A Second Great Depression? The Cost of Mental Illness in the Canadian Economy
A Second Great Depression? The Cost of Mental Illness in the Canadian Economy
Once plagued by taboo and dismissed as a private struggle, the effects of depression have quietly become a measurable factor in the Canadian economy. Affecting over 11% of Canadians, major depressive disorder is a leading cause of lost productivity and work absence. As awareness grows, so too does an understanding of the financial toll: billions of dollars lost annually through absenteeism and presenteeism. This article will examine how public campaigns and shifting cultural narratives have helped to reduce stigma, yet the economic burden of depression continues to climb as rates of depression among 18-25 year olds reached 17.2% in 2020, raising questions about whether Canada’s health infrastructure can prevent further economic loss and personal suffering.
How is Depression Affecting Canadians?
The term depression was once (and, to a lesser extent, still is) stigmatized; it has gradually entered public discourse amid increased awareness and education about mental health. Some attribute it to campaigns such as ‘Bell let’s talk’ or CAMH’s (Centre for Addiction and Mental Health) ‘mental health is health’, while others attribute it to cultural shifts and a growing acceptance that sweeping mental illness under the rug does nothing but create a severe tripping hazard for Canadians.
One in five Canadians lives with mental illness, and major depressive disorder accounts for over half of these diagnoses at 11% of the population. The highest prevalence lies among working age Canadians, primarily those aged 16-64. This is a concerning statistic for economists especially as depression has rapidly become a leading reason for work-related disability and lost productivity. Diagnoses of depressive disorders have steadily been on the rise, though a certain percentage of this increase must be attributed to the rise in diagnosis caused by the increase in awareness and decrease in stigma, the growth rate exceeds any explanation simply caused by increased diagnosis. There are numerous explanations for this surge in depression, some point to the rise in substance addiction as a major comorbidity of depression, while others point to cultural factors by highlighting a positive correlation between a nation’s per-capita GDP and depression rates. A 2013 study conducted by the NIH (national points to the fact that populations in rich countries such as Canada and the USA are increasingly overfed, malnourished, sedentary, sunlight-deficient, sleep-deprived, and socially isolated as contributing and often overlooked factors in the rising depression rates. Although the higher diagnosis rates in wealthier countries can partly be accredited to greater healthcare infrastructure and reduced stigma thanks to mental health campaigns, this study indicates a systemic problem. Certain risk-factors for depression are deeply ingrained in capitalistic societies and therefore override the sustainability of any surface-level prevention or intervention. As depression rates expand and capitalism continues to dominate Canada's economy, there exists a growing threat to the Canadian economy as its workforce becomes increasingly impeded by the effects of depression.
But What is the Real Cost of Depression?
Traditionally, there have been two categories of costs associated with depression and mental health in the economy: direct and indirect. The direct costs are unambiguously characterized by hospital stays, psychiatric spending, pharmaceuticals, and long-term care homes. In 2011, $42.3 billion was spent on treatment and care for Canadians with mental illnesses representing 2.8% of Canada’s GDP that year.
Since 1995, the funding for Canada’s health care has been channelled though a 70/30 split–70% public, 30%–private and is allocated to the provinces to spend essentially at their discretion. Each province has been criticized for not allocating enough of their funding towards mental health; a report done by the Canadian Mental Health Association (CMHA) has shown that the provinces and territories are spending a mere 6.3% of their overall health budgets on mental health, which is significantly lower than France at 15% and the UK at 11%.
On the other hand, the indirect costs of depression on the economy are vague and difficult to calculate. Indirect costs, that is, foregone GDP and lost productivity have cost the Canadian economy an estimated $32.3 billion a year. This figure stems from the financial effects of both absenteeism and presenteeism. This is a culmination of the absent working days formed by the quarter of working-age Canadians living with depression who are unable to work full time or even at all because of their symptoms. Presenteeism is the effect on productivity while in the workplace. Symptoms of depression such as sadness, fatigue, and brain fog prevent individuals from working at the expected rate and therefore limits their productivity and output.
A new study done by Yale University points to yet another hidden cost of mental illness. It revealed that in addition to these direct and indirect costs, people with mental illness consume less, invest less, and may choose less-demanding jobs. Economist Aleh Tsyvinski utilized a cross-disciplinary approach rooted in economics and psychology to develop a model for this exact dilemma. Typifying depression as a state of negative thinking and rumination that is uncontrollable means that people with depression are pessimistic about their future productivity, hesitant towards risky investments, and lose hours ruminating that otherwise could have been put towards working, investing, or consuming. His model revealed that in the USA, by providing mental health services to everyone aged 16-25 experiencing mental illness, societal benefits equal to 1.7% of aggregate consumption could be reaped.
Reframing Mental Health as Infrastructure
Combining the direct and indirect costs of depression with the lack of financial investment exhibited by people with depression, it becomes apparent that the growing rate of depression in Canadian society must be put on policymakers' radars. It is evident that the 6% of provincial healthcare funding channelled towards mental illness is not sufficient to match the growing rate of depression and the economic burden associated with it. Just as road maintenance, waste management, and power lines are seen as necessary costs to the government, mental healthcare must be reframed as infrastructure in order to offset the costs of depression. Policymakers must amplify sustainable, long-term, evidence-based mental health interventions and preventions while accepting that there are systemic factors at play in the growing rates of depression. In doing so we can shift mental health care from reactive to preventative which has the possibility to save the economy billions. As demonstrated by the figures in this article, investing more into mental health is not just compassionate policy, its sound economic investment.
References
https://publications.gc.ca/site/eng/9.687812/publication.html
https://pmc.ncbi.nlm.nih.gov/articles/PMC3330161/
https://ottawa.cmha.ca/the-state-of-mental-health-in-canada-2024/
https://www.camh.ca/en/professionals/treating-conditions-and-disorders/depression