Rules versus Discretion: Treatment of Mental Illness in US Adolescents

Emily Cuddy and Janet Currie

Journal of Political Economy, 2026, vol. 134, issue 1, 478 - 522

Abstract: Many mental health disorders start in adolescence, and appropriate initial treatment may improve trajectories. But what is appropriate treatment? We use a large national database of insurance claims to examine the impact of initial mental health treatment on the outcomes of adolescent children over the next 2 years, where treatment is either consistent with US Food and Drug Administration guidelines, consistent with looser guidelines published by professional societies (gray area prescribing), or inconsistent with any guidelines (red-flag prescribing). We find that red-flag prescribing increases self-harm, use of emergency rooms, and health care costs, suggesting that treatment guidelines effectively scale up good treatment in practice.

Date: 2026
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