Mental Health: The Economic Case for Investment

The economic case for mental health investment: a failure to invest can produce significant economic costs

Investing in mental health care and workplace mental health programs takes money, and in the short term, that can be an obvious deterrent. However, it can really pay off in the longer term. A number of organizations have each put together solid economic cases for investment in mental health, and this post will take a look at some of them.

For those of us dealing with mental illness, it’s about so much more than dollars and cents. Still, governments care about $$$, and the money argument is on our side.

The World Health Organization’s perspective

In a 2013 report, the World Health Organization (WHO) pointed out that mental illness is associated with significant social costs. Mental disorders contribute to premature mortality due to suicide and an increased risk of developing and prematurely dying from other health conditions. The costs associated with accessing care can be high, and this can have a devastating impact on families.

International figures have shown that people with mental illness are over-represented among those living in poverty. There are high rates of unemployment and underemployment among people with mental illness. This limited labour participation and output has a negative impact on gross domestic output (GDP). Improved mental health outcomes can mean more people getting back to work and decreased welfare payments.

The report concludes with this cautionary statement: “For each year of inaction and underinvestment, the health, social and economic burden will continue to rise. Doing nothing is therefore not a viable option.”

The case for investment in different countries


The Mental Health Commission of Canada (MHCC) has identified mental health promotion and early intervention in childhood and adolescence is an important way to offset both lasting negative impacts on quality of life and economic losses associated with illness.

A 2017 MHCC report stated that it’s important to focus on mental health promotion and early intervention. It also indicated that improvements at the primary level should be able to serve the needs of many people with mild to moderate illnesses, who make up the majority of people who are affected by mental illness. About 1.5% of the population would need specialized or intensive services.

In 2015, mental health spending accounted for about 7.2% of overall health spending in Canada. This is much lower than in many other Western countries; for example, in the UK’s National Health Service, it’s around 13%.

The MHCC identified a number of areas where mental illness can have indirect economic costs:

  • employer costs related to absenteeism, presenteeism, and turnover
  • public and private disability costs
  • costs of government income assistance and social supports for people who are unable to work
  • lost tax revenue from unemployment and underemployment

Practices that reduce overall costs

These are some of the practices that the MHCC found were associated with overall cost savings:

  • community-based rapid response teams for youth experiencing suicidal thoughts
  • early psychosis intervention programs reduce health care costs and increase the likelihood of clients having paid employment
  • improving access to psychotherapy can save $2 for every $1 spent
  • offering timely collaborative care to people off work on short-term disability can result in fewer days spent on disability per person and fewer people transitioning to long-term disability
  • for high-end service users, an investment of $22K per person for a housing first approach with assertive community treatment can save $42K in costs that would have otherwise been incurred (based on data from the MHCC’s large At Home/Chez Soi study)
  • incorporating peer support into discharge planning related to long-term hospital stays can facilitate earlier discharges
  • community crisis resolution teams can be a cost-effective alternative to hospital admission
  • crisis houses have a lower daily cost than hospital admission and are associated with greater client satisfaction

The UK

A 2011 report from the Centre for Mental Health in the UK pointed out that most mental health spending is on dealing with illnesses that have already reached the crisis stage and require long-term support, yet 50% of mental health conditions are already present by age 14. Focusing investment on mental health promotion, prevention, and early intervention often costs less than intervening at a later stage. It’s also likely to have a wide range of payoffs for the public sector and society more broadly.

The report added that some payoffs are spread out over a long time frame, but the costs of intervening can be recouped in a relatively short time frame. For some interventions, cost recovery occurred within 1 year, while many others paid off within 2-5 years).


Modelling by Australia’s National Mental Health Commission identified a number of mental health prevention and early intervention strategies that would improve national productivity and lead to savings for the health care system. One such intervention was the broader implementation of the online MoodGYM program to prevent anxiety disorders in young people.

Workplace mental health

The American Psychiatric Association Foundation’s Center for Workplace Mental Health reports that 80% of employees who receive treatment for mental illness report higher levels of work efficacy and satisfaction. Treatment can lead to lower overall medical costs, increased productivity, less absenteeism, and decreased disability-related costs. Their website has cost calculators for employers to get estimates of how much depression, alcohol, and substance misuse could be costing them.

A 2020 report by Deloitte UK identified screening and early, targeted intervention yielded the greatest return on investment. Proactively addressing workplace culture and improving awareness of workplace mental health tended to yield a greater ROI than trying to be reactive in supporting employees once their mental health had worsened.

Deloitte also identified stigma as an important ongoing issue to address. Their report mentioned a finding in a Business In The Community survey that 9% of employees who disclosed mental health problems being either fired, demoted, or disciplined.

Short-sightedness costs $$$

Given that many politicians’ main priority seems to be getting re-elected, it’s not surprising that long-term thinking isn’t much of a priority. However, short-term thinking is shitty for those of us dealing with mental illness, plus it’s expensive for society.

While it would be nice to see change because it’s the right thing to do, dollars and cents speak pretty loudly, so the economic case for investment is a pretty important one to be able to make.

What do you think would have to change to get the powers that be to pay more attention to mental health?


Book cover: A Brief History of Stigma by Ashley L. Peterson

My latest book, A Brief History of Stigma, looks at the nature of stigma, the contexts in which it occurs, and how to challenge it most effectively.

You can find it on Amazon and Google Play.

26 thoughts on “Mental Health: The Economic Case for Investment”

  1. I agree with you overall about the need for investing in better mental health care. Maybe I’m dense, but what initiatives/programs/treatment/resources should investment actually go towards? I haven’t read all the links; maybe the links better answer this.

    1. Early intervention when people are first starting to get sick can make a big difference, like early psychosis intervention programs. Also, community-based care is a lot cheaper than hospital care, yet it tends to be underfunded.

  2. I’m so glad you wrote about this Ashley, such an important subject and I really wish the higher-ups would read this! You are so so right! And maybe a fiscal perspective is the only thing that will work to get through to those people who only seem to care about the money.

  3. I’ve personally put a dent on healthcare due to untreated mental health issues and few resources available to me. I agree that it’s worth every penny to invest in mental health. Not just for ethical reasons, but yes, economical ones too.

  4. What an insightful write up! It is so true that often times, we overlook the fact that investments on mental health can take you a long way! The immediate deterrent effect prevents us from seeing the wonders it can do. It can be especially difficult when you’re from a country that still has this huge stigma associated to mental health and getting help.

  5. The moodgym was fascinating and it’s quite inexpensive. Intervention and significant help early on for those of us who now struggle with chronic/permanent would have saved more than money, for sure. A really timely piece.

  6. We’re in a study to validate a WHO scale on the disability impact of depression for cross culture relevance. We were paid for it and we told the researcher what some folks have to do out of desperation to get financial aid for treatment and living expenses when unable to work.

  7. Great post. I agree that it’s hard for politics to have a long-term outlook when the election cycle is short-term. We need more parity work by non-profit organizations like NAMI – the National Alliance on Mental Illness – in the US.

  8. Yet another great post, Ashley 🙂 As a therapist I see this all too well. Not only in mental health, but in ALL aspects of life we need to focus on being preventative vs reactive. I think mental health should be more involved in primary care as opposed to specialty care, honestly. Yearly or twice yearly “psychological physicals” are another really inexpensive way to keep mental health at bay. I know here in the US general adherence to out medical interventions can be rough, as well, because of the shortsighted costs. It isn’t really communicated to us that dealing with chronic health complications (and I mean mental and physical health) later in life is much more expense for EVERYONE than if we were to prioritize trying to be preventative about it in our younger years. Ugggghhh, it makes my blood boil. Another great piece with a lot of fantastic truths 🙂

      1. I know, right?? The idea was proposed while I was in grad school and I always thought it was such a shortcoming of our medical system that there wasn’t an extensive psychological workup that we do yearly. I’m trying to implement it in my own practice!

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  10. Great article. Might I add, would you say funding is all that is required to promote better mental healthcare outcomes? Or are there deep lying issues within health services (the NHS) themselves

    1. I think there are definitely deep underlying issues that need to be addressed at the services level, and hopefully pressure coming from government payors could help to get some of those issues addressed.

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