Economics and Mental Health

Richard G. Frank and Thomas G. McGuire

No 7052, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: This paper is concerned with the economics of mental health. We argue that mental health economics is like health economics only more so: uncertainty and variation in treatments are greater; the assumption of patient self-interested behavior is more dubious; response to financial incentives such as insurance is exacerbated; the social consequences and external costs of illness are formidable. We elaborate on these statements and consider their implications throughout the chapter. Special characteristics' of mental illness and persons with mental illness are identified and related to observations on institutions paying for and providing mental health services. We show that adverse selection and moral hazard appear to hit mental health markets with special force. We discuss the emergence of new institutions within managed care that address long-standing problems in the sector. Finally, we trace the shifting role of government in this sector of the health economy.

JEL-codes: I10 (search for similar items in EconPapers)
Date: 1999-03
New Economics Papers: this item is included in nep-env and nep-hea
Note: EH
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Published as Frank, Richard G. & McGuire, Thomas G., 2000. "Economics and mental health," Handbook of Health Economics, in: A. J. Culyer & J. P. Newhouse (ed.), Handbook of Health Economics, edition 1, volume 1, chapter 16, pages 893-954 Elsevier.
Published as Richard G. Frank, 1990. "Mental health economics," Administration and Policy in Mental Health, vol 17(3), pages 189-191.

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