The Effects of Diagnosing a Young Adult with a Mental Illness: Evidence from Randomly Assigned Doctors

Abstract

In the developed world, the diagnosis of mental illness is widespread among young adults. This paper estimates the long-term causal effects of being diagnosed during young adulthood for those at the margin of diagnosis. We follow all Swedish men born between 1971 and 1983 matched to administrative panel data on health, labor market, and family outcomes to estimate the impact of a mental illness diagnosis on subsequent outcomes. Exploiting the random assignment of 18-year-old men to doctors, we find that, for people at the margin, a mental illness diagnosis increases the future likelihood of internal death, hospital admittance, being sick from work, and unemployment while also lowering expected income and the propensity to be married or have children. We find that diagnosis increases the use of psychiatric medication in the 36 months right after diagnosis. A possible interpretation of our results is that the amount and type of treatment used for marginal diagnosis may be inadequate, or inappropriate.