New York, NY: Mental illness is on the rise among adults in the U.S., with over 20% experiencing some form of mental illness and 5.5% facing serious conditions. May is Mental Health Awareness Month, and the statistics demonstrate the need for awareness, understanding, and support. Not only does mental illness burden individuals, but a new analysis shows that it also drains the U.S. economy, costing an estimated $282 billion annually. The finding comes from new research from Columbia Business School Professor Boaz Abramson that presents a novel economic model to analyze the macroeconomic costs of mental health. Using this model, the researchers determined how much mental illness costs the American economy, and if popular mental health policies work to improve productivity and general welfare.
In the study, “Macroeconomics of Mental Health,” released as a working paper in NBER, Professor Abramson and his co-authors University of Wisconsin-Madison Professor Job Boerma and Yale University Professor Aleh Tsyvinski, reviewed old and new psychiatric literature about mental health and developed a new economic model that features three key attributes of mental illness: negative thinking, rumination, and how behaviors can reinforce mental illness. Negative thinking is captured by individuals having more negative expectations on future outcomes. Rumination is characterized by a repetitive and uncontrollable fixation on negative thoughts. As a result, individuals with mental illnesses work less, consume less, invest less in risky assets, and forego treatment. The model provides an estimate of the monetary value lost in the American economy. Based on this assessment, it finds that the total cost of mental illness is about 1.7% of the United States’ gross consumption ($282 billion/year). Using their model, the authors determine that certain policies aimed at improving mental health can help alleviate this cost. For example, increasing the availability of mental health services by eliminating the shortage of mental health professionals can lead to societal benefits equivalent to 1.1% of annual consumption ($118 billion) in the economy. Treating mental illness early in life is the most effective policy, with estimates indicating that providing mental health services to all adolescents and young adults with mental illness could reap benefits of 1.7% of consumption annually.
In response to the escalating mental health crisis, policymakers are increasingly dedicated to using a multi-faceted approach to mitigate the burgeoning crisis. This model offers a concise economic evaluation of these policies, assessing their effectiveness in enhancing mental health outcomes.
To learn more about cutting-edge research being conducted, please visit Columbia Business School.
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