A '99 National Bureau of Economic Research paper by Richard G. Frank and Thomas G. McGuire is an excellent summary of the unique aspects of mental health economics and helpful reading for many interested in the Mindsite project.

This chapter is concerned with the economics of mental illness and mental health care. Following convention, we will use the term “mental illness” to include substance abuse disorders such as drug or alcohol abuse and dependence. Mental health has been an active and distinct subfield of health economics for some time. Though mental health economics can claim no special methodology, it has its own conferences, training programs, and journals. Mental health economics is like health economics only more so: uncertainty and variation in treatments are greater; the assumption of patient self interested behavior is more dubious; response to financial incentives such as insurance is exacerbated; the social consequences and external costs of illness are more formidable. We will elaborate on these statements and consider their implications throughout this chapter. “Special characteristics” of mental illness, and the persons with mental illness, will be identified and related to the observance of institutions paying for and providing mental health care. When Pauly (1988) asked, “Is Health Care Different?”, he was contrasting health care with the rest of the economy. Here we explore the question: “Is mental health care different from health care?”