The papers in this volume are revisions of those presented at the Conference on Economics and Mental Health. The purposes of these papers and the conference at which they were discussed were to identify issues to facilitate wise public decision-making about mental health care, to assess the current state of knowledge, and to suggest directions for economic research. The five papers consider difficulties caused by the lack of adequate understanding of what constitutes mental "health," and the lack of consensus about the effectiveness of various forms of therapy. The first paper analyzes the benefits and costs of alternative mental illness therapies. The next paper explores the extent to which insurance stimulates demand and considers the potential long-term effects of widespread insurance coverage on demand for mental health services. Two subsequent papers highlight the need for improved understanding of the nature of the varied resources employed in the mental health care industry. The growing political and professional pressures for deinstitutionalization and the problems of substituting community-based therapies are the focal point of the final paper. (NRB)