Psychiatry interacts with contemporary Western views: the DSM‐III innovation and its adverse effects

Abstract

Economic studies of innovation are relevant to the mental health sector, not just for innovations in more conventional industries, such as telecommunications. We present an economic examination of the impact of an innovation in the mental health sector. The innovation examined here was first adopted in 1980 with the publication of a new edition of the nosology (or classification) for the diagnosis of mental illnesses and disorders, which is known familiarly as the DSM‐III. In our analysis, we incorporate the impact of that innovation, and another major force relevant to psychiatric diagnosis during that time period, i.e. a trend in the West towards the medicalisation of normal sorrows. This is now a documented phenomenon. By using conventional price–quantity space and focussing attention on the quantity outcome, we are able to consider the impact of these concurrent forces on the false positive rate in the diagnosis of mental illnesses in the West and on efficacious diagnostic practice in this sector. Diagnostic efficacy is relevant to treatment, but it is relevant also to resource allocation in the mental health sector. Our analysis highlights the vital place of innovation in diagnostic practices, and the funding of this, in the mental health sector.

Acknowledgements

We acknowledge, with gratitude, the encouragement of Don Lamberton over many years. We also gratefully acknowledge a conversation that occurred serendipitously with Sue Gargett, which was helpful in shaping the early ideas for this paper. We wish to thank two anonymous referees whose comments have considerably improved this paper. In particular, we were referred to Peter Swann's 2006 book, Putting Econometrics in its Place. Though we had missed the publication of this monograph, we identified immediately with its arguments, particularly with Swann's description of the applied economist's ‘toolbox’. Having tilled the field of applied health economics for many years, it was illuminating to know that some problems with which we had been grappling for decades had been described and named by Swann. Any remaining errors and deficiencies are our responsibility.

Notes

1. Not every psychiatrist or school of psychiatry has embraced the DSM‐III and its successors, or has regarded them as an innovation. There are pockets of psychiatry (the Freudians and the Jungians) where the DSM has little application (see, for example, Frances et al., 1993).

2. There are a few other schema, but they are not of relevance here. These other manuals include Chinese and Latin American systems of classification of mental disorders. Also, psychoanalysts have their own manual, the Psychodynamic Diagnostic Manual. There is also a manual for use in primary care (i.e. general practice or family practice), the ICD‐10‐PHC.

3. These 10 headings are: Organic, including symptomatic, mental disorders; Mental and behavioural disorders due to use of psychoactive substances; Schizophrenia, schizotypal and delusional disorders; Mood (affective) disorders; Neurotic, stress‐related and somatoform disorders; Behavioural syndromes associated with physiological disturbances and physical factors; Disorders of personality and behaviour in adult persons; Mental retardation; Disorders of psychological development; Behavioural and emotional disorders with onset usually occurring in childhood and adolescence; and a group of ‘Unspecified mental disorders’.

4. This term refers to that pernicious educational virus that has devastated academic standards in Australian (and other) universities in the last 10–15 years (Sadler, 2009).