Mental Health Treatment and Educational Outcomes

Abstract

Mental health affects many facets of a person’s life. Over the past decade, New Zealand saw a significant rise in the number of people with mental distress. The public healthcare system struggles to provide sufficient treatments due to underfunding and understaffing. The insufficient supply of mental health specialist forces many to rely on psychiatric medication as their primary treatment. However, the medical literature indicates that psychiatric medicines alone are not sufficient. Absence of ‘talking therapy’ results in worse recovery rates, higher rates of relapse more reminisce of symptoms after recovery and requires longer recovery time. Most literature on the benefits of Psychotherapy focuses on clinical outcomes, savings in physical healthcare, better labour market outcome for workers and less sick leaves. The mainstream literature often overlooks the effect Psychotherapy has on education. Mental disorders often cause students to underperform at school and impede their human capital development. In this dissertation, I investigate how Psychotherapy can potentially improve students’ outcome at high school and their likelihood of entering university. Education is crucial in developing and accumulating human capital for individuals; thus crucial for the performance of a country’s labor market. I employ detailed microdata on students born between the year 1994-2001 with mental distress from New Zealand’s IDI on their educational attainment at NCEA performance and university entrance. I compare outcomes for students receiving only Psychiatric medication to students receiving both Psychotherapy and psychiatric medication for treatment after controlling for a host of individual, family and environmental factors affecting educational achievement and mental distress simultaneously. To account for the endogeneity of Psychotherapy, I consider an instrumental variables estimation strategy that exploits exogenous variation in the cost of accessing mental health facilities providing Psychotherapy brought about by the construction of new highways and road closures from extreme weather events. The result of this dissertation suggests that Psychotherapy treatment has a long term benefit on student’s educational performances long after ceasing treatment. The result is consistent with the idea that Psychotherapy provides long-term durability in reducing mental distress and the basis for patients to develop valuable life skills for 3 communication, building relationships, time management, and regulating emotions over time, which acts as channels for the improvement in educational performances. There is an improvement in the expected educational outcome in the long term for students who received past Psychotherapy. The study suggests that policymakers should consider the benefits Psychotherapy offers when allocating resources for students who suffer from mental distress.