Mental health costs the US economy more than $280 billion annually, stymying investment, productivity, and wealth accumulation. With an impact comparable to that of a recession, its aggregate cost is equal to 1.7 percent of the country’s annual consumption—or the budget of a major federal department.
Fortunately, research from Columbia Business School Professor Boaz Abramson may have found the solution. Along with the University of Wisconsin’s Professor Job Boerma and Yale University’s Professor Aleh Tsyvinski, Abramson has quantified the true macroeconomic cost of mental illness, which the researchers say affects more than 20 percent of American adults. Using their findings, Abramson and his team have crafted policy solutions aimed at dramatically reducing costs.
While previous studies have quantified the loss of income and healthcare costs associated with mental illness, Abramson and his team’s methodology takes a broader approach, analyzing how individuals with mental health conditions behave differently in the labor market and invest and spend differently than those not affected. They found that the cost of mental illness in the United States is a whopping $282 billion annually—an estimate 30 percent higher than that found in previous epidemiological research.
“Our model takes into account a wide host of adverse socioeconomic outcomes that these previous models did not, as well as the psychological and psychiatric costs of living with mental illness,” Abramson says.
To grasp the sum of these socioeconomic outcomes, the researchers focused on three characteristics of mental illness that modern psychiatric theories emphasize: negative thinking, rumination, and reinforcement through behavior.
The Sinister Cost of Symptoms
Negative thinking, a main factor in both moderate and severe mental illness, was a critical point of study in the researchers’ model. They found that a negative outlook leads those experiencing mental illness to invest less in high-risk, high-return assets such as stocks and real estate. This in turn has a snowball effect, with those affected building significantly less wealth throughout their lifetime compared to those who do not experience mental illness.