Benefit-Cost Analysis of a Controlled Experiment: Treating the Mentally Ill

This study is the first benefit-cost analysis of a controlled (random assignment) experiment in the mental health field. It compares, in terms of an unusually wide variety of "tangible" and "intangible" forms of benefits and costs, a traditional hospital-based approach to treating the mentally ill with a nontraditional community-based approach. The study highlights the very different forms taken by the effects of the alternative therapies. Thus it shows how distorted conclusions can result from a failure of benefit-cost analyses to measure benefits and costs comprehensively; a change in form can be mistaken for a change in level of costs or benefits.