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Macroeconomics of Mental Health

Author

Listed:
  • Boaz Abramson
  • Job Boerma
  • Aleh Tsyvinski

Abstract

We develop an economic theory of mental health. The theory is grounded in classic and modern psychiatric literature, is disciplined with micro data, and is formalized in a life-cycle heterogeneous agent framework. In our model, individuals experiencing mental illness have pessimistic expectations and lose time due to rumination. As a result, they work less, consume less, invest less in risky assets, and forego treatment which in turn reinforces mental illness. We quantify the societal burden of mental illness and evaluate the efficacy of prominent policy proposals. We show that expanding the availability of treatment services and improving treatment of mental illness in late adolescence substantially improve mental health and welfare.

Suggested Citation

  • Boaz Abramson & Job Boerma & Aleh Tsyvinski, 2024. "Macroeconomics of Mental Health," NBER Working Papers 32354, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:32354
    Note: EFG EH PE
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    Cited by:

    1. Diego Ascarza-Mendoza & Christian Velasquez, 2025. "On the Dynamics of Mental Health," Working Paper Series of the School of Government and Public Transformation 7, School of Government and Public Transformation, Tecnológico de Monterrey.
    2. Ana María Iregui-Bohórquez & María Teresa Ramírez-Giraldo & Ligia Alba Melo-Becerra & Héctor M. Zárate-Solano, 2025. "Pandemia del Covid-19 y salud mental en Colombia: un análisis de riesgos competitivos," Borradores de Economia 1300, Banco de la Republica de Colombia.

    More about this item

    JEL classification:

    • E0 - Macroeconomics and Monetary Economics - - General
    • H0 - Public Economics - - General
    • I10 - Health, Education, and Welfare - - Health - - - General

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