I don't see how that makes the measure bullshit. Outlook and expectations are related to happiness. If you want for nothing but have little it's better than a never ending treadmill of more.
Having a culture that produces happier people in worse circumstances doesn't make those people less happy.
Yes, absolutely. How else would you define it? The whole point of happiness is that is a subjective, internal state. If you just want to know if people live in a cold, dark climate you don't need to ask them.
Having a culture that produces happier people in worse circumstances doesn't make those people less happy.