This article is an overview of the growth of the field of mental health economics during the past decade. Research in this field has contributed to an understanding of such issues as the economic effects of state regulation on mental health insurance, comparative costs of treatment alternatives, and the effect of prospective payment on the supply of care. The National Institute of Mental Health has played an important role in promoting the growth of mental health economics by supporting research and education in this field, the results of which are shaping mental health policy.
An earlier version of this paper was prepared for the 
Seminar in Honor of Carl Taube,
November 4, 1987, sponsored by the National Institute of Mental Health on the occasion of the late Carl Taube's departure from the Instute. . The paper was presented at that seminar in recognition of the contribution that Dr. Taube has made to the growth of the field.