Scattergood Ethics

An Introduction to the Economics of Behavioral Health

News Date: 
January 15, 2013

J. Catherine Maclean, Ph.D.

J. Catherine Maclean, PhD. is a Professor of Medical Ethics and Policy at the University of Pennsylvania, Perelman School of Medicine. As the 2013 Scattergood Scholar she will discuss how economics offers an organized framework with which we can measure the full costs and benefits of behavioral health. Decision making that does not consider all costs and benefits can lead to sub-optimal outcomes, for both persons who suffer from behavioral health problems and society as a whole. This blog aims to bring together varying perspectives on behavioral health to better inform health policy makers.

High medical care costs are at the center of current policy debates. A key point of disagreement between Democrats and Republicans during the debt ceiling and fiscal cliff negotiations was how to finance Medicare. The focus on medical care costs is justifiable: in 2012 the U.S. spent $2.8 trillion on medical care. This number is greater than the annual Gross Domestic Product (the market value of all officially recognized final goods and services produced within a country) in France, Germany, or the United Kingdom. At the same time population health falls below levels considered acceptable by public health experts. For example, 25.8 million Americans, or 8.3% of the population, suffer from Diabetes.

One potential strategy to contain medical costs and improve population health is to encourage individuals to focus on behavioral health, as well as physical health. Such improvements can prevent future disease, better manage current conditions, and contain medical costs. Positive changes in behavioral health have the added benefit of increasing the quality of people’s lives and their productivity, which can lead to greater prosperity for the U.S. Because 40% of premature deaths are attributable to behavioral health and behavioral health imposes large costs on society (e.g., the annual cost to the U.S. of tobacco addiction is over $193 billion), this strategy holds promise. Individuals make myriad behavioral health choices each day. When making these choices, they consider their own likes and dislikes, prices, health costs that accrue from their choices, laws, cultural norms, the opinions of their peers, etc. This is a complex environment in which to make decisions that will have lasting repercussions on both health and welfare. Can the economist’s toolkit shed light on how people make decisions related to their behavioral health?