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Abstract for:

Cost-Benefit Analysis of Psychological Therapy

David Clark,  Martin Knapp,  Richard Layard,  Guy Mayraz,  October 2007
Paper No' CEPDP0829: Full paper (pdf)
Tags: depression; anxiety; cost-benefit analysis; cognitive behavioural therapy; psychological therapists


At present six million people are suffering from clinical depression or anxiety disorders, but only a quarter of them are in treatment. NICE Guidelines prescribe the offer of evidence-based psychological therapy, but they are not implemented, due to lack of therapists within the NHS. We therefore estimate the economic costs and benefits of providing psychological therapy to people not now in treatment. The cost to the government would be fully covered by the savings in incapacity benefits and extra taxes that result from more people being able to work. On our estimates the cost could be recovered within two years and certainly within five. And the benefits to the whole economy are greater still. This is not because we expect the extra therapy to be targeted especially at people with problems about work. It is because the cost of the therapy is so small (750 in total), the recovery rates are so high (50%) and the cost of a person on IB is so large (750 per month). These findings strongly reinforce the humanitarian case for implementing the NICE Guidelines. Current proposals for doing this would require some 8,000 extra psychological therapists within the NHS over the next six years.

This paper has been published as:
National Institute Economic Review No.202 October 2007