Back-of-the-envelope cost-effectiveness comparison
Even if there are mental health interventions that work, they may not be as cost-effective as other ways of improving lives around the world. In this section, we make a rough calculation of the cost-effectiveness of two charities: GiveDirectly, which provides unconditional cash transfers to people in Kenya, and StrongMinds, which provides interpersonal group therapy to women in Uganda.
To evaluate StrongMinds and GiveDirectly, we need to convert their impact into a common unit. We use self-reported life satisfaction scores, as mentioned earlier, to make this comparison. In effect, the question becomes: which charity is more cost-effective at increasing life satisfaction?
A study of GiveDirectly indicates cash transfers increase life satisfaction by about 0.3 life satisfaction points - hereafter ‘LSPs’ - on a 10 point scale. To explain, this effect would be equivalent to increasing someone's life satisfaction from 6 to 6.3 out of 10. This was measured after 4.3 months on average, but let's assume this effect lasts a whole year. We assume it is the same for everyone in the recipient household, and there are 5 people per household on average. Hence the annual LSP impact is 0.3 (LS/person) x 1 (year) x 5 (persons) = 1.5 LSPs. The average cash transfer is $750, implying a cost-effectiveness of 2 LSPs/$1000.
There isn’t research on StrongMinds which has directly measured its impact in terms of life satisfaction, so we estimate this using other available information, explained in this endnote. We infer that the treatment effect is an increase of 0.8 LSPs per person (to 1 decimal point; modelled either as 0.2 LSPs per person per year for 4 years, or 0.2 LSP in the first year with a 75% annual retention thereafter). StrongMinds say their per-participant costs are $102 (StrongMinds Q1.2018 report). That suggests the impact is 8 LSPs/$1000 (to 1 d.p.).
Therefore, based on the present evidence and our rough calculation, StrongMinds is four times more cost-effective at improving life satisfaction than GiveDirectly. The evidence base about how much poverty alleviation and mental health treatments each improve self-reported life satisfaction is relatively weak; we would like to dig into this further at HLI to improve the accuracy of the comparisons. This is also a simple calculation; for example, we have ignored any spillover effects to other people who are not receiving the cash transfer or group therapy.
Further research needed
We would also like to compare the cost-effectiveness of mental health interventions with other charities, which are more cost-effective than GiveDirectly, according to GiveWell. However, this will require further careful research. In particular, it is necessary to address key questions in two areas:
1. GiveWell’s other life-improving charities - namely SCI, Deworm the World, SightSavers and END - provide deworming interventions. According to GiveWell, the vast majority of the benefit of deworming comes from the fact dewormed children earn more in later life. To make a cost-effectiveness estimate in terms of subjective well-being, therefore, requires an understanding of the relationship between increases in wealth and well-being. This has been studied in developed countries, but much less in low- and middle-income countries. Further, a common effect of making someone wealthier is that this makes others feel worse - so called ‘negative spillovers’. What does this mean for the well-being of those who are in extreme poverty? These are examples of topics that we plan to address at HLI.
2. GiveWell also recommends life-saving charities: the Against Malaria Foundation and Malaria Consortium. In order to evaluate these charities in terms of subjective well-being, perhaps the simplest starting point would be to say the value of saving a life is the total well-being the person would have had if they’d lived. However, we quickly run into a problem. Life satisfaction surveys don’t ask people to specify what point on the 0 to 10 scale they would consider equivalent to not being alive. 0 is labelled ‘extremely dissatisfied’ and 10 ‘extremely satisfied’. The value that we choose for this so-called “neutral point” has a large effect on any resulting estimates of cost-effectiveness. Again, this is a question we intend to address at HLI. Two potential methods for doing this would be (1) asking people to state where they think this neutral point is; or (2) using mood reports and finding out at what score on the life satisfaction scale people report net neutral mood.
If this cause profile has motivated you to use some of your resources towards addressing the large and neglected problem of mental health then there are a number of ways you can contribute. Go to our Take Action section to learn more about your options for donating to effective organisations, pursuing a career in mental health or assisting with further research.
 All the calculations for the cost-effectiveness of both GiveDirectly and StrongMinds, including references, can be found in the following spreadsheet: Michael Plant, (2018). “Life Satisfaction Impact of Treating Mental Health vs Alleviating Poverty.”
 GiveWell "2018 Cost-effectiveness analysis -version 4" states that 2% of the cost-effectiveness of the deworming charities (DtW, SCI, Sightsavers, END) comes from 'short-term health effects' and 98% from 'eventual income and consumption gains'. See 'Results' tab in this spreadsheet.