In the prevailing climate of cost containment, doctors are increasingly expected to consider the economic consequences of treatment choices. Clinical (or medical) economics attempts to apply economic principles to the description and analysis of the costs of medical interventions, so as to identify how best to spend scarce health care resources. Such economic evaluations may assess the overall financial burden of a disease to society as a whole (macro-economics), or attempt to compare alternative treatment strategies for a specific clinical situation (micro-economics). In addition to expenditure on drugs and investigations (direct medical costs), economic studies may consider a variety of other costs. These include direct costs borne by patients (e.g. prescription charges, travel, food), indirect costs to society owing to lost productivity (resulting from morbidity or premature mortality) and even intangible costs which assign a monetary value to outcomes of disease such as pain, distress and anxiety. Four main types of economic analysis are in current use. Cost-minimization analysis attempts to identify the least expensive option in situations where there are a range of equally effective treatments for a given clinical condition, whereas cost-effectiveness analysis allows management strategies differing both in cost and efficacy to be compared. The cost-effectiveness of health care programmes targeting different disease states may also be compared using cost-utility analysis, in which health benefits are translated into a common utility-based unit of outcome, such as the Quality Adjusted Life Year (QALY). Cost-benefit analysis attempts to quantify health outcomes in monetary terms, so that the net result provides an assessment of value-for-money of health interventions. Gastrointestinal disorders are amongst the commonest of complaints, and considerable health care resources are consumed in treatment. Issues of cost-effectiveness are likely to assume increasing importance in gastroenterology because of the ever expanding range of drug choice, the increasing number of high cost treatments and the development of new therapeutic interventions.