CtP Happiness FAQ 0.1There are a number of factors that affect happiness. With the exception of overcrowding (in diffdb.txt I believe) and certain unconventional unit attacks (const.txt usually), they are denoted in govern.txt, and affect you differently based on what government you are in.
First of all is overcrowding. At Deity you get your first point of unhappiness penalty for size 2 cities, and each easier level gives you 1 more size before causing problems. Check diffdb.txt for these to be sure though.
Certain improvements, such as the Aqueduct and Hospital are specific in reducing the unhappiness penalty, rather than the generalist happiness improvements just increasing happiness. This is unavoidable (cities grow and you want them to) you'll never really be ahead of the game in unhappiness caused by overcrowding, so its important to get every overcrowding reducer you can in your big cities.
Secondly are the two 'governing limit' penalties, empire size and empire distance. Governments have limits on how many cities they can manage, before a penalty (also modifiable) starts kicking in. The other side of the coin is empire distance, where the distance from each city to the capital by the shortest route is calculated, and if it exceeds the min empire size stat for the government then you start incurring a penalty, based on a factor, upto a maximum. Its interesting that roads, railroads and maglevs reduce travel time and hence reduce or negate this penalty. I think this is one of the cleverest things in CtP1.
A wonder... Conf. Academy... is available pretty early on, which negates the empire size penalty, which is very useful on larger maps, to avoid the growth inhibiting penalty.
Pollution, caused by high production values in a city, or improvements, which add multiples to this value, cause unhappiness. If you reduce the pollution, you reduce the penalty. Its important to reduce the pollution in your most productive cities to avoid general ecological distasters or specific terrain damage that can occur.
Unhappiness caused by army size, is reducable by the Cineplex... although I've never found it a big enough problem to do so, based on the cost and support of the Cineplex.
Theres another temporary form of unhappiness based around conquest of cities... but this is so temporary and such a minor penalty from what I've seen, that its not drastically affected me.
I may have missed one or two... but those are the main ones.
The general happiness improvements are important to a) get the happiness up towards 85 where WLTxD occurs in CtP b)deal with happiness problems that you can't deal with in other ways... like overcrowding, conquest unhappiness etc. etc.
It should be noted that there is a reducing scale of crime; that reduces gold, production and food by a percentage based on the government, that is lessened as happiness improves up to 85.
Most important? Only get what you need. Having a Hospital in a size 2 city is definitely a waste, but an Aqueduct isn't, since it will reduce the upcoming penalty, and will help you grow in the mean time.
Theatres are definitely one of my favorites, from a happiness sense, since they double the effectiveness of Entertainers (on the Specialists tab, you can take people out of productive city squares and make them entertain (or be scientists, or with appropriate improvements, merchants or laborers, increasing science, money and production respectively.)
Theatres plus entertainers are important since there aren't enough bonuses from early overcrowding improvements and happiness improvements to deal with growing city sizes, but the theatre combo is a solution since you only need one entertainer per two city sizes.
The Nanopedia advance, later in the game doubles that effect.
Its very important to build infrastructure (roads, railroads and maglevs) as your empire grows, to avoid significant penalties. Often if you send a settler way out beyond your travel network, and found a city, then that city will just die off, since it riots the next turn due to unhappiness penalties from its distance to the capital. As I mentioned Conf. Academy is a wonder which negates this penalty, but it does go obsolete (with Mass Production) so you may want to complete as many railroads as you can to link your empire to your capital, before this obsolescence occurs.
The Sensorium is a great wonder to build in the late game, especially if you are ahead and cruising into victory; it negates overcrowding and pollution penalties. At this point Hospitals are moot, and you usually have enough happiness improvements built to kick many of your cities to the 85 or above mark, causing them to celebrate and grow at a rate of double of what their food surplus would normally mean.