Background and objectives Patient and public involvement (PPI) is seen as a way of helping to shape health policy and ensure a patient‐focused health‐care system. While evidence indicates that PPI can improve health‐care decision making, it also consumes monetary and non‐monetary resources. Given the financial climate, it is important to start thinking about the costs and benefits of PPI and how to evaluate it in economic terms. Design We conducted a literature review to assess the potential benefits and costs of involvement and the challenges in carrying out an economic evaluation of PPI. Results The benefits of PPI include effects on the design of new projects or services, on NHS governance, on research design and implementation and on citizenship and equity. Economic evaluation of PPI activities is limited. The lack of an appropriate analytical framework, data recording and understanding of the potential costs and benefits of PPI, especially from participants' perspectives, represent serious constraints on the full evaluation of PPI. Conclusions By recognizing the value of PPI, health‐care providers and commissioners can embed it more effectively within their organizations. Better knowledge of costs may prompt organizations to effectively plan, execute, evaluate and target resources. This should increase the likelihood of more meaningful activity, avoid tokenism and enhance organizational efficiency and reputation.