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Cost-Benefit Analysis of Psychological Therapy

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Author Info

  • David Clark
  • Martin Knapp
  • Richard Layard
  • Guy Mayraz

Abstract

At present six million people are suffering from clinical depression or anxiety disorders, but only a quarter of them are in treatment. NICE Guidelines prescribe the offer of evidence-based psychological therapy, but they are not implemented, due to lack of therapists within the NHS. We therefore estimate the economic costs and benefits of providing psychological therapy to people not now in treatment. The cost to the government would be fully covered by the savings in incapacity benefits and extra taxes that result from more people being able to work. On our estimates the cost could be recovered within two years - and certainly within five. And the benefits to the whole economy are greater still. This is not because we expect the extra therapy to be targeted especially at people with problems about work. It is because the cost of the therapy is so small (£750 in total), the recovery rates are so high (50%) and the cost of a person on IB is so large (£750 per month). These findings strongly reinforce the humanitarian case for implementing the NICE Guidelines. Current proposals for doing this would require some 8,000 extra psychological therapists within the NHS over the next six years.

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Bibliographic Info

Paper provided by Centre for Economic Performance, LSE in its series CEP Discussion Papers with number dp0829.

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Date of creation: Oct 2007
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Handle: RePEc:cep:cepdps:dp0829

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Web page: http://cep.lse.ac.uk/_new/publications/series.asp?prog=CEP

Related research

Keywords: depression; anxiety; cost-benefit analysis; cognitive behavioural therapy; psychologicaltherapists;

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References

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  1. Giulia Faggio, 2007. "Job Destruction, Job Creation and Unemployment in Transition Countries: What Can We Learn?," CEP Discussion Papers dp0798, Centre for Economic Performance, LSE.
  2. Cuñat, Alejandro & Melitz, Marc J, 2007. "Volatility, Labour Market Flexibility, and the Pattern of Comparative Advantage," CEPR Discussion Papers 6297, C.E.P.R. Discussion Papers.
  3. Overman, Henry G. & Rice, Patricia & Venables, Anthony J., 2008. "Economic Linkages Across Space," CEPR Discussion Papers 6786, C.E.P.R. Discussion Papers.
  4. Christos Genakos & Tommaso Valletti, 2011. "Testing The “Waterbed” Effect In Mobile Telephony," Journal of the European Economic Association, European Economic Association, vol. 9(6), pages 1114-1142, December.
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Cited by:
  1. Richard Layard, 2010. "The Greatest Happiness Principle: Its Time Has Come," CESifo DICE Report, Ifo Institute for Economic Research at the University of Munich, vol. 8(4), pages 26-31, 01.
  2. Dan Chisholm & Richard Layard & Vikram Patel & Shekhar Saxena, 2013. "Mental Illness and Unhappiness," CEP Discussion Papers dp1239, Centre for Economic Performance, LSE.
  3. Böckerman, Petri & Johansson, Edvard & Saarni, Samuli I., 2011. "Do established health-related quality-of-life measures adequately capture the impact of chronic conditions on subjective well-being?," Health Policy, Elsevier, vol. 100(1), pages 91-95, April.
  4. Richard Layard & Dan Chisholm & Vikram Patel & Shekhar Saxena, 2013. "Mental Illness and Unhappiness," SOEPpapers on Multidisciplinary Panel Data Research 600, DIW Berlin, The German Socio-Economic Panel (SOEP).
  5. David M. Clark & Richard Layard & Rachel Smithies, 2008. "Improving Access to Psychological Therapy: Initial Evaluation of the Two Demonstration Sites," CEP Discussion Papers dp0897, Centre for Economic Performance, LSE.

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