Methods for measuring outcomes suitable for economic evaluations of health and care interventions have primarily focused on adults. The validity of such methods for children and young people is questionable in areas including the outcome domains measured and how they are measured and valued, with most existing measures narrowly focusing on health. Novel methods for assessing benefits beyond health by focusing on a person's capability have also concentrated on adults to date. This paper aims to set out the rationale for capability measures in children and young people. It argues for the need to expand the evaluative space beyond health functioning towards broader capabilities, with children and young people playing an integral role in capability measure development. Drawing from existing literature, specific challenges related to the identification, measurement, and valuation of capabilities in children and young people are also discussed. Finally, the practical implications for conducting economic evaluation when measuring and valuing capabilities at different stages across the life-course are illustrated. We develop an alternative framework based on conceiving capabilities as evolving across the life-course. This framework may also be helpful in thinking about how to model health outcomes across the life-course.