Happiness affects productivity. An unhappy population will idle frequently, decreasing overall production. Some structures increase happiness, such as:
- trading posts
- taverns - (producing Ale)
Industrial structures such as mines and quarries will decrease the happiness of those who live nearby.
Births and marriages increase happiness, while deaths, sickness, starvation, and freezing will decrease it. A cemetery will reduce the amount of happiness lost when a citizen dies, so long as there is room for a new gravestone.
The more unhappy a citizen is, the longer they will idle for - having very unhappy citizens will lower their effectiveness at their jobs.