Baumol Effect

Post by Lerc » Tue, Jul 16, 2019, 9:04 PM UTC

anonuser123456 wrote: post #51

Lerc wrote: post #49

Earlier quoted context omitted.

The modern doctor is far more productive. She's healing 10 highly productive units. In fact I think that could generalise for all service based work. Providing a service enables people to not have to do the thing themselves. As such the productivity of the service can be considered a factor of the productivity of the people they are providing the service for.

The Baumol effect does not imply that the value of the doctor is not higher today. It just means that on a per-unit basis physicians are not more productive (and possibly less today thanks to EHR). A doctor can still only see 1 patient every 15 minutes just like they could 50 years ago. A BMW factory that produces 100 cars/day might be more valuable than a Toyota factory producing 100 cars/day, but it wouldn't be mor…

Post by rahimnathwani » Tue, Jul 16, 2019, 10:33 PM UTC

inflatableDodo wrote: post #48

rahimnathwani wrote: post #46

Earlier quoted context omitted.

Even if you take into account the emergence of recording and distribution, the effect is still present. Musicians that record their music and sell it on CDs or Spotify have become more productive, for the reasons you state. But concert orchestras, who are paid only for live performances, also earn more than before, even though their productivity in unchanged. If their income didn't go up, they would shift to a (more…

Concert orchestras aren't only paid for live performances, they also record, and musicians themselves flit between gigs and often wear a lot of different hats. There's a lot of cross pollination with musicians.

Post by crdoconnor » Tue, Jul 16, 2019, 11:09 PM UTC

anm89 wrote: post #3

"they pointed out that the same number of musicians is needed to play a Beethoven string quartet today as was needed in the 19th century; the productivity of classical music performance has not increased. On the other hand, the real wages of musicians (as in all other professions) have increased greatly since the 19th century" This seems painfully naive to the point of farce. Do they really believe the value of playi…

Post by taneq » Wed, Jul 17, 2019, 1:33 AM UTC

papln wrote: post #58

taneq wrote: post #15

It seems pretty obvious to me that jobs which show the Baumol Effect are ones where the raw labour cost before inflation was dramatically below the value produced for the end customer. For public-facing roles, this value (in monetary terms) will also be driven up by the very effect that drives up the salaries of those producing the value.

Do you think live music has higher value than food, even if food is in short supply ? If you had only $10/day to spend, would you spend it on music or food?

Post by keenmaster » Thu, Jul 18, 2019, 6:52 PM UTC

keenmaster wrote: post #68

smith0000 wrote: post #4

Earlier quoted context omitted.

Workers aren't paid according to the market value of their work but rather for what they can demand in the labor market and what it costs to produce and reproduce their labor. That hasn't changed. Also, if anything, per capita demand for classical music is less now that it was a century or two ago. Baumol's cost disease is a powerful explanation for why people like doctors, musicians, and nanny's seem to be paid more…

Baumol’s cost disease might be a true phenomenon, but it makes artificial constraints not he supply of labor all the more insidious. The cost of a doctor or nanny is going up, but Congress + the AMA artificially limit the amount of medical residencies. That’s one small reason why the medical industry is broken. There are also many regulations that serve to increase the average price of a nanny. Musicians, on the othe…