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Rules versus Discretion: Treatment of Mental Illness in US Adolescents

Emily Cuddy, Janet Currie

Journal of Political Economy · 2026 · Volume 134 · Issue 1

DOI: 10.1086/738249

Abstract

Many mental health disorders start in adolescence, and appropriate initial treatment may improve trajectories. But what is appropriate treatment? We use a large national database of insurance claims to examine the impact of initial mental health treatment on the outcomes of adolescent children over the next 2 years, where treatment is either consistent with US Food and Drug Administration guidelines, consistent with looser guidelines published by professional societies (gray area prescribing), or inconsistent with any guidelines (red-flag prescribing). We find that red-flag prescribing increases self-harm, use of emergency rooms, and health care costs, suggesting that treatment guidelines effectively scale up good treatment in practice.

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