The Happy Living Index also measured well-being measures such as life expectancy and life satisfaction - and the UK only managed to come in 21st place, behind the majority of its European competitors.
Only transition economies such as Portugal, Greece, and Luxembourg fared worse in the rankings.
"Countries that have most closely followed the Anglo-Saxon, strongly market-led economic model show up as the least efficient," said Andrew Simms, the NEF's policy director and head of the climate change programme.
"These findings question what the economy is there for. What is the point if we burn vast quantities of fossil fuels to make, buy and consume ever more stuff, without noticeably benefiting our well-being?
"We know that someone is just as likely to have high life satisfaction while living within their environmental means, as someone who recklessly over-consumes. So, what is preventing us from radically changing direction, and reaping the benefits?
"If Europe doesn't lead, India, China and Brazil will not follow," Mr Simms concluded.
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