Once 'coinage' has been researched you can also spend money to reduce discontent.
You really don't want it building too high though as the penalties really scale up - fast - if it gets out of control.
To quote from the manual:
In most 4x games, unhappy citizens reside in your cities, and at some point, if your unhappy factors outweigh your happy factors, you get a chance of rebellion.
Things are very different (and much more complicated) in Old World, and unhappiness can take a variety of different forms and have many different consequences.
For example, if all of your vassal families are happy with you, you’ll find that the troops they have fielded on your behalf fight more effectively. The bonus can range from a modest 5% to a much more impressive 20% in the case of incredibly happy families, so it’s certainly significant, and making sure your families are happy before you march off to war is a key component of planning a successful military campaign.
Conversely, if one or more of your families is unhappy with you, the combat effectiveness of troops they’ve provided will begin to fall off (-5% to -20% depending on exactly how unhappy they are), and if not dealt with, this could wind up crippling your ability to actually defend your realm. In addition to that, if a given family is angry enough (-100 relationship score, or worse), you’ll have a per turn chance of seeing rebel units appear around cities that the unhappy family controls, further degrading your ability to defend your nation against external threats.
If that wasn’t enough, each city you found starts with a per turn level of discontent that increases as you increase the game’s difficulty level.
This per turn discontent builds up over time, slowly increasing the Discontent Level of every city you have (all cities begin with a Discontent Level of 0).
At each level of Discontent, the city in question will suffer a -5% penalty to its growth rate, the amount of science it generates, and its upkeep costs will increase by 5%, so if you have a city with a Discontent level of 8, then it will suffer a staggering 40% penalty to the factors mentioned above. That’s painful.
In addition to that though, each level of discontent also hits you with a -20 relationship penalty with the family that controls the city in question, so, using the example above, in addition to the penalties already outlined, you’d also suffer a -160 relationship penalty with the family that controlled that city.
Each city’s discontent level is tracked individually, and you can view any given city’s current level of discontent, and how much per turn discontent that city is suffering, by going into the city detail screen.
The good news is that the game provides you with all sorts of easy ways to reduce city per turn discontent. Among these include:
• Connecting a city to your Capital, so it’s on your Kingdom’s Trade Network.
• Putting a military unit in a city that is from the same family as the city itself, and building a wall. Note that building wall upgrades (moats and towers) will reduce per turn discontent by an additional point.
• Certain laws will reduce per turn discontent.
• Certain urban improvements your workers can build will reduce per turn discontent (cold baths, warm baths, amphitheaters, and the like).
• Some religious buildings may reduce per turn discontent, or at the very least, allow you to train specialists that can reduce per turn discontent, depending on how you opt to develop your religion.
• If you have adopted a religion and that religion’s head is pleased or happy with you, then you get an extra reduction to Discontent, so if you’re going to adopt a religion, then be sure to actively use/expand/improve it so you continually improve relations with the head of your religion.
The bottom line is, while discontent is definitely something to guard against, the game gives you plenty of tools to deal with it. Used well and wisely, you can create a happy, prosperous kingdom.
So while you’re growing and expanding, you’ll have to keep a watchful eye on your Nobles, keeping them happy with gifts, assassinating troublesome leaders, sometimes offering the carrot, and other times, beating with the stick.