Happiness for the whole family
November 2024: Update to our analysis
We have made a substantial update to our psychotherapy report. This 83 page report (+ appendix) details new methods as well as an updated cost-effectiveness analysis of StrongMinds and Friendship Bench. We now estimate StrongMinds to create 40 WELLBYs per $1,000 donated (or 5.3 times more cost-effective than GiveDirectly cash transfers). We now estimate Friendship Bench to create 49 WELLBYs per $1,000 donated (or 6.4 times more cost-effective than GiveDirectly cash transfers).
See our changelog for previous updates.
Executive Summary
We update our earlier cost-effectiveness comparison of psychotherapy and cash transfers (both implemented in low-income countries) by including an estimate of the total household effects. Our previous analysis only considered the effects on recipients. For cash transfers, we estimate from eight studies that each household member experiences 86% (95% CI: 43%, 154%) of the benefits experienced by the recipient. For psychotherapy, we estimate from three studies the spillover ratio to be 53% (95% CI: 11%, 108%). After including the household spillover effects, we estimate that psychotherapy is 9 times (95% CI: 2, 100) more cost-effective than cash transfers (before it was 12 times). The charity StrongMinds is estimated to be 9 times (95% CI: 1, 90) more cost-effective than the charity GiveDirectly (before it was also 12 times). Our household analysis is based on a small number of studies, eight for cash transfers and three for psychotherapy. We conducted several robustness checks. We found psychotherapy (and StrongMinds) to be at least five times more cost-effective than cash transfers (and GiveDirectly) in all cases. The lack of data on household effects seems like a gap in the literature that should be addressed by further research. We show that including household spillovers can change the relative cost-effectiveness of two interventions, which demonstrates the need to account for the impact of interventions beyond the direct recipient.
Note: There is a cutoff at $1,000 for cash transfers because we considered it implausible for a cash transfer to cost less than $1,000 to send $1,000 (i.e., we truncated cost simulations, see footnote 18).