“Happy” comes from the word “happenstance” and is dependent upon one’s “circumstances.” Notice the commonality in the two words, happenstance and circumstance- “stances.”
Joy, on the other hand, is a willful choice to be grateful in whatever circumstances, good or bad. It is only produced by the Holy Spirit (Gal. 5:2-23). God wants us to be joyful and to count it all joy even when we face various problems and trials in our lives (James 1:2). Joy only comes from knowing Christ and having a fruitful life with Him.
Joy is a determined state of mind produced when one focuses entirely upon Christ and the spiritual blessings in Christ. Mature Christians are joyful because the Holy Spirit produces this fruit in them!
Happiness is fleeting and focuses only upon one’s temporary circumstances in the physical world. Most people are happy on their birthdays and Christmas when they receive temporary gifts. But God has permanent, eternal gifts to offer us all in Christ!
-Mark (choosing to be joyful regardless of what life brings me)