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Cost-benefit analysis of psychological therapy

Author

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  • Layard, R.
  • Clark, D.
  • Knapp, M.
  • Mayraz, G.

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 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 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 some 8,000 extra psychological therapists withing the NHS over the six years.

Suggested Citation

  • Layard, R. & Clark, D. & Knapp, M. & Mayraz, G., 2007. "Cost-benefit analysis of psychological therapy," National Institute Economic Review, National Institute of Economic and Social Research, vol. 202, pages 90-98, October.
  • Handle: RePEc:cup:nierev:v:202:y:2007:i::p:90-98_10
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    Cited by:

    1. Ralph Chapman & Nicholas Preval & Philippa Howden-Chapman, 2017. "How Economic Analysis Can Contribute to Understanding the Links between Housing and Health," IJERPH, MDPI, vol. 14(9), pages 1-12, August.
    2. Layard, Richard & Chisholm, Dan & Patel, Vikram & Saxena, Shekhar, 2013. "Mental Illness and Unhappiness," IZA Discussion Papers 7620, Institute of Labor Economics (IZA).
    3. Gruber, Jonathan & Lordan, Grace & Pilling, Stephen & Propper, Carol & Saunders, Rob, 2022. "The impact of mental health support for the chronically ill on hospital utilisation: Evidence from the UK," Social Science & Medicine, Elsevier, vol. 294(C).
    4. Tim Bothe & Josephine Jacob & Christoph Kröger & Jochen Walker, 2020. "How expensive are post-traumatic stress disorders? Estimating incremental health care and economic costs on anonymised claims data," The European Journal of Health Economics, Springer;Deutsche Gesellschaft für Gesundheitsökonomie (DGGÖ), vol. 21(6), pages 917-930, August.
    5. Layard, Richard & Chisholm, Dan & Patel, Vikram & Saxena, Shekhar, 2013. "Mental illness and unhappiness," LSE Research Online Documents on Economics 121783, London School of Economics and Political Science, LSE Library.
    6. Leire Alcaniz & Ana Martínez-Pampliega & Marta Herrero, 2022. "Cost-Benefit Analysis of an Intervention in Divorced Parents: Implications for Society, Public Administrations and Family Visitation Centers," IJERPH, MDPI, vol. 19(6), pages 1-11, March.
    7. Benjamin Ly Serena, 2021. "Revisiting Offsets of Psychotherapy Coverage," CEBI working paper series 21-05, University of Copenhagen. Department of Economics. The Center for Economic Behavior and Inequality (CEBI).
    8. Patricio V. Marquez, 2016. "Mental Health Among Displaced People and Refugees," World Bank Publications - Reports 25854, The World Bank Group.
    9. 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.

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