Economics and mental health care

Jacob, a loyal MR reader, writes to me:

I am a research assistant involved in an evaluation of the quality of mental health care.  It turns out that much of “quality” from a clinician's perspective involves coercing/convincing/luring patients into treatment – patients should show up quickly (“initiation”) and repeatedly (“engagement”) and for a really long time (“continuation-phase treatment”).  For example, health plans are graded on the proportion of depressed patients that they can keep on antidepressants for 6 months (link – pg 23).  

So, how do you think about markets and individual-level-decision making among the severely mentally ill. On one hand, it feels inadequate to throw up ones hands and say everyone is the best ruler of themselves.  But it also feels inadequate to defer fully to the experts.  I’m sure this topic has been tackled elsewhere but a thoughtful analysis has evaded me so far.

A few points:

1. Here are some recent reported results about conceptualizing mental illness; I cannot vouch for them.

2. Here is an article about the fracturing of the concept of mental illness.  Here is The Economist on the same topic.

3. The mentally ill have it tough in China.

4. Here is one story of rational economic man.

5. I disagree with Bryan Caplan's argument that mental illness is a false category; he is making an odd turn toward behaviorism.  That the behavior can be reduced to preferences and constraints does not mean that is the best or only way of understanding the phenomenon (which is not just about behavior).

6. Here is the major paper on economics and mental health.  Here is a collection on the same topic, by the same authors.

7. You won't find the answers to your questions in any of those places, or here.  I do, in the meantime, hold two views.  First, historically the concept has been used — indeed abused — to incorrectly rationalize a lot of forcible institutionalization.  Second, it is not a meaningless concept, though fractured it may be.


His description sounds like the same problem as with everything. The person 'solving' your problem, in his role of monetizing the solution service no longer has an incentive to solve your problem unless the market forces him to. It looks like psychiatry has taken the unusual and ballsy step of institutionalizing and formalizing this flaw.

So, the only robust solution is to keep yourself from becoming a participant in a market made up by irrational consumers. This is why I enjoy buying concrete. Noone can convince you that not-concrete is concrete or that concrete is not-concrete. Obsessive concrete disorder.

Thanks for the interesting post. I agree with you that much forcible institutionalisation based on so-called expert opinion has resulted in many lives being damaged. However we conceptualize mental illness, it still exists. How we treat it is what's most important.

I work in knowledge mobilization where we attempt to include patients, researchers, social agencies, practitioners and policy makers to develop greater knowledge around major social issues like mental health. The experts become collaborative.


That the behavior can be reduced to preferences and constraints does not mean that is the best or only way of understanding the phenomenon (which is not just about behavior).

Yes it does, and yes it is.

Mental illness does not exist, period. There are genuine neurological conditions, and then there are behaviors that society disapproves of. The mind is not an organ of the body and cannot be "ill". Those who help us cope with behavior issues are not "doctors" and they do not practice "medicine".

I realize that all medication is used to "cure", ease, lessen, and numb the diseases that plague the human body. If all medical "professionals" would take a look at the proof that most diseases are caused by glandular receptors not liking the secretions meant for them to function properly or glands that no longer provide the secretion to keep the body healthy. The WHOLE BODY from head to foot. this the place for research instead of throwing medications at us willy nilly. It's not that we do not need specialists but even the specialists do not know more about this especially psychiatrists don't listen and do not treat the illness which is real,

Whether or not you believe that mental illnesses are real definable diseases, which I wholeheartedly do as a sibling of one who suffers greatly from genetic diagnosable disease caused by chemical imbalances which result in hallucinations, breaks from reality, leading to dangerous uncontrollable bursts, Jacob points to a larger and more complex problem with the incentives for doctors, patients, and caretakers in the mental health system. As dirk says above, the focus should be on how we respond to the care. These reporting mechanisms on “quality” lead to poor, unreliable, broken and ineffective care because we limit care options based on faulty cost benefit analysis which neglects a personalized approach to care due to the funding mechanisms in place. The individual needs of patients suffering from mental illnesses vary greatly from one person to another and the market for treatment options is broken.

Pharmaceutical interventions are only one method of treatment and when needed should be used in tandem with therapy and other systems of support yet compliance is a serious problem for those who are a threat to themselves or others.

Those who are seriously ill or suicidal can be forcibly institutionalized by the state if they are determined to be a threat otherwise they have to voluntarily admit themselves. From personal experience, you cannot coerce or use market mechanisms and rational argument to motivate someone who is extremely mentally ill to change their behavior when they are a threat to themselves or others. The most intelligent person suffering from severe mania or schizophrenia cannot will themselves out of episodic hallucinations because what they see is real to them, projected misfirings of their brain. Simply put, their reality is blurred, conflicted and damaged and the rule of law and the rule of markets is not a factor in their decision making process. So what are other options would one propose than forcible intervention?

Perhaps our broken system of care leads to a greater instance of forcible intevention because the quality markers we observe do not rate quality care based on the individual.

I live in California and the laws here indicate that you cannot force medication on someone or put them in a psychiatric ward, even if its obvious they are quite ill, unless they are a direct danger to themselves or others. Most people with schizophrenia are not aware that they have it and they think that they are "normal" so it's hard to get them treated.

I know someone who is schizophrenic and think it's in part a chemical imbalance but it was also influenced by his environment. For example, this person's parents used to fight violently (Dad threw a knife at his mom once or vice versa) and his dad used to kick him in the head when he was a boy and I think it's that combined with the genetic pre-disposition that caused him to go into psychosis.

Given my own experiences with depression, anxiety, and American mental health care, I will see what I can contribute here. I sometimes post here under another name, but this remains a sensitive subject so I prefer more anonymity.

As Jacob and others point out, one unfortunate part of our approach to mental health care is that some psychiatrists seem more interested in keeping patients medicated and in the system than getting them healthy. However, there is also some truth to the notion that the depressed, and even more so those with more severe mental illnesses, may hold the irrational belief that they do not need or would not benefit from treatment. Recognizing that while also respecting individual autonomy creates a difficult tension, because seeking treatment isn't something many people come around to easily on their own. Frequently they have to either hit rock bottom in some fashion and seek help or get institutionalized, or in less extreme cases they get pressured to seek out help by well-meaning friends or family, as I was. Almost no one suffering from mental health issues recognizes their problem for what it is until some sort of damage to relationships, job, school, or even the body is already done. Under those circumstances, an individual's emotional state is already compromising their ability to make rational decisions by the time they recognize that there is a decision to be made.

Also, I hate to take the bait on this, but people like the above commenter who think that mental illnesses aren't legitimate clinical conditions are simply wrong. I don't offend easily, but it is incredibly offensive to me that anyone would suggest that this burden would up and go away if I just tried a little harder.

Thanks Adam and illish, well said. This is such an important debate for me personally as one who has struggled to balance my passion for free markets and limited government and the realities and reprocussions of severe mental illness in the home. I feel that there are many who are overly concerned in remaining purist in their libertarian beliefs and therefore they ignore vast scientific evidence and throw their hands up and question the merits of ths issue when asked for answers about the role of government in addressing our mental health epidemic and how that fits into their philosophical lens. The lens in which I see the world is guided by theory ...but not blinded. And yet, as Jacob initially asks, I still have not heard any thoughtful analysis.

Thanks Tyler and everyone else for tackling my question.

I think Frank's abstract provides one good way to think about the economic issues: "We argue that mental health economics is like health economics only more so: uncertainty and variation in treatments are greater; the assumptions of patient self-interested behavior is more dubious; response to financial incentives such as insurance is exacerbated; the social consequences and external costs of illness are more formidable."

Caplan also rightly emphasizes the HUGE range of totally wacky things that “normal” humans do without any mention of mental illness. He then concludes that we should simply lump mental illnesses into the “many crazy things that humans do” category. I think recognizing the heterogeneity is important but the conclusion doesn’t seem right.

For what it’s worth, my own opinion is that the mental illness category should be defined more by consequences than by behavior. Externalities fall into the list of consequences but not exclusively so. Regardless of what economic theory suggests, I don’t buy that daily heroin use should fall into the “consumer benefit” category just because the user decided to use. That seems too tautological. Maybe the individual isn't always the right level of analysis. Maybe we should think about individual decisions as emerging from (sometimes screwy) lower-level (biological) processes.

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