The prosperity index was compiled by the Legatum Institute and is based on data from 170 locations across the country.
According to the organisation, prosperity was measured by average incomes and happiness levels.
The Black Country borough of Sandwell was ranked second-last in terms of prosperity.
In addition, Blackpool, Liverpool and East Derbyshire were ranked in the bottom five.
With the exception of the Outer Hebrides, the top five most prosperous areas in Britain are in London, according to the index.
The findings are based on local GDP figures from 2011 and the Office for National Statistics well-being data from 2013-14.
Sian Hansen, executive director at the Legatum Institute, said: "The data shows that Wolverhampton is the least prosperous part of the UK because its citizens report the lowest levels of satisfaction with their lives.
"Some of the most prosperous areas of the country are those where, regardless of their income, people have the opportunity to lead healthy, fulfilling and prosperous lives."
Wolverhampton residents and workers were split about the study's findings.
"I think it's a bit harsh to be bottom," said 23-year-old Shane Parker, from Coseley.
"It's not as bad as some people think, there are places in Birmingham that are much worse.
Angela Scrivens, 42, from Bilston, said: "I think the town itself is quite dull, but the people can be quite happy.
"It's gone through a rough patch lately, but the town centre is being done up, and hopefully that will bring in more jobs and people."
Sharon Kiteley, 47, from Dudley, said: "Whenever I've looked around I've always seen happy smiling faces, so I can't believe it's come last.
Responding to the findings, the leader of the City of Wolverhampton Council, Councillor Roger Lawrence, said: "Whilst it's fair to say that Wolverhampton took a battering during the recession, we're now seeing some really positive signs of recovery.
"The data used is from 2011 and 2013-14. Wolverhampton's come a long way since then and as we approach 2016 there's a lot going on in our city."

The deputy head of the bloc's executive Commission, Frans Timmermans, said it was determined to uphold EU values.
Thousands of Hungarians have protested against laws which could see the closure of a prestigious university.
Hungary is also forcibly housing asylum seekers in secured shipping containers.
There was a serious question whether that was compatible with EU law, Mr Timmermans said at a news conference.
He said the Commission would consider its next steps in coming weeks and would act if there were no positive developments.
"Taken cumulatively, the overall situation in Hungary is a cause of concern for the Commission," Mr Timmermans said.
Hungary's increasingly radical right-wing Prime Minister, Viktor Orban, has declared war on liberalism, reports BBC's Nick Thorpe, in Budapest.
Hungary to detain all asylum seekers in border camps
Large protest in support of Hungary's Soros-backed university
His government has come under growing criticism of its treatment of asylum seekers - including on Monday, when the UN High Commissioner for Refugees Filippo Grandi said the container camps would surrounded by razor wire would "have a terrible physical and psychological impact on women, children and men who have already greatly suffered".
Mr Grandi also said he was "very concerned about highly disturbing reports of serious incidents of ill-treatment and violence against people crossing the border into Hungary, including by state agents".
Hungary's Higher Education Law, signed earlier this week, could force the closure of the Central European University (CEU), founded by philanthropist George Soros and ranked among the top 200 universities in the world in eight disciplines.
Last Sunday, Budapest also saw the largest protest yet against the move, which has also inspired an international campaign of solidarity.
Late on Tuesday, US state department spokesman Mark Toner urged the Hungarian government to suspend implementation of the law.
Another protest is planned in Budapest on Wednesday evening.
But the Hungarian government says it will not respond to the campaign, saying CEU has a year to comply with the new rules.
Hungary passes bill targeting Central European University
Hungarian attack on George Soros prompts NGO anger
The university built to defend democracy
Wolverhampton is the least prosperous area in the UK, according to findings from an international think-tank.
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The EU has warned it could take legal action against Hungarian legislation cracking down on higher education, non-governmental organisations and asylum-seekers.