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Baumol's Cost Disease

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Re: Baumol's Cost Disease

#61

Post by ghaff »

steveBK123 wrote: post #29
Mistletoe wrote: post #24

Earlier quoted context omitted.

No I pretty much still just need Photoshop features from 2000, 25 years later. That’s $24 a year instead of the current price of almost $24 a month.

Your perpetual license on a fixed version of Photoshop would not have been transferrable across OS/compute generations for 25 years. In practice most longtime Photoshop users paid the $600 once and some $200~ upgrade cost every 2-4 years. Adjusted for inflation its same or more than what you pay now. If you think you'd be fine now with 25 year old Photoshop features you maybe forget how basic the product was compared…

And there are both cheaper proprietary programs and even free open source programs if they care that much. There are a lot of way cheaper software options, especially on the desktop, in many cases than there were 25 years ago.

Re: Baumol's Cost Disease

#62

Post by adam_patarino »

kmeisthax wrote: post #37
adam_patarino wrote: post #7

I can’t help but notice the items of increasing price / cost are not optional / discretionary purchases. Price can increase and not affect demand. Whereas the items decreasing in price are all subject intense competition and price sensitivity.

College is optional. Actually, if you're just looking for "a skilled job" trade school is a better bet than college now. But the only people actually saying that are conservative nut-jobs trying to fight a culture war against a balanced education. People send their kids to colleges for the same reason why they demand more car lanes instead of better buses and trains: it's a status symbol. The thing about status symbo…

Perhaps it is optional for some. The point isn’t if it’s technically required. It’s that these items have less price sensitivity, which could be a greater factor in what industries invest in automation.

Re: Baumol's Cost Disease

#63

Post by ghaff »

wat10000 wrote: post #58
ghaff wrote: post #55

Earlier quoted context omitted.

Journals less commonly but pretty much every conference out there of any scope is sponsored by companies. In fact, absent sponsors, very few conferences would exist other than small volunteer-run ones.

If attendees aren’t willing to pay the full cost then maybe the conference isn’t providing enough value and we’re better off without it.

People (and their companies in many cases) have limited budgets. I do pay out of my pocket for some conferences, and conference organizers and (previously) employers in other cases. You're probably not going to convince me that I'm better off sitting at a desk than getting out and collaborating with people at an event from time to time. For that matter, why should companies sponsor open source projects? If they're that valuable, individuals should just pay for them I guess.

Re: Baumol's Cost Disease

#64

Post by tomrod »

bigbadfeline wrote: post #46
derf_ wrote: post #4

The submission is titled with "Cost Disease", though the Wikipedia article has the more neutral term "Effect". But it is important to remember that money is a relative resource, not a real resource. If some sectors of the economy become drastically more efficient, and some do not, overall society has become wealthier , even if the prices in the latter sectors rise a lot.

> If some sectors of the economy become drastically more efficient... overall society has become wealthier That's a weird one - what's your metric for the "wealth of overall society"? Stock market indexes can't be it because those are subject to extreme levels of unreported inflation and gaming. How can you measure something that is subject to extreme inflation when that inflation is not only unmeasured but not even…

GDP produced divided by costs required measures intensity. These will be typically normalized (inflation removed) or, if a ratio, can be nominal since both have the inflation ratioed out.

GDP is known to be an imperfect measure, especially for capturing cottage industry and due to the distribution effect you described, but it's not horrible to start with.

Re: Baumol's Cost Disease

#65

Post by wat10000 »

yunyu wrote: post #60
wat10000 wrote: post #56

Earlier quoted context omitted.

I’m very confused. Why would “black-box ranking algorithms” be on the no advertising side? Medicine has a pretty good system for getting knowledge out to doctors as far as I can tell. I fail to see how advertising contributes to this in any way. Banning advertising is the opposite of controlling attention. I’d like a total ban on all advertising, but I at least see some merits in the discovery argument for consumer g…

> Medicine has a pretty good system for getting knowledge out to doctors as far as I can tell. Yes, it does - it’s called advertising. In the US, the average promotional spend per physician exceeds $20k/yr. As a result, a lot more patients are able to quickly benefit from new medications like Dupixent or Ozempic as a result of wider awareness. Suppose we banned Google ads and you are searching for a plumber. You are…

Your hypothetical is the world I actually live in, except I have to scroll past the ads first. It’s amazing that you’re so invested in advertising as a concept that you’d think a guy who keeps ranting about banning advertising would ever select a plumber from an ad.

The only purpose Google ads serve to me is to take up space and waste my time locating where the ads end and the real results begin.

Otherwise, they’re at best useless. Being able to distinguish the ads from the real results is an important online safety skill these days to avoid getting ripped off or outright scammed. They’re no longer merely parasitic, but are now actually dangerous.

If your argument is that advertising medical treatments to doctors is just like the mundane advertising I see on Google, you’re doing an excellent job of making my case for me.

Re: Baumol's Cost Disease

#66

Post by yunyu »

wat10000 wrote: post #65
yunyu wrote: post #60

Earlier quoted context omitted.

> Medicine has a pretty good system for getting knowledge out to doctors as far as I can tell. Yes, it does - it’s called advertising. In the US, the average promotional spend per physician exceeds $20k/yr. As a result, a lot more patients are able to quickly benefit from new medications like Dupixent or Ozempic as a result of wider awareness. Suppose we banned Google ads and you are searching for a plumber. You are…

Your hypothetical is the world I actually live in, except I have to scroll past the ads first. It’s amazing that you’re so invested in advertising as a concept that you’d think a guy who keeps ranting about banning advertising would ever select a plumber from an ad. The only purpose Google ads serve to me is to take up space and waste my time locating where the ads end and the real results begin. Otherwise, they’re a…

Your value to advertisers is probably less than 1% of that of a single doctor or corporate VP. It makes sense that your queries are lower intent - this is hardly contradictory. Fortunately, you are an edge case wrt how firms are actually spending their money, so we’ll leave it at that.

Re: Baumol's Cost Disease

#67

Post by wat10000 »

ghaff wrote: post #63
wat10000 wrote: post #58

Earlier quoted context omitted.

If attendees aren’t willing to pay the full cost then maybe the conference isn’t providing enough value and we’re better off without it.

People (and their companies in many cases) have limited budgets. I do pay out of my pocket for some conferences, and conference organizers and (previously) employers in other cases. You're probably not going to convince me that I'm better off sitting at a desk than getting out and collaborating with people at an event from time to time. For that matter, why should companies sponsor open source projects? If they're th…

And you’re not going to convince me that collaboration is so valuable that it’s worth corrupting the whole medical establishment, and simultaneously not valuable enough for you to pay what it costs to do it.

Re: Baumol's Cost Disease

#68

Post by bloppe »

bigbadfeline wrote: post #46
derf_ wrote: post #4

The submission is titled with "Cost Disease", though the Wikipedia article has the more neutral term "Effect". But it is important to remember that money is a relative resource, not a real resource. If some sectors of the economy become drastically more efficient, and some do not, overall society has become wealthier , even if the prices in the latter sectors rise a lot.

> If some sectors of the economy become drastically more efficient... overall society has become wealthier That's a weird one - what's your metric for the "wealth of overall society"? Stock market indexes can't be it because those are subject to extreme levels of unreported inflation and gaming. How can you measure something that is subject to extreme inflation when that inflation is not only unmeasured but not even…

The main metrics are mean and median real income (i.e. inflation-adjusted). Baumol's only occurs if mean real income rises. Unless inequality rises simultaneously, then median real income (the metric most people care about) will rise as well.

Re: Baumol's Cost Disease

#69

Post by wat10000 »

yunyu wrote: post #66
wat10000 wrote: post #65

Earlier quoted context omitted.

Your hypothetical is the world I actually live in, except I have to scroll past the ads first. It’s amazing that you’re so invested in advertising as a concept that you’d think a guy who keeps ranting about banning advertising would ever select a plumber from an ad. The only purpose Google ads serve to me is to take up space and waste my time locating where the ads end and the real results begin. Otherwise, they’re a…

Your value to advertisers is probably less than 1% of that of a single doctor or corporate VP. It makes sense that your queries are lower intent - this is hardly contradictory. Fortunately, you are an edge case wrt how firms are actually spending their money, so we’ll leave it at that.

If you want to argue that advertising is different for doctors than it is for me, and it’s useful for them despite being a drain and a danger for me, then go for it. But that’s the opposite of the argument you laid out.

Re: Baumol's Cost Disease

#70

Post by ghaff »

randallsquared wrote: post #21
websiteapi wrote: post #13

Earlier quoted context omitted.

sure, but take furniture - is high quality furniture cheaper today than 50 years ago, normalized by inflation? from my investigation the answer is no.

It depends on what you mean by "high quality", I suspect. Above a relatively low floor, price of furniture seems unrelated to (e.g.) sturdiness or expected lifespan. It's more like fashion, in that you are paying for names or decoration.

Probably a difficult question to answer. My sense is that high quality new hardwood furniture hasn't gotten especially more expensive over recent time (adjusted for inflation) but you'd probably have to ask someone in the industry who is more plugged into various cost inputs.

>seems unrelated to (e.g.) sturdiness or expected lifespan

I'll disagree somewhat. At least in New England, there are smallish manufacturers who make high quality products that you're not going to find in most, if any, of the large retailers.

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