In the Feb. 26, 1906 NYT is an article concerning lunacy in the state of New York. Now, I am no expert in the area of mental health and wouldn't claim to be. Nor am I making light of the obviously complicated problems of the human mind. However, the article points out that the State Commission in Lunacy (perhaps what we should be calling most state legislatures these days) had been carefully following the trends in lunacy and had found "there was a constant increase in the ratio of the insane to the general population."

Unfortunately, the commission data confuse supply and demand side influences. The Commission reported that in 1892 there were 17,275 "insane" people in all of the state institutions and the state population was 6.51 million (for a ratio of 1 in 377). By June of 1905, the Commission reported there were 27,300 "insane" people in state institutions and the state population was 8.06 million (fora ratio of 1 in 299). The commission went on to estimate that there were an additional 6,000 insane persons "being maintained in their own homes."

Of course, in 1892 there were considerably fewer state institutions in operation, and therefore it is impossible to determine whether the increase in per-capita lunacy is from the supply side (more people were crazy) or the demand side (the state needed more "lunatics" to justify the expenditures). Moreover, as science evolved over the 13 years between studies, it is entirely possible that a deeper understanding of the human mentality would naturally lead to more people being categorized in lunacy.

Perhaps there was a moral hazard problem in that public institutions, ultimately run by individuals (regardless of their intentions), were funded by the state. There was an average daily population of 25,280 patients in 1905 and total spending was $4.593 million. The article reports that $4.95 million would be requested in the coming year (a 7.7% increase!).

Yet another excellent quote from the article:

A similar increase [in lunacy] is reported by the Commissioners in Lunacy of Great Britain

Beautiful wording...