AbstractEstimating the economic costs of a disease is an important prerequisite to determining the costs and benefits of various preventive programs. For preventive programs, incidence‐based costing is a more appropriate means of estimation than is prevalence‐based costing. In this study the cost of acute myocardial infarction (AMI) in New South Wales has been estimated using an incidence‐based approach. The calculated cost of AMI in 1979 was $301.0 million, made up of $32.3 million as direct costs and $268.7 million as indirect costs. In a sensitivity analysis, the cost was shown to be most sensitive to the incidence of AMI, the discount rate, and the assumption of a wage for housework. Both the direct costs and indirect costs per case are substantially higher in the United States than in Australia, and this reflects higher physician charges, higher hospital costs, and in the case of indirect costs, higher average weekly ear