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They would think people were possessed, or they were under the influence of magic or gods.
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People would think witchcraft was involved with the mentally ill, and people performed exorcisms on them as well because they suspected demons were inside of them.
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People started wanting to treat mental illness, so they started developing asylums to treat the mentally ill.
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The mentally ill were treated better than they were in asylums, with community health and deinstitutionalization being enforced.
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The mentally ill are treated better, with scientists having better understanding of the brain and disorders. A lot of different kinds of therapy exists for those who need it.