Mental illness is a pervasive problem in the U.S., affecting one in five adults each year, according to the National Alliance on Mental Illness (NAMI). However, the economic impact of this issue is equally staggering. A recent study by economists from Yale, Columbia, and the University of Wisconsin-Madison has revealed that mental illness costs the U.S. economy a whopping $282 billion annually.
The Economic Toll of Mental Illness
Published in April as a working paper by the National Bureau of Economic Research, this study highlights that the economic burden of mental illness is equivalent to an average economic recession, or about 1.7% of the nation’s aggregate consumption. This new estimate is 30% higher than previous estimates, which mainly focused on the cost of treatment and income loss due to mental illness.
In this groundbreaking study, coauthor Aleh Tsyvinski, PhD, a professor in the Yale Department of Economics, explained, “We developed the first integrated model of macroeconomics and mental health building on classic and modern psychiatric theories. We show that mental illness alters people’s consumption, savings, portfolio choices, as well as the country’s labor supply, generating enormous annual costs to our economy.”
The Impact on Individuals
Individuals suffering from mental illness may consume less, opt for less demanding jobs, and avoid investing in risky assets like houses or stocks. According to the study’s data, those experiencing mild or severe mental illness consumed 3-7% fewer goods and services and worked 13-23% less than healthy individuals.
Job Boerma, PhD, an assistant professor in the Department of Economics at UW-Madison and coauthor of the study, noted, “Mental illness affects 20% of the population at any given time. The fact that the costs of mental illness amount to 1.7% of aggregate consumption for the U.S. population is massive.”
Policy Proposals to Boost the Economy
Boerma, Tsyvinski, and Boaz Abramson, PhD, an assistant professor at Columbia Business School, applied their research to three policy proposals supported by the Biden administration:
- Expanding the availability of mental health services
- Lowering out-of-pocket costs
- Improving the mental health of adolescents and young adults
The Mental Health Care Deficit
According to health policy nonprofit KFF, as of April 1, more than 122 million Americans were living in areas with a shortage of mental health professionals, where only 27% of mental health care needs are met. Eliminating this deficit could reduce mental illness by 3.1% and provide societal benefits equivalent to 1.1% of aggregate consumption, or $118 billion.
Providing comprehensive care for everyone aged 16-25 experiencing mental illness could yield even more significant benefits, potentially resulting in gains of 1.7% of aggregate consumption.
The Limitations of Lowering Costs
However, the researchers found that merely lowering the cost of mental health care would have minimal economic impact. Boerma explained that many people with mental illness do not seek treatment due to various factors, including a lack of available services, the stigma associated with mental illness, and the belief that treatment might be ineffective. Therefore, simply reducing costs would not significantly increase treatment uptake.
“If you don’t address those other factors, lowering the cost of care alone will not increase people’s propensity to seek treatment,” Boerma said.
Moving Forward
Boerma plans to inform lawmakers of his team’s findings, hoping that the integration of economic and psychiatric research will fuel science-backed policymaking. “Very exciting insights are always coming at the edges or overlaps of different fields,” Boerma said. “It will be good for the field if we do this more.”
Conclusion
The hidden recession caused by mental illness in the U.S. is an economic burden that requires urgent attention. Expanding mental health care access and addressing the factors that prevent individuals from seeking treatment could significantly alleviate this burden and boost the economy.
For those needing immediate mental health support, contact the 988 Suicide & Crisis Lifeline.
This news story highlights the immense economic and personal toll of mental illness in the U.S. and underscores the urgent need for comprehensive mental health care reforms. By addressing the root causes and barriers to treatment, we can help improve the well-being of millions and strengthen the economy.
