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Baumol's Cost Disease

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Re: Baumol's Cost Disease

#71

Post by yunyu »

michaelt wrote: post #54
yunyu wrote: post #34

Earlier quoted context omitted.

What are legitimate sources in your definition? Should physicians be expected to spend all their free time reading every single study in every medical journal or conference, even for niche areas that they don't usually encounter? Should the average diabetic/arthritic patient need to obsessively pore over academic reports to stay informed about their condition? Should advertisers be banned from sponsoring journals or…

Doctors should learn about new drugs the traditional way - physically attractive drug company reps taking them out for expensive dinners and gifting them branded golf equipment.

My favorite form of definitely-not-advertising :)

Re: Baumol's Cost Disease

#72

Post by yunyu »

wat10000 wrote: post #69
yunyu wrote: post #66

Earlier quoted context omitted.

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.

Yes, advertising is more relevant and works better for people with power over large purchasing decisions as the bidders have more at stake. Maybe you aren't in the market for plumbers or running shoes, and are instead looking for "download vlc media player". This doesn't contradict anything I said?

Re: Baumol's Cost Disease

#73

Post by ghaff »

wat10000 wrote: post #67
ghaff wrote: post #63

Earlier quoted context omitted.

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.

I have nothing to do with the medical establishment. I do know that the conferences I do attend are subsidized by companies in the tech space in various ways. You're welcome to bemoan that of course although I'm pretty sure neither of us are in a position to overturn decades-long (at least) practice.

Re: Baumol's Cost Disease

#74

Post by seizethecheese »

zeroonetwothree wrote: post #36
Mistletoe wrote: post #9

Computer software is on the chart as getting cheaper with time but that can’t be right? I remember Photoshop used to be a disc and you owned it for a reasonable price and now you subscribe to the Adobe protection racket. Software as a service would be a service which should go in the top of the graph with other extortionists like colleges and hospitals.

Well there are other examples, eg Google Docs is free, no need to pay for Office. I don’t know about the aggregate data tbf

This is what came to mind for me. Certainly there are free versions of everything that used to cost money a decade or two ago. The paid software now is much more advanced.

Re: Baumol's Cost Disease

#75

Post by jimbokun »

rwmj wrote: post #25
AnimalMuppet wrote: post #23

Earlier quoted context omitted.

Finance funds hospitals and cancer research institutes - or at least, it enables the gathering and concentrating of resources to do so. Now, advertising...

Some finance is needed and beneficial. The ability to form corporations and raise money through the stock market enhances many other fields of endeavour. But this can go too far. In London during 2000-2008, finance consumed every spare IT worker, as well as mathematicians and physicists. Salaries were far higher working for a bank than working in any other IT-related industry or start-up. Did this produce great works…

What’s your basis for concluding “no”?

London is a very desirable place to live.

Re: Baumol's Cost Disease

#76

Post by yobbo »

It seems relevant that the categories healthcare, housing, and higher education are not paid by wages/cash but rather through various means of financing (in the form of insurance for healthcare). (In addition to not being outsourcable).

New cars not increasing looks strange but that might be a US phenomena, where most cars might be imported and the median car have "shrunk" in size over the period.

Re: Baumol's Cost Disease

#77

Post by BurningFrog »

tomrod wrote: post #64
bigbadfeline wrote: post #46

Earlier quoted context omitted.

> 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.

GDP is how much wealth is produced in society at a moment in time.

The total accumulated wealth in a society is a related but entirely different number.

Re: Baumol's Cost Disease

#78

Post by BurningFrog »

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.

> money is a relative resource

I think this is the better way to think of money and wealth:

Money is the unit of measure for wealth. It's not in itself wealth.

Re: Baumol's Cost Disease

#79

Post by ben_w »

yunyu wrote: post #49
ben_w wrote: post #47

Earlier quoted context omitted.

> in a cost effective manner Facebook is currently showing me these ads: Lady's earrings (see my name), Pixel 10 (I'm theoretically an iPhone developer), cat food (I don't own any pet let alone a cat), special offers from a supermarket I would have been shopping at anyway even if they had not told me about the offers, a sponsored government message because apparently the Bundesministerium für Gesundheit don't have a…

The fact that your Facebook ads are worse is probably because you're in the EU. I'm in the US, and I am getting fairly relevant ads for Broadway shows, data infrastructure products, discounted hotel packages, and climbing gym subscriptions - things that I am actually considering purchasing. And we haven't even brought up intent-based ads (Google search). Word of mouth benefits incumbents. Advertising at least enables…

> And we haven't even brought up intent-based ads (Google search).

OK, those also suck, for different reasons.

If I search for a thing, a search engine's entire job is to show me about that thing. That the engine's website puts a different thing that whatever the search algorithm thought was the best thing at the top because an advertiser paid for it to be so, is strictly worse. It's worse when the ad is not correct for obvious reasons, but it's also worse when the ad is also the best thing to show me, because in that condition it was already at the top and shouldn't have needed to pay to get there.

> Word of mouth benefits incumbents.

Ads generally (but not always) benefit whoever is richest, which is usually (but not always) the incumbent. This is why Coca Cola spends so much money on ads, even when those ads say nothing about the product itself e.g. the current GenAI Christmas ad.

> Advertising at least enables newcomers to temporarily burn money to gain mindshare, while “slow diffusion” will lock society into a “nobody ever got fired for buying IBM” state forever.

How long had ChatGPT been out before OpenAI's first ad for it?

The Google search engine itself, I heard about from word of mouth back in the 90s when all of us were using AltaVista, which I also only knew about from word of mouth. Firefox, word of mouth. LiveJournal and then Dreamwidth, word of mouth. Facebook, word of mouth. Skype, Telegram, AeroPress, Huel, these are all things I learned about from word of mouth.

If I understand correctly, "word of mouth" is also known in marketing-speak as "going viral".

Re: Baumol's Cost Disease

#80

Post by simonh »

wat10000 wrote: post #18
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.

Your conclusion falls victim to the same conflation you’re calling out. If some sectors become drastically more efficient, society has become wealthier in terms of money, but not necessarily in terms of real resources. For example, consider a case where finance becomes much more productive (in terms of $ per employee-hour) and raises wages to attract smart people, leading to fewer people becoming doctors because fina…

The Baumol effect says wages for doctors will also have to go up. Society can afford this because it now has commensurately more resources due to increased efficiency. It’s a tide that raises all boats, precisely because of this effect. This is why a taxi in London costs and pays better than the same service in Cairo.
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