A Stochastic Dynamic Model of the Mental Health of Children ∗

We estimate the parameters of a dynamic multi-period model where parents with one child periodically decide whether their child uses mental health services. In this model, parents receive utility from household consumption and from their child’s mental health. Mental health services may improve the child’s mental health but may be costly in terms of reduced household consumption and direct disutility. We find that mental health services can slightly improve a child’s mental health but that the use of services accounts for a small fraction of the improvement of the mental health of the children in our sample.