The Effects of Diagnosing a Young Adult with a Mental Illness: Evidence from Randomly Assigned Doctors

The diagnosis of mental illness is prevalent around the developed world. This paper estimates its long-term causal effect on young adults at the margin of diagnosis. We follow all Swedish men born between 1971 and 1983 matched to administrative panel data on health, labor and financial market, and family outcomes to estimate the impact of a mental illness diagnosis on subsequent outcomes. Exploiting the random assignment of 18-year-old men to doctors during military conscription, we find that a mental illness diagnosis for people at the margin increases the future likelihood of death, hospital admittance, being sick from work, living with your parents and unemployment, while lowering income, liquidity and the probability of being married. Using a separate identification strategy, we measure the effect of military service on the same set of outcomes to rule out that the effect of diagnosis in our setting is primarily mediated by altering the probability of serving.