Dr. Shrinivas Kashalikar discusses grading happiness on different scales based on three criteria: durability, how widely shared the happiness is, and intensity. He provides examples of happiness graded from A to F, with A grade happiness being the most durable, shared with the most people, and intense, while F grade happiness stems from heinous crimes. The document encourages readers to learn how to grade happiness in their own lives to make choices and reinforcements that maximize success and well-being over time.