The settlement system is all kinds of broken, and happiness is just another disappointment in a growing list.
I decided to test many settlements (still ongoing, as I've a few left to build) and decide what works best and doesn't work at all, and so far, I can attest the following do not make a difference to happiness:
-TV and/or radios
-Rugs
-Paintings
-Plants
The number will go up if you use them, but it's limited time only, as the number will reset back down (usually 2 points). Aside from aesthetics, they don't offer crap.
Here are some things I've noticed make a difference in raising happiness and keeping it high:
-Surround your crops. If you're using walls, either do so completely or throw down a wall with a door. If you're using fences, be sure to have a gate. It matters even if you have another means of getting people to the crops. I found walls added a 4+ point bonus, simply because I believe the line-of-sight of enemy attacks is mitigated.
-Even number of settlers. All my settlements having 3 settlers max at 79-81. With settlements having nearly identical setup (I build all the sleeping quarters the same way for all but 4 settlements - more on this in a bit) but with 4 settlers, 84+. Either one weird coincidence or a glitch.
-Building beds next to walls and separating them with at least one floor space = WHOA! Yeah, this is where the 90%+ comes in, and I'm confident bed placements against walls is a huge factor. It seems the game calculates how well a settler is "protected", so placing open windows next to beds = bad idea. Again, this is just observation based on how I set up settlements but the kicker is that in Hangman's Alley, 4 settlers sleep in an area where each is next to a wall despite one side facing into the open air! That settlement has been low 90s and so, there's gotta be a connection with beds, walls, and settler "comfort". I just moved a few beds on Spectacle Island this evening and put everyone into their own room without windows, as well as assign 6 stores (the first settlement to have this many with a very small settlement).
-If you were like me, you wanted a nice layout so you decided to put all your water together in one area, then build outward. Go back and remove this. 2 points is mitigated when you spread your wells around your livable area and settlers have access to them. If you have water behind walls with no access (even though the water gets into the workstation!), that'll affect the score. Weird, given I've never seen settlers walk to water. Ever.
-NPCs use crafting stations, especially if you have stores. Not sure if this is related to happiness, but again, Hangman's Alley (excluding Sanctuary) is the only settlement I have that has accessible crafting stations.
As soon as I get the remaining settlements built, and do a few more tests, I'll report my findings.
So far, the best settlement I have with the best constant 90%+ score is Hangman's Alley:
-4 settlers
-6 water, 6 food
-48 defense
-20 power (not using it all)
-All beds are in rooms with walls surrounding them - no windows despite one side being completely open
-Food is secured in a small "enclave" consisting of 3 walls
Time to wreck their world just to see what makes it tick.