Economic Evaluations in the Canadian Mental Health System I: Theory behind Economic Evaluation *

Economic evaluation is becoming an increasingly important part of the evaluation of health and mental health services. Current models for conducting economic evaluation, including cost-effectiveness analysis, cost-benefit analysis, and cost-utility analysis, have great potential for improving the quality of decision-making and for making mental health programs more effective and efficient. This paper presents the basic economic theory underlying the various forms of economic evaluation and provides general guidelines for developing and conducting an economic analysis of a health program.