The field of health economics has attracted considerable attention from health sector professionals over the past few decades. There is evidence (Hersch-Cochran 1986) that, by the mid-1980s if not before, university curricula in Australasia, the United Kingdom, the United States and much of Europe, had responded to the demands of this market segment. The number of economists working in this area has also increased, but the proportion of economists choosing to specialise in health economics is still small. The purpose of this paper is to describe some of the pedagogical challenges in health economics and the related problems of building capacity in this field. The paper reveals that the existing literature on teaching health economics is sparse and identifies some pedagogical issues that demand empirical attention. It also proposes that some of the reasons for an apparent capacity problem in health economics may be traced to some of these (largely unexplored) pedagogical issues, as well as to related problems of hidden information, quality uncertainty and adverse selection in the health economics labour market.