Mental Health and Economic Decision-Making: A Systematic Review of Behavioral Consequences across Psychiatric Disorders

Mental health disorders profoundly shape individuals’ economic behaviors, influencing how they make decisions under risk, plan for the future, interact with markets, and allocate resources. This systematic review synthesizes empirical and theoretical literature on the economic consequences of common psychiatric conditions, including depression, anxiety, bipolar disorder, obsessive-compulsive disorder (OCD), post-traumatic stress disorder (PTSD), and schizophrenia. Drawing on interdisciplinary research from behavioral economics, psychiatry, and public health, the review identifies robust patterns in decision-making impairments associated with these disorders—particularly in domains of risk tolerance, time discounting, loss aversion, labor force participation, and consumption behavior.The review follows a systematic methodology based on PRISMA guidelines, screening peer-reviewed articles published between 2000 and 2024 across major academic databases (e.g., PubMed, PsycINFO, EconLit). Findings highlight that individuals with depressive and anxiety disorders tend to exhibit increased loss aversion and temporal discounting, while those with bipolar disorder display unstable and extreme shifts in risk preferences across manic and depressive states. Schizophrenia is linked to severe impairments in planning, probabilistic reasoning, and consistency in preferences. Across disorders, diminished cognitive control and heightened emotional reactivity emerge as central mechanisms underlying economic dysfunction.This paper underscores the need for integrating mental health considerations into economic modeling and policy design. By illuminating the systematic ways in which psychiatric disorders alter rationality assumptions, this review contributes to a growing literature on bounded rationality and mental health-informed behavioral economics.