Why was the prince called a happy prince?

Like Siddhartha Gautama, the founder of Buddhism, the prince in this story was sheltered from all knowledge of suffering. The prince explains to the swallow that was he happy during his lifetime because he lived in a palace surrounded by a high wall that blocked out anything unpleasant. He played with companions in his garden and led dances at night. He never explored what was outside the palace walls. Therefore, because he was untroubled, he was called the Happy Prince. He says he was happy because at that time he equated pleasure with happiness.
Following his death, however, the Prince (like the Buddha after he grew up) can see the suffering and poverty all around him. This has made him very sad, especially because, as a statue, he is immobilized. Nevertheless, when he meets the swallow, who can fly around, he now has a way to help other people. He becomes happy in a new way, through insisting that the costly gold and jewels of his statue be given to help the poor. The swallow distributes the wealth to those most in need. This is a deeper and more profound form of happiness than what the prince experienced in life, and he is rewarded at the end with a place for his heart in heaven.

During his life on earth, the prince was called the Happy Prince because he was always happy.
Accordingly, the prince never knew unhappiness when he was alive, as he lived in splendor and ease. He lived in a palace where sorrow was never allowed to enter; a high wall separated his palace grounds from the outside world. Because his existence was so sheltered, the prince never knew of the misfortunes and miseries his subjects experienced in their own lives. The prince tells the swallow that his own courtiers used to call him the Happy Prince, only because he was always found to be cheerful and untroubled.
The prince remembers living a life that consisted of largely unvarying daily pleasures; during the day, he cavorted with his companions in the garden, and in the evenings, he led dances in the Great Hall of the palace. It was only when he died that he became sad, and this was because they placed his statue so high up on the city grounds that he could see the surrounding miseries and degradation in the city.