ABSTRACT
This chapter examines the relevance of the rationality assumption of economic method for studies of mental health care and the importance of distinguishing positive from normative method in economics. It also examines the relevance of the individualistic framework of conventional economics, the economic meaning of so-called 'consumer ignorance' in mental health care, and the role of social investment appraisal. The economics of mental health care needs to take cognisance of consumer ignorance. Social investment appraisal is an important part of economic research in health care. Most simply, social investment appraisal is concerned with evaluating government projects and programs. Perhaps the one major concern of an economist is that social investment appraisal must be seen to be different from financial investment appraisal for the private sector. The chapter provides an overview of several key issues in economic method. It concludes with the complicated nature of mental illness and its treatment.
