In this interview Ulrike Malmedier sat with Canishk Naik to discuss his research, which sits at the intersection of mental health, behavioral economics, and public economics. Canishk explains that mental health challenges are not only very prevalent, but also highly unequal, disproportionately affecting people at the bottom of the income distribution. His work shows that barriers limit access to the people who need it most, leading economic policy to “really go wrong if we don’t take into account mental health.” Looking ahead, he hopes to bring greater attention to emotions in decision making and welfare while extending his research to homelessness in California and the mental health consequences of climate disasters in Pakistan.
Interview
This transcript has been lightly edited for clarity, accuracy, and completeness.
Ulrike Malmendier: Canishk, how did you first get interested in mental health research?
Canishk Naik: I think it started from experiences in my life, personal experiences, and particularly those of loved ones. Seeing people I care about deeply struggle with poor mental health made me think, this is definitely something that I want to do in my research.
That was happening, but then I think the catalyst was actually this movie that I watched called I, Daniel Blake. Maybe I told you about it? It’s a British movie about this man getting stuck in a Kafkaesque loop in the welfare benefits system in the UK, where he’s trying to claim benefits.
The benefits have work requirements, but he’s had a health condition, so his doctor says that he can’t work. And so he goes back to the benefits and says, “My doctor says I can’t work,” and all this stuff. Then it ends up having a really strong psychological toll on him. These policies seem to not be taking this detrimental psychological effect into account.
So that was one thing where it really inspired me to do some research.
The only other thing would be more on the academic side. I had been doing some behavioral economics work and some public economics work, and I just think that mental health is a really interesting intersection between those, where it affects the way that you make decisions, your emotions, the way you feel. But it doesn’t seem to me that economic policy has been taking that into account.
Ulrike Malmendier: What I love about it is this combination of both, really. So you saw something that’s really important out there in the real world, personally around you, in movies that aim to reflect some of the real world, and then you do economics, and somehow that’s a different world.
And I feel like earlier generations of researchers, I mean, for sure the one I grew up in, kind of accepted, well, that’s the economics world, right? That’s the homo economicus, or maybe slowly we introduce some biases, but then that’s that, and it kind of stops there.
And you just say, no. In real life, if I think about what shapes the lives of these people I know, or my own life and so on, there’s this other force you guys are completely leaving out of the picture, and I’m not going to accept that. I’m going to charge ahead and bring it into economics. I think that’s really great.
Canishk Naik: One thing I think that relates to is the fact that I never did economics until my PhD, so I never really learned the homo economicus thing anyway. All I had was the real world and what I learned in undergrad. I was just looking at the real world and then using the tools I learned in undergrad from math. There are definitely some things that I wish I would have learned, but that’s life.
Ulrike Malmendier: That’s good. I think it might also free you up. So then, tell us a little bit about your key findings, and why they’re interesting in and of themselves, and why they suggest that other economists, or the economics profession, should follow your path and see that this is important to bring into economics.
Canishk Naik: I think there are basically three main things that I want economists to know about mental health. These aren’t solely my findings, obviously.
The first one is that [mental health issues] are very prevalent. The WHO thinks that around a billion people in the world suffer from mental disorders. I can guess at how they came up with that figure, but maybe I can speak to some data that I use in my research, which is from the Netherlands.
In the Netherlands, we see that around 10 percent of the general population use psychotropic medication. So that’s drugs for the treatment of mental health conditions, which means that a GP has said that your mental health is sufficiently bad for you to require medication. So many people struggle with these issues. That’s the first thing.
The second thing is that it’s highly unequal. Again, just using the data from the Netherlands, we’re seeing that individuals at the bottom of the income distribution are using these medications twice as much as people than at the top of the income distribution. They are hospitalized for mental health conditions three times as much as those people at the top of the income distribution, and they die by suicide four times as much.
I don’t have a good comparative, but I think that’s more unequal than many other health conditions and causes of mortality. That’s the second thing. And I think economists should care, insofar as we care about redistribution and the functioning of the welfare state, these things are so disproportionately falling on people at the bottom of the income distribution.
The final thing is that economic policy can really go wrong if we don’t take into account mental health.
I’ve said that mental disorders make you vulnerable not only psychologically, but also economically. But I show in my job market paper that, at the same time, poor mental health also makes it very difficult to overcome the barriers to getting assistance to help with those vulnerabilities.
In particular, barriers to accessing social assistance are disproportionately screening out people with poor mental health. So that basically means that the policy is backfiring.
The barriers, which were intended to screen out the people with low need, are actually screening out people with high need. In this case, the people with poor mental health. So that’s another reason why I think economists should really care.
Ulrike Malmendier: Absolutely: prevalence, policy design, economically important long-term outcomes. That’s the way it becomes really clear why economists should take this into account: these are the variables we are interested in, the policies we design.
As you know, in a lot of my own other work, I try to always think about what are the long-term effects for employment and careers.
But at the same time, I just want to say the obvious, which is that ultimately we economists claim we are always setting up our models where individuals maximize their own happiness, where“W” is not wealth; it’s welfare or well-being or something like that. And leaving out mental health is just ridiculous. Just measuring how much money we have is going to miss out on a huge chunk of our happiness. So this is really core to economics, if you think about it. We can’t just keep ignoring it.
I guess one of the excuses was it was hard to get data on it, and then we felt we’d rather work with the data we have. It’s still not easy, but people like you are making progress, so that’s great.
Canishk Naik: One other challenge is that people find it difficult to measure the intrinsic value of mental health.
There’s something else that I’ve been thinking about more recently, since being in Berkeley. Maybe you can put a number on it because you can measure the productivity loss due to mental disorders and income loss, and therefore GDP loss or whatever.
But that’s only one small proportion because you have this direct cost, based on well-being, of having one of these disorders. That’s something that I don’t think we know how to put a number on. As economists, we work with those kinds of numbers.
Ulrike Malmendier: That’s good. It’s a difficult question. Some progress is made, and in any case, just because it’s difficult, it doesn’t mean we can ignore it and say we stick to income as a measure of well-being.
Ulrike Malmendier: So then, in your work, what has surprised you the most?
Canishk Naik: The other main finding of my past job market paper was quite surprising. I really didn’t think that I was going to find this, which was that people with poor mental health actually value these welfare benefits much more than those with good mental health.
You would have thought potentially that what we know about depression is that it mutes what economists might say is the marginal value of consumption, that you enjoy consumption relatively less due to things like anhedonia.
I actually find completely the opposite, these people realize that they need more money than those without poor mental health to compensate for their mental disorders.
And so this echoes Amartya Sen’s capabilities approach, which is that people living with disabilities need more money to get to the same level of utility as those who don’t face these costs to living out their everyday life. That was actually quite surprising, and I think speaks to the fact that there’s quite a lot of rationality.
It’s not that we economists think, “Oh, mental health, that’s purely just a behavioral thing.” These people exhibit substantial behavioral biases. We should stop making aspersions on how these people behave and just look at what’s happening in the data.
It seems like in this project that they were showing quite a lot of evidence that they were trading off the values and costs of taking up welfare benefits, and the value was really high for them. It just shows that even normal economic methods can be used to study this topic.
Ulrike Malmendier: Yeah, that’s really interesting. It reminds me of when I got started in behavioral economics. Some of my earliest work was on overconfidence and overoptimism, and I was always struck by the literature pointing out that whenever they had depressed people, real pessimists, in their sample to contrast with the optimists, those were the very rational people.
In my case, I was interested in over- and underestimating success chances, and they were very rational. And so that was always just a cute, curious little fact. But from another angle, it gets at the same thing. These people might have been very pessimistic, maybe depressed, and that’s something we should care about in terms of their well-being. It doesn’t mean that they’re irrationally making trade-offs.
If anything, they were doing better than the optimists I was interested in. So that’s a really, really good point.
Ulrike Malmendier: So,where do we go next? Where do you go next? Where should the field go next? Any thoughts?
Canishk Naik: I wanted to say one thing empirically and one thing theoretically.
Empirically, where I would like to go next is to go global. I’ve been working a lot in the Netherlands, but there are two things that I’ve recently been getting interested in.
One is here in California, in the U.S., I’m interested in the super high rates of trauma and serious mental illness among the unhoused population, and whether homelessness policy is accommodating the special needs for those people, particularly in the goal to keep them housed long term. So that’s one thing that’s close to home here in Berkeley. During my postdoc here, we started a new project on this topic, together with Sydney Costantini (who just graduated from the Ph.D. program at the Economics Department here at Berkeley), and I am very excited about continuing it.
And then, in a completely different context, but with some interesting parallels, I’ve started this project in Pakistan, which is basically motivated by the serious mental health costs of the climate crisis.
In 2022, you had these devastating floods in Pakistan. We have data from one province where two million homes were completely destroyed. Of course, this has many costs, but in particular, trauma costs. And we’ve started projects trying to look at evaluating the mental health effects of both psychological and economic recovery programs in the face of these big climate disasters.
So that’s where I’m going next in terms of the empirical side.
In terms of the literature, theoretically, what I would love to see is more research looking at emotions and how we model the role of emotions in both decision-making, but also welfare. Directly, the normative relevance of emotions.
And mental health is one cool lens that we can look through to study that because it goes back to lesion studies in neuroscience, where people looked at the decision-making of people who had damage to particular parts of their brain to reveal what the role of that part of the brain was in terms of your decision-making.
We could try and be inspired by that. We can look at people who suffer from particular disorders and conditions that psychology knows well. We study their decision-making and how they feel in order to understand, generally for everyone, what is the role of emotions, and how do we model that in terms of decision-making and welfare?
Ulrike Malmendier: Yeah. Every now and then there is an economist who has ventured a little bit into the emotion realm. My colleague here, Terry O’Dean, has looked at how, with films, you induce different, more positive or negative emotions, and trading behavior differently.
But documenting their role out there, as it is in some of the core decision-making we do in our lives, and also thinking about welfare, These are great steps forward. Hard ones, but great steps forward.
Canishk Naik: Mental health could be an interesting way of tackling that very hard problem because there are measurement issues, but it’s reasonably observable.
We can elicit whether you struggle with particular emotion regulation disorders in a survey or in administrative data, and then we can look at how those people compare with people who don’t struggle. Or how people who receive emotion-regulation therapy, therapies that are based on emotion regulation, how they then change their decision-making and how that impacts their welfare.
So I feel optimistic about that being an interesting way to approach this problem.
Ulrike Malmendier: And it will also be interesting to think about, first of all, for themselves, but then for many others, for the families they live in, their communities.
As you know, I do some policy advising. I sometimes think emotion-regulation training for politicians could be very helpful for the world. So I hope you’re going to get somewhere with that.
As you know, it’s exactly those interests, this broad vision of economics, bringing elements, which hadn’t been taken seriously in economics, why I invited you to join the O’Donnell Center as a postdoc and what we love to pursue here, to broaden what economics is about, bring more neighboring sciences, life science in.
However, as exciting as it is, it doesn’t mean it’s always easy. So, would you have any advice for other young researchers who might have the same passion you have and want to pursue a broader vision of economics?
Canishk Naik: One practical thing that I always say whenever young researchers are asking me for advice is: Do therapy.
I just think that the evidence is overwhelmingly positive, and it’s overwhelmingly positive that it works essentially regardless of your baseline mental health state.
So even if you think you’re a PhD student, you’re not doing so bad, often you can get six sessions of free counseling in the university. It’s pretty good. So that’s one thing, practically speaking.
More broadly, I guess one of the most amazing parts of the center is how pluralistic it is. The goal is to take insights not just from psychology, but biology, neuroscience, sociology, whatever.
One piece of advice in that realm is to strive to be pluralistic by just talking with people and listening to their experiences, even just the people that you know. Maybe you think that your friends aren’t a source of research ideas, but listening to what they struggle with in their day-to-day life, I’ve definitely found that that’s been a great inspiration for what I do in my work. So one way that you can actively go for pluralism is listening to the experiences of the everyday lives of the people that you know.
Ulrike Malmendier: Oh, I think these are both excellent.
On the first one, I feel I just got confirmation in my research of what you say, like everybody should do therapy.
As you know, I’ve been running this experiment in Kenya, where I’m also interested in depression and anxiety and how it might affect your behavior in the workplace. And then I have this intervention where I give them a version of CBT, cognitive behavioral therapy, which does have an effect, but not particularly on those who score high on the depression-anxiety scale, on everybody.
So I had to learn the hard way what you know already. It’s just great for everybody, and if it’s available for free, definitely take advantage of it.
And then, like you, I feel that being broad, or pluralistic, as you said, and listening to people who come from different realms, that gives you the novel stuff that makes you move away from just generalizing something that has been previously done or getting some refined implication, which is all important. But particularly young researchers who are fresh, who look at it with new eyes, who maybe never learned about the homo economicus, skip right ahead before they are brainwashed into the traditional ways of thinking and try to bring that in, that’s excellent advice.
Canishk Naik: And it’s just way more exciting as well. You enjoy research more if you are thinking about a conversation that you had at dinner about something that’s happening in the real world than if you’re thinking of, I don’t know, the other version. I’m not sure what it is. It just seems less exciting.
Ulrike Malmendier: Very good. That’s great. Thank you so much. I look forward to having many more conversations like this.