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Cost-benefit analysis of psychological therapy

Author

Listed:
  • R. Laynard

    (Centre for Economic Performance, London School of Economics, UK, R.Layard@Ise.ac.uk)

  • D. Clark

    (Centre for Economic Performance, London School of Economics, UK,)

  • M. Knapp

    (Centre for Economic Performance, London School of Economics, UK,)

  • G. Mayraz

    (Centre for Economic Performance, London School of Economics, UK,)

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 governement would be fully covered by the savings in incapacity benefits and extra taxes that result from more people being able to worl. 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 theropy 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 per cent) and the cost of a person on IB is so large (£750 per month ). These findings strongly reinforce the humanitatian case for implementing the NICE Guidelines. Current proposals for doing this would require som8,000 extra psychological therapists withing the NHS over the six years.

Suggested Citation

  • R. Laynard & D. Clark & M. Knapp & G. Mayraz, 2007. "Cost-benefit analysis of psychological therapy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 202(1), pages 90-98, October.
  • Handle: RePEc:sae:niesru:v:202:y:2007:i:1:p:90-98
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    References listed on IDEAS

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    1. Faggio, Giulia, 2007. "Job destruction, job creation and unemployment in transition countries: what can we learn?," LSE Research Online Documents on Economics 19716, London School of Economics and Political Science, LSE Library.
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    Citations

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    Cited by:

    1. Layard, Richard & Chisholm, Dan & Patel, Vikram & Saxena, Shekhar, 2013. "Mental Illness and Unhappiness," IZA Discussion Papers 7620, Institute for the Study of Labor (IZA).
    2. Patricio V. Marquez, 2016. "Mental Health Among Displaced People and Refugees," World Bank Other Operational Studies 25854, The World Bank.
    3. Richard Layard, 2010. "The Greatest Happiness Principle: Its Time Has Come," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 8(4), pages 26-31, 01.
    4. Clark, David M. & Layard, Richard & Smithies, Rachel, 2008. "Improving access to psychological therapy: initial evaluation of the two demonstration sites," LSE Research Online Documents on Economics 51591, London School of Economics and Political Science, LSE Library.
    5. 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.

    More about this item

    Keywords

    Depression; anxiety; cost-benefit analysis; cognitive behavioural therapy; psychoogical therapists;

    JEL classification:

    • H5 - Public Economics - - National Government Expenditures and Related Policies
    • I1 - Health, Education, and Welfare - - Health

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