Two other Australian cities feature in the top-ranked places: Sydney (5th) and Adelaide (10th), while only one other European city made the top ten.
Although both cities registered improvements in their "liveability" - a ranking of 140 cities worldwide, across five broad categories of stability, healthcare, culture and environment, education, and infrastructure - increases in Vienna's ratings were enough for the city to overtake Melbourne.
The Economist's data is somewhat at odds with research from May this year, carried out by Your Housing Group, which ranked Manchester below Liverpool in its Northern Powerhouse Liveability Index.
"The great thing for Melbourne is that we're always looking at ways to improve", Capp said of her city's No. 2 spot.
Japan has two cities in rank among the top 10 - Osaka in third place and Tokyo in seventh. London and NY didn't even make the top 40 - which may or may not come as a surprise to anyone who has lived in either - and cities in Japan, Canada, and Australia, where the "liveability" is usually thought to be pretty high, couldn't keep up with Vienna. It's the first time a European city has topped the rankings of the EIU annual survey.
It added that the Middle East, Africa and Asia accounted for the 10 lowest-scoring cities in the survey where violence, whether through crime, civil insurgency, terrorism or war, played a significant role.
Basically, the best places on the liveability scale are Canada - they provided 3 of the top 10 - and America. A year ago it failed to make the top 10.
It is now 13 places ahead of London, the biggest gap between the two cities since the survey began two decades ago, while NY comes in at 57th. The placement is slightly improved from last year's report, when Calgary came in fifth on the list.
Other notables included Paris (19), Hong Kong (35), London (48) and NY (57).