Middle English (in the sense 'lucky'): from the noun hap¹ + -y¹.

• Before the 14th century you could be glad but not happy. The word is from hap ‘fortune, chance’, which entered English a century or more earlier and which is no longer used in everyday English, except in hapless (Late Middle English) meaning ‘unfortunate’, its development happen (Late Middle English) and perhaps. To be happy was at first to be favoured by fortune—but came to refer to feelings of pleasure in the early 16th century. Happy as a sandboy is said because sandboys (who would have been grown men as well as boys) were ‘happy’ or ‘jolly’ because they were habitually drunk. A dictionary of slang terms published in 1823 explains that jolly as a sandboy referred to ‘a merry fellow who has tasted a drop’. This is reflected in a pub in Charles Dickens's The Old Curiosity Shop, published in 1840: ‘The Jolly Sandboys was a small road-side inn…with a sign, representing three Sandboys increasing their jollity.’ Sandboys sold sand for use in building, for household chores such as cleaning pots and pans, and to spread on floors to soak up spillages, especially in pubs. In Australia you can also be as happy as Larry, which may be connected with the renowned 19th-century boxer Larry Foley, or owe something to larry (late 19th century), a dialect word meaning ‘a state of excitement’ that appears in the novels of Thomas Hardy. A North American equivalent is as happy as a clam or as happy as a clam at high water: when the tide is high, the clams are covered by seawater and are able to feed to their hearts' content.