Yes, Icelanders are the happiest people on Earth. Iceland ranks in the top five happiest countries in the World for several years in a row. With a happiness index of 7.575, Iceland had the second most contented populace (topped only by Finland) in 2020.
Despite the decent incomes and low unemployment rates, the financial crash in Iceland (2008-2011) showed that money doesn't buy happiness in the Nordic country. Namely, 40% of Icelanders were just as happy after the crisis as before, and 30% were even happier.