Health Economics, Policy and Law


Money or mental health: the cost of alleviating psychological distress with monetary compensation versus psychological therapy

Christopher J. Boycea1 c1 and Alex M. Wooda2

a1 Department of Psychology, University of Warwick, Coventry, UK

a2 School of Psychological Sciences, University of Manchester, Manchester, UK


Money is the default way in which intangible losses, such as pain and suffering, are currently valued and compensated in law courts. Economists have suggested that subjective well-being regressions can be used to guide compensation payouts for psychological distress following traumatic life events. We bring together studies from law, economic, psychology and medical journals to show that alleviating psychological distress through psychological therapy could be at least 32 times more cost effective than financial compensation. This result is not only important for law courts but has important implications for public health. Mental health is deteriorating across the world – improvements to mental health care might be a more efficient way to increase the health and happiness of our nations than pure income growth.