If you look at the facts and figures on the mental health charity Mind's website, you'll find that around 1 in 4 people will experience some sort of mental health problem each year. About 10% of these people will see their doctor and be diagnosed as having a mental health problem, and of this group, a small proportion will in turn be referred to specialist psychiatric care. Of these people, precisely none resemble the breathtakingly ignorant costumes that have recently been withdrawn from Tesco and Asda. If you want to know what someone with a mental health issue looks like, just look around you.

One of the most common types of mental health issue is anxiety – about 9% of people in Britain meet the criteria for mixed anxiety and depression, for example. We all feel anxious from time to time, and that's not necessarily a bad thing. Isaac Marks and Randy Nesse argued in 1994 that anxiety is an important emotion that has been shaped during the course of human evolution. If we are in a potentially dangerous environment, being anxious increases our awareness of our surroundings and puts us in a state of physiological readiness to deal with any threats. However, when an anxiety response kicks in too often, and in situations where it is not needed, it becomes a debilitating problem. In serious cases, anxiety can make it incredibly hard for the person to function.

There's now a wealth of research that is trying to tap into the mechanisms involved in both sub-clinical and clinical forms of anxiety. By understanding what happens when we become anxious, we might be able to get a clearer idea of how and why things go wrong in anxiety disorders. For example, a new study published this week in the Journal of Neuroscience has suggested one potential contributing factor – how smells are processed.

In the study, Elizabeth Krusemark and Wen Li from the University of Wisconsin put participants in an MRI scanner, and asked them to rate a number of smells on different dimensions, such as pleasantness, intensity, pungency and familiarity. They were then shown a series of pictures that were picked to create feelings of anxiousness, and asked to rate the smells a second time. The researchers found that odors that were initially rated as being neutral were rated as unpleasant after the participants had been made to feel anxious.

They also found that activity in a brain area called the pregenual anterior cingulate cortex (pgACC) became linked to activity in the olfactory orbitofrontal cortex (OFC). The pgACC is a region that is associated with emotional reactivity, whereas the olfactory OFC is involved in perceiving smell – so in other words, anxiety created a stronger link between an area involved in smell and an area involved in emotion.

This finding might have important implications for our understanding of the biological mechanisms that underpin anxiety. Our connection to the world is through our senses; sight, sound, touch, taste and smell (among others). Although this is likely to be only one part of a very complex process, Krusemark and Li's results suggest that anxiety can have an effect on how we actually perceive the world around us – things that normally smell indistinct or uninteresting seem to become offensive when we're anxious. This potentially creates an undesirable feedback loop – if we're smelling nasty things and creating a more negative impression of our surroundings, this could in turn impact on our emotional wellbeing, making us feel more distressed and ultimately more anxious.

There are many reasons why the "mental patient" Halloween costumes weren't funny. For one, the costumes tap into an extremely unhelpful stereotype that people with mental health issues are a group that should be avoided or ostracised. But it's also important to understand that if anxiety colours our perception of the world around us, these sorts of stereotypes may reinforce negative distortions and cause further suffering, regardless of whether or not it was meant as a joke. It's great that Asda have apologised and made a donation to Mind, but the whole furore highlights yet again how much still needs to be done to dismantle the stigma associated with mental health issues.