This study examines how a major welfare reform, characterised by harsh conditionality, affected the wellbeing of residents in Great Britain. The phased implementation of Universal Credit across areas constituted a natural experiment, enabling the
estimation of its causal effects on wellbeing with Callaway and Sant’Anna’s (2021)
staggered difference-in-differences model. Two data sources underlie the analyses: the nationally representative UK Household Longitudinal Study for the life satisfaction analysis in Great Britain and the Small Area Mental Health Index in England for the mental health analysis. The results reveal a negative effect on life satisfaction and mental health following the policy’s rollout in the period 2013-2020. In
addition, subgroup analyses reveal that the life satisfaction declines are stronger for males and disabled individuals. Furthermore, the effects are dynamic: the negative effect on wellbeing takes 2-3 years to manifest and grows larger the longer
individuals/areas are exposed to the policy. The study contributes to the wellbeing literature by identifying welfare conditionality as an important determinant. In
particular, the life satisfaction effect of -0.68 (on a 7-point scale) is amongst the largest observed effects in the literature. Countries seeking to implement similar
welfare conditionality aspects of UC (e.g., the 5-week waiting period, harsher conditions, and expansion of conditions to new groups of claimants) should consider these results