A report published last week by the British Medical Association suggests that there has been a steady increase in mental health disorders among children between five and 16 years old. Today, 9.6% of them - very nearly one in 10 - suffer from psychological problems that are "persistent, severe and affect functioning on a day-to-day basis". Roughly "1.1 million children under the age of 18 ... would benefit from specialist services". I don't think it would be an exaggeration to describe this as a social catastrophe.

What is going on? The BMA isn't sure. It suggests that diet may be a factor, in particular a possible deficiency of Omega 3 fatty acids (an issue I discussed in last week's column). It notes that while there has been no increase in the number of 11- to 15-year-olds who drink alcohol, consumption among those who do has doubled in 14 years. It found that children living in poverty were much more likely to develop disorders than those with richer parents. But as child poverty is falling, you would expect this to mean that psychological problems were declining.

The BMA also points to changing family lives. But another report on the same issue, published by the Nuffield Foundation in 2004, found that "marked changes in family type ... were not the main reason for rising trends in behaviour problems".

The same study contains one of the most arresting statements I have ever read: "Rises in mental health problems seem to be associated with improvements in economic conditions." As our GDP increases, we become more disturbed. Among other possible causes, it blames rising pressures at school, changing relationships with other children, and a decline in the limits and rules set by parents. But all these, it admits, are "untested hypotheses". As anyone's guess is as good as anyone else's, I feel justified in hazarding one of my own. I accept that this a complex problem, and that there are doubtless many causes. But I propose that one of them is Willy Loman syndrome.

Willy Loman is the hero of Arthur Miller's play Death of a Salesman. He is torn apart by the gulf between his expectations - the promise held out to everyone of fame and fortune - and reality. Even as his modest powers decline and his career falls apart, he believes that he can still be No 1. This used to be called the American dream. Now it is everyone's nightmare.

A survey published in April by the economist Tom Hertz showed that the United States has one of the lowest levels of intergenerational mobility in the rich world. A child born into a poor family has a 1% chance of growing up to become one of the richest 5%, while a child born into a wealthy family has a 22% chance. Another study, published by Business Week, found that in 1978 23% of adult men whose fathers were in the bottom quartile made it into the top quartile. In 2004 the figure was 10%. But reality and public perceptions are travelling in opposite directions. A poll for the New York Times published in 2005 showed that 80% of respondents thought it was possible for poor people to become wealthy by working hard. In 1983 the figure was only 60%.

Hertz noted that "among high-income countries for which comparable estimates are available, only the United Kingdom had a lower rate of mobility than the United States". In April the Joseph Rowntree Foundation published a study showing that UK citizens in their 30s today are twice as likely to be stuck in the same economic class as their parents than people born 10 years earlier.

Here too, declining mobility is accompanied by rising expectations. In January the Learning and Skills Council found that 16% of the teenagers it interviewed believed they would become famous, probably by appearing on a show like Big Brother. Many of them saw this as a better prospect than obtaining qualifications; 11% of them, it found, were "sitting around 'waiting to be discovered' ". The council claimed that the probability of being chosen by Big Brother and of becoming rich and famous as a result is 30 million to one. But the promise held out to us is that it can happen to anyone. The teenagers seemed to believe it can happen to everyone.

And this is surely how much of our economy now works. A vast industry is devoted to selling people images of themselves that bear no relation to reality. The most obvious of these (this is hardly an original point) is the celebration of extreme thinness just as childhood obesity becomes an epidemic.

The headline on this month's edition of the girls' magazine Sugar is "Get this Bikini Body with no effort". Most pages are devoted to either bodies or celebrities. A feature on Theo Walcott's partner, Melanie Slade, shows how she is about to exchange her modest life for mansions, sports cars, health spas and shopping in Bond Street. Its drawing of a typical "celeb wedding" contains an enclosure for "ugly relatives". A fat woman is being hosed with fake tan by a makeup artist, who is "trying to make the uglies photogenic".

A couple of readers seek to rebel against these impossible dreams, but they are slapped down. "After reading 'How to be sexy by Christina Aguilera' ", one girl writes, "I realised: how can a girl say she's individual, but look plastic?" The letters editor replies: "She has an individual approach to fashion, image and attitude - which is why we think she's fab." Another letter asks: "Why is a celeb always on the cover of Sugar? People who aren't celebrities are people, too, and readers would respond better to seeing their mate's older sister than a star who they wish they were!" She's told: "We've done our research and most of you'd prefer to see a celeb on the cover."

One of the conditions that is growing fastest, the British Medical Association says, is self-harm: cutting or burning yourself, pulling out your hair, swallowing poisons. It is commoner in girls than in boys: one survey found that 11.2% of girls had committed an act of this kind. If girls are attacking or seeking to erase their bodies, it is surely because they have been taught to hate them.

The gulf between what we are told we should be and what we are is growing. As children's expectations lose contact with reality, they are torn between their inner lives of fame and fortune and the humdrum reality their minds no longer inhabit. Advertising (and the businesses supported by it) is not the clattering of the stick in the swill bucket that Orwell perceived as much as the carrot that keeps the donkey moving. You are never allowed to come close enough to eat, however hard you pull. An economy driven by dissatisfaction could scarcely fail to cultivate mental illness.

Monbiot.com