Not the mental health of the people living in smart cities, but that of the cities themselves. Why not? We are building smart cities to be able to sense, think, and act; their perceptions, thoughts, and actions won't be remotely human, or even biological, but that doesn't make them any less real.
Cities can monitor themselves with an unprecedented level of coverage and detail, from cameras to government records to the wireless information flow permeating the air. But these perceptions will be very weakly integrated, as information flows slowly, if at all, between organizational units and social groups. Will the air quality sensors in a hospital be able to convince most traffic to be rerouted further away until rush hour passes? Will the city be able to cross-reference crime and health records with the distribution of different business, and offer tax credits to, say, grocery stores opening in a place that needs them? When a camera sees you having trouble, will the city know who you are, what's happening to you, and who it should call?
This isn't a technological limitation. It comes from the way our institutions and business are set up, which is in turn reflected in our processes and infrastructure. The only exception in most parts of the world is security, particularly against terrorists and other rare but high-profile crimes. Organizations like the NSA or the Department of Homeland Security (and its myriad partly overlapping versions both within and outside the United States) cross through institutional barriers, most legal regulations, and even the distinction between the public and the private in a way that nothing else does.
The city has multiple fields of partial awareness, but they are only integrated when it comes to perceiving threats. Extrapolating an overused psychological term, isn't this an heuristic definition of paranoia? The part of the city's mind that deals with traffic and the part that deals with health will speak with each other slowly and seldom, the part who manages taxes with the one who sees the world through the electrical grid. But when scared, and the city is scared very often, and close to being scared every day, all of its senses and muscles will snap together in fear. Every scrap of information correlated in central databases, every camera and sensor searching for suspects, all services following a single coordinated plan.
For comparison, shopping malls are built to distract and cocoon us, to put us in the perfect mood to buy. So smart shopping malls see us like customers: they track where we are, where we're going, what we looked at, what we bought. They try to redirect us to places where we'll spend more money, ideally away from the doors. It's a feeling you can notice even in the most primitive "dumb" mall: the very shape of the space is built as a machine to do this. Computers and sensors only heighten this awareness; not your awareness of the space, but the space's awareness of you.
We're building our smart cities in a different direction. We're making them see us as elements needing to get from point A to point B as quickly as possible, taking little or no care of what's going on at either end... except when it sees us, and it never sees or thinks as clearly and as fast, as potential threats. Much of the mind of the city takes the form of mobile services from large global companies that seldom interact locally with each other, much less with the civic fabric itself. Everything only snaps together with an alert is raised and, for the first time, we see what the city can do when it wakes up and its sensors and algorithms, its departments and infrastructure, are at least attempting to work coordinately toward a single end.
The city as a whole has no separate concept of what a person is, no way of tracing you through its perceptions and memories of your movements, actions, and context except when you're a threat. As a whole, it knows of "persons of interest" and "active situations." It doesn't know about health, quality of life, a sudden change in a neighborhood. It doesn't know itself as anything else than a target.
It doesn't need to be like that. The psychology of a smart city, how it integrates its multiple perceptions, what it can think about, how it chooses what to do and why, all of that is up to us. A smart city is just an incredibly complex machine we live in and whom we give life to. We could build it to have a sense of itself and of its inhabitants, to perceive needs and be constantly trying to help. A city whose mind, vaguely and perhaps unconsciously intuited behind its ubiquitous and thus invisible cameras, we find comforting. A sane mind.
Right now we're building cities that see the world mostly in terms of cars and terrorism threats. A mind that sees everything and puts together very little except when it scares it, where personal emergencies are almost entirely your own affair, but becomes single-minded when there's a hunt.
That's not a sane mind, and we're planning to live in a physical environment controlled by it.