ABSTRACT

This chapter presents the conventional Theorems of Welfare Economics. In order to investigate the Welfare Economics of mental health care, let the economic well-being of buyers and sellers in mental health consist of two components: quantities of services bought and sold; and the individual's budget constraint. The chapter considers how deficiencies in resource allocation affect the level of economic well-being. The deficiencies in the competitive model are well-established, and the literature on these deficiencies is vast. K. J. Arrow explores the presence or absence in medical services of the major preconditions for the model. Though sharing many features in common with other medical services, the market for mental health has some unique characteristics. The chapter illustrates the suitability of goods and services available for people with a particular physical illness, compared with those for people with a mental illness. Some individuals with mental disorders exhibit socially unacceptable preferences.