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Money or mental health: the cost of alleviating psychological distress with monetary compensation versus psychological therapy

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  • Boyce, Christopher J.
  • Wood, Alex M.

Abstract

Money is the default way in which intangible losses, such as pain and suffering, are currently valued and compensated in law courts. Economists have suggested that subjective well-being regressions can be used to guide compensation payouts for psychological distress following traumatic life events. We bring together studies from law, economic, psychology and medical journals to show that alleviating psychological distress through psychological therapy could be at least 32 times more cost effective than financial compensation. This result is not only important for law courts but has important implications for public health. Mental health is deteriorating across the world – improvements to mental health care might be a more efficient way to increase the health and happiness of our nations than pure income growth.

Suggested Citation

  • Boyce, Christopher J. & Wood, Alex M., 2010. "Money or mental health: the cost of alleviating psychological distress with monetary compensation versus psychological therapy," Health Economics, Policy and Law, Cambridge University Press, vol. 5(4), pages 509-516, October.
    • Handle: RePEc:cup:hecopl:v:5:y:2010:i:04:p:509-516_99
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    Citations

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    Cited by:

    1. Boyce, Christopher J. & Wood, Alex M., 2011. "Personality and the marginal utility of income: Personality interacts with increases in household income to determine life satisfaction," Journal of Economic Behavior & Organization, Elsevier, vol. 78(1-2), pages 183-191, April.
    2. James Kennedy, 2020. "Subjective Wellbeing and the Discount Rate," Journal of Happiness Studies, Springer, vol. 21(2), pages 635-658, February.
    3. Hilda Osafo Hounkpatin & Alex Wood & Gordon Brown & Graham Dunn, 2015. "Why does Income Relate to Depressive Symptoms? Testing the Income Rank Hypothesis Longitudinally," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 124(2), pages 637-655, November.
    4. Akay, Alpaslan & Karabulut, Gökhan & Yilmaz, Levent, 2021. "Life Satisfaction, Pro-Activity, and Employment," IZA Discussion Papers 14117, Institute of Labor Economics (IZA).
    5. Boyce, Christopher J. & Wood, Alex M., 2011. "Personality and the marginal utility of income: Personality interacts with increases in household income to determine life satisfaction," Journal of Economic Behavior & Organization, Elsevier, vol. 78(1), pages 183-191.
    6. David W. Johnston & Michael A. Shields & Agne Suziedelyte, 2018. "Victimisation, Well†being and Compensation: Using Panel Data to Estimate the Costs of Violent Crime," Economic Journal, Royal Economic Society, vol. 128(611), pages 1545-1569, June.
    7. Sekulova, Filka & van den Bergh, Jeroen C.J.M., 2016. "Floods and happiness: Empirical evidence from Bulgaria," Ecological Economics, Elsevier, vol. 126(C), pages 51-57.
    8. Christopher Boyce & Alex Wood & Nattavudh Powdthavee, 2013. "Is Personality Fixed? Personality Changes as Much as “Variable” Economic Factors and More Strongly Predicts Changes to Life Satisfaction," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 111(1), pages 287-305, March.

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