The psychological trauma experienced on and since October 7 is harming Israel’s labor market, health care and education systems, as well as the public sphere, generating cumulative damage to the economy. According to a new report by the NATAL - Israel Trauma and Resiliency Center nongovernmental organization, the situation is expected to continue for years after the war ends.
NATAL is a nonprofit organization that offers psychological and emotional treatment and support to victims of trauma due to war, terror and violence. The organization recently released a report, led by Dr. Yifat Reuveni, Ella Bokobza, Hellena Ashkenazi, and Alon Geller, that examines the indirect costs of war. The team found that, in line with international research, early and personalized investment in mental health rehabilitation is not only morally and medically essential but also economically sound.
A World Health Organization report shows that every dollar invested in treating depression and anxiety yields up to a fourfold return through improved productivity, reduced absenteeism, uninterrupted training and savings in future treatment costs. Failing to invest in such treatment has the opposite result.
According to NATAL’s findings, the Iron Swords war is expected to cost Israel an estimated 500 billion shekels ($160 billion) in direct and indirect psychological trauma-related expenses over five years.
“In Israel, we are very good at counting the direct costs of the war,” explained Reuveni, “but we don’t know or don’t want to look for the indirect costs. So that is what we did.”
Reuveni said the impact of war is more nuanced than many understand. In the labor market, some people do not go to work, others show up but do not truly produce, and still others return from the war unable to continue their education or training. Some shift fields entirely, choosing less demanding paths such as moving from engineering to history.
Reuveni said that the market is going to feel it in human capital, in human quality and more. “But beyond this side of the equation, there is the social price of trauma, and we found there are four main phenomena, and the prices are very high: car accidents, addiction, domestic violence and chronic illness,” he said.
Of the estimated 500 billion shekels total, around 200 billion shekels reflects the direct economic cost of coping with prolonged exposure to trauma. The remaining 300 billion shekels reflects indirect expenses.
These figures assume that supporting studies are correct and that Israel will experience the expected 13.6% increase in the prevalence of post-traumatic stress disorder (PTSD), rising to 29.8% of the population compared with the global average of 3.9%. Even before the war, PTSD rates in Israel were higher than in other countries, standing at 16.2% before October 7.
Around 625,000 Israelis are experiencing or will experience psychological effects following the war, impairing many people’s ability to reintegrate into the workforce. Of these, between 60,000 and 80,000 are expected to develop acute symptoms.
Already, there has been a 67% increase in the number of claims submitted to the Ministry of Defense, and the majority of disability applications to the National Insurance Institute now focus exclusively on mental health issues.
The largest share of the direct cost of psychological trauma, estimated at 74%, stems from damage to employment and labor productivity.
The other four social categories identified in the report are potentially destructive to the nation. For example, deadly road accidents spiked following the war. In 2021, there were 364 fatalities; in 2022, 351; and in 2023, 361. However, in 2024, one year after the start of the war, that number climbed to 439 deaths on the road.
“This increase is particularly sharp considering it followed the events of October 2023, a period of reduced overall traffic volumes,” the NATAL report indicated.
The researchers noted that a similar pattern emerged in 2007 after the Second Lebanon War, when 437 people were killed in road accidents. This represented a 21.6% increase in traffic accident fatalities, far higher than in the years before or after.
“The macroeconomic cost of traffic accidents to the state treasury exceeds 21 billion shekels per year,” according to the NATAL report. “Data analyses indicate significant risk groups, primarily men and young drivers up to age 24, whose involvement in fatal accidents significantly exceeds their population share.”
The trauma impact also hits inside the home. The report documented a 65% increase in referrals related to domestic violence among the general population during the first six months of the war.
In addition, studies highlight a high rate of dual diagnosis of PTSD and substance use disorders. In the general population, the rate ranges from 3.8% to 8.1%. Among military veterans, it reaches 50% to 76%. Having both PTSD and a substance use disorder leads to higher rates of physical and mental health problems, impaired social functioning, increased suicide risk, and reduced treatment response.
The outbreak of the Iron Swords war intensified this problem. The report cited a study from November and December 2023 that showed a 25% increase in addictive substance use among those directly exposed to the October 7 attacks.
The cannabis market saw a surge of more than 3,000 new medical cannabis licenses issued in November 2023, as well as an increase in risky-use rates among young people from 12.5% to 13.4%.
There has also been a 2.5-fold increase in the use of sedatives and sleeping pills, from 3.8% to 9.5% of the population, and a 70% rise in prescription opioid use since the war.
Trauma is also linked to physical illness, many of which can be chronic and life-threatening.
“Chronic disease, you can usually find two years after the trauma,” Reuveni said. “So, only now, we are noticing more diabetes and heart attacks, and we are not yet counting the number of cancers or other diseases. The numbers will likely be way higher than the numbers we based our calculations on,” he said.
Already, the team reported a 35% increase in severe heart attacks between October and December 2023 compared with the same period in 2022. Among civilians in southern Israel living close to combat zones, there was an eightfold increase in cardiac events. The report also documented a 20% rise in strokes linked to psychological stress from the war.
In most cases, NATAL’s analysis relied on third-party studies that were corroborated and calibrated within the report.
“The research presented here reveals a simple yet powerful truth: Trauma carries not only a direct economic cost, but also a heavy and far-reaching indirect one,” the report concluded. “When we treat trauma in a timely manner, we are not only healing a wounded soul; we are also growing the economy, strengthening communities, and building a future. … Mental health care is not an expense; it is an economic, moral, and national investment.”
Reuveni said that the age group most harmed by trauma is between 25 and 38, which represents the core of the workforce. She also noted that Israel currently lacks a unified system that can provide accurate, nationwide data on PTSD and trauma-related symptoms. Different ministries, the IDF, welfare agencies, NGOs, and academic researchers all collect data independently. She pointed to the United States, where one national body oversees released soldiers through the U.S. Military Veterans’ Associations, and recommended that Israel develop a similar structure.
Still, Reuveni emphasized that the five-year projections described in the report need not come to pass. She and her colleagues outlined several recommendations for a better path forward.
The report calls for a significant expansion of community-based mental health care with accessible, continuous, and outcome-driven programs. It also stresses the need for integrated occupational rehabilitation pathways that connect health systems, employers and employment services and provide individualized support and practical accommodations. In addition, the report recommends establishing national cross-sector coordination that includes multiyear budgeting, shared treatment standards and an open database for performance management and ongoing learning.
There is also a call to integrate trauma-informed practices into workplaces, hospitals, and educational institutions. This includes specialized training for managers and staff, strengthened community resilience programs through group interventions and secondary prevention initiatives, and improved coordination between clinical and community responses.
“There is a lot of innovation and tech startups rising in the field of trauma,” Reuveni said, “but there is a need to regulate this field.”
She added that 2026 will focus on integrated treatments combining psychotherapy with physical care and career training.
“We have windows of opportunity,” Reuveni said. “We are in an acute phase. If we invest millions, we can save billions. If we do nothing, the price will go up and up.”
She stressed that Israel “must shift from measuring the cost of treatment to measuring the cost of not treating now. The price of trauma is hiding on our roads and in our cardiology wards. Early intervention will prevent this domino effect.”