The Reds are on the verge of completing a £16m move for the Italy international, and despite question marks over the AC Milan forward's temperament, Carragher thinks that the deal is good value for money.
He told the Daily Mail: "When I first saw the news breaking, my initial reaction was 'This can't be true'; I had serious misgivings.
"Since then, though, I have changed my stance because of the economics — £16million for a 24-year-old who is Italy's No 1 striker looks a great deal. If you consider Ross McCormack moved from Leeds to Fulham for £11m, it is even better value.
"And if Balotelli fails to deliver, Liverpool could expect to recoup most of their outlay. I admit he still has to convince me as a player. People talk about his behaviour off the pitch — that doesn't worry me too much and, in truth, I think some of it is quite funny."
Liverpool travel to Balotelli's former club Manchester City on Monday.