This chapter focuses on economic perspectives, and tries to demonstrate how researchers from different disciplines can work together to assist decision makers to formulate mental health policy. Defining the need for treatment is the first requirement, which can be objectively addressed with epidemiological and utilization data on a population-wide basis. From the economic point of view, the purpose of treating mental disorders is to reduce the economic burden of illness on the individual, the family, the community, and on society as a whole. The economic literature has developed three basic methodologies which are used to evaluate the effectiveness of various treatment modalities. These methodologies include: cost-benefit analysis; cost-effectiveness analysis; and cost-utility analysis. Cost comparisons and cost-effectiveness studies in relation to location of care have been undertaken, but more rigorous and complete ones are still required. Cost-benefit, cost-effectiveness, and cost-utility analyses are crucial to decisions about resource allocation in medical care.