According to their site,
The index is composed of 24 qualitative and quantitative indicators from highly respected sources, which combine internal and external factors ranging from a nation's level of military expenditure to its relations with neighbouring countries and the level of respect for human rights. These indicators were selected by an international panel of academics, business people, philanthropists and peace institutions. The GPI is collated and calculated by the Economist Intelligence Unit...
The GPI was founded by Steve Killelea, an Australian international technology entrepreneur and philanthropist. It forms part of the Institute for Economics and Peace, a new global think tank dedicated to the research and education of the relationship between economics, business and peace. This report is written in cooperation with the Economist Intelligence Unit.
Actually, all the criteria are listed here (and I think Japan probably does much better on the remaining 21), but I laughed when I read the 3 that were mentioned in the explanation.
(If there is already a thread on the Global Peace Index, I'm sorry--I did a quick search but didn't find anything)