Health economics uses economic concepts and methods to understand and explain how people make decisions regarding their health behaviors and use of health care. It also provides a framework for thinking about how society should allocate its limited health resources to meet people’s demand/need for health care services, health promotion and prevention.

It determines the price and quantity with limited financial and non-financial resources to the care of the sick and promotion of health.

Health economics is exerting an influence on decision making at all levels of health care. Health economics seeks to facilitate decision making by offering an explicit decision making framework based on the principle of efficiency.