My personal theory, represented in the points in TFA but not quite pinpointed, is that it is due to smartphones and the overall media environment (not just social media). Specifically:

Smartphones enable unprecedented levels of reach as well as content personalized to you... as decided by The Algorithm. Media organizations and social media influencers discovered that ragebait gets clicks, which generates revenue. This also explains why news articles overall are very negative, as TFA points out. This is what influences The Algorithm.

This is all that is needed. Consider:

1. The psychological harms of social media are very well understood, as often shown in Meta's own leaked reports. But the discussion has focused on youths because "think of the children" (which is actually justified here) but overshadows the harm to the general population.

2. Elon and Twitter. 'Nuff said.

3. Beyond public channels, there is even more negativity in private message groups like WhatsApp and Telegram which is invisible from the outside. I've seen a lot of large influence campaigns and disinformation flow through those channels that have not made the news. Which also means that fact-checking is not a thing there.

4. The countries where happiness is rising has two main (mostly mutually exclusive) traits:

a) They have low inflation (from TFA: Portugal, Italy, Spain). Maybe this is sufficient to overcome the effects of negative media environment.

b) They are largely authoritarian states (from TFA: China, India, Vietnam) where the media environment is heavily controlled. So the constant media narrative is "Things have never been better!" (Though the cracks are showing in India, because people will tolerate this only as long as things are good, and genuine dissatisfaction is breaking the narrative barrier, since "fake it til you make it" does not work for national economies. I suspect cracks will show in China too if the gravy train comes to an end there.)

5. The lockdown from the pandemic was probably just the impetus that drove more people to their smartphones and got them hooked into this cycle of negativity.

So basically people have been inundated, via public and private channels, with constant waves of negativity and disinformation. Even the "positivity" is stuff like social media influencers portraying unrealistic, luxurious lifestyles ("a day in the life of a PM at a tech company".) This further breeds resentment in people even if their own lives are actually getting better.

In my tinfoil hat mode, I even suspect the global media environment is heavily manipulated to sow dissatisfaction and cause instability (hence the "vibecession") as a form of economic warfare. ("We will take America without firing a shot. We do not have to invade the U.S. We will destroy you from within." - Kruschev, maybe)

But Occam's Razor says good old capitalism is a sufficient explanation.