Mental Illness: A Global Economic issue


Mental illness is one of the leading causes of mortality and morbidity worldwide and people with severe mental illnesses tend to die of preventable conditions 25 years earlier than persons without such diagnoses. Distressing symptoms can be exacerbated by the inability to participate in work, leisure or age-appropriate responsibilities.  The substantial number of people affected by mental illness worldwide (450 million) has profound socio-economic implications for quality of life, health care systems, and the economic cost to society.

Since I decided my dissertation would focus on Mental illness and UK/US labour market outcomes, I wanted to summarize here some of the main economic costs society faces today. Growing research in behavioral economics and finance acknowledge the impact of psychological mechanisms on economic behaviour, but there is still a strong need for mental health to be incorporated into research studies, economic theories and methodologies. So, we must work to conceptualizing mental illness in an intelligible way that captures and delineates the empirical facts about the relationship between mental illness and economic variables (i.e. productivity, growth and utility).

Many disorders begin in childhood/adolescence and have significant adverse effects on daily functioning.  Although mental disorders are estimated to account for 13% of the global burden of disease, the mental health budgets of the majority of countries constitute less than 1% of their total health expenditures – a colossal treatment gap . Hence, expansion of treatment would be cost-effective from occupational, economical and societal perspectives.


Labour Market

Previously, physical health was imperative for job performance, by cause of globalisation and rises in the services sector; it is now mental health. Jobs have become innovation-driven, knowledge intensive and psychologically more demanding. A higher level of cognitive, social and emotional skills, are needed to keep up with the dynamic labour market characterized by growing (perceived) job insecurity, job turnover, and more frequent (spells of) unemployment. Thus, psychological wellbeing is of utmost importance.

On the other hand, a quality working environment is also vital for good mental health. Work has a greater psychological impact on employees today as employment could equip you with psychologically valuable elements i.e. intrinsic motivation, self-esteem, possibilities for self-development and personal growth, and a sense of meaning or negative psychological effects (i.e. work related stress, burnout, resulting MH problems like depression, anxiety,psychosis..) and the enormous costs associated with them, in terms of reduced productivity and human capital investment..increased absenteeism, work disability and health care costs

Direct Costs

  • Cost of treatment
  • Cost of medication
  • Hospitals
  • Prisons
  • Impaired work performance
  • In communities, some high income economies show that mental disorders consume more than 20% of all health service expenditure.
  • Cost of childcare
  • Loss productivity by patient and/or family members

Indirect costs 

Mental health problems costs the EU an estimated 3-4% of GDP, mainly through lost productivityThose with depression experience symptoms that interfere with work ( i.e an inability to concentrate, low energy and easy fatigability, exaggerated self-doubts, indecisiveness and disturbed sleep).

Indirect labour costs include:

  • Reduced productivity
  • Increased absenteeism
  • Work disability
  • ‘Presenteeism’ (showing up at work while being not productive/counterproductive)
  • Effects on skill acquisition
  • Reduced cognitive and social functioning

Especially in high-income countries, which are working to improve the quality and effective use of human capital, the costs associated with mental health problems and the resulting loss of functionality are vast, and increasing.

Harvard Professor Ronald Kessler specializes in global mental health studies, observes: “There is an entire burgeoning area of literature that looks at the impact of medical conditions on role performance. Depression is one of the most costly conditions in the workplace, and the majority of dollars for health care comes from employers. They are very interested in knowing what they are getting for their dollar. Where once mental health was likely to be the first thing cut, today a lot of forward thinking employers are seeing the value of high-quality mental health care”.


I love Economics and I love Psychiatry. This topic is salient, compelling, and also personal to me. Since childhood I always questioned economic issues and human psychology. The economy is essentially run by us and by factoring in human behavior into scientific theories, but also aspiring to greatly improve the psychological well being of the masses, then surely it would lead to greater productivity and benefits for most.

It is clear mental health is highly significant to the economy, but also an important economic asset to have. Mental illness disturbs mood, thought or functioning, which hinders a person from leading a fulfilling or productive life. It tends to obstruct a person’s ability to study, work, and to make decisions about educational, employment, housing or other social choices. Consequently, mental health disturbances not only impact the individuals who have them, but hindrance to their families and increased economic costs to society at suicide

76%-85% of people with severe mental disorders in low to middle income countries receive no treatment. For high income countries 35-50% endure no treatment. Certain populations live in a situation that makes them particularly vulnerable to developing mental disorders and the social and economic impact of mental disorders.

Many resources are spent on preventing, treating and improving mental health. Antidepressants have proliferated from a modest market in the 1980 to reaching sales of $12 billion in 2008, plus the self-help market in the U.S was worth $10.82 billion in 2007.

Evidently, both the public and private sector should continue to spend on stress management and treatment programs, but a continuous effort must be made by all members of society to achieve national prosperity. 


Economics and Finance student. University of Southampton. Autodidact. INTJ. Psychiatry devotee. To myself I am only a child playing on the beach, while vast oceans of truth lie undiscovered before me - Isaac Newton. Any Questions? Email:

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Posted in Psychiatry, Psychology, Socioeconomics

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