Identifying Sources of Cost Disease
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Identifying Sources of Cost Disease
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Re: Identifying Sources of Cost Disease
#2When I read Scott Alexander's post I couldn't shake the notion that he could have saved himself a lot of writing if he simply read up on how CPI is calculated and noticed that it's a very limited measure of real inflation.
Re: Identifying Sources of Cost Disease
#3Here's a major one the article missed: short-sightedness.
In industry and commerce, that may be optimizing for short-term cost-cutting over long-term efficiency.
In education, that might be standards and incentives that lead schools to "teach the test" so the teacher/school gets a positive evaluation this semester - rather than investing in teaching how to learn or instilling a love of learning.
In healthcare, that might be high costs and bureaucratic obstacles that deter people from seeking evaluative and preventative care - at the cost of much more expensive later-stage treatments down the line.
In real estate, it could be crappy building materials and lower standards of craftsmanship that help build faster and cheaper but result in more problems and higher utility and eventually maintenance costs down the line.
In infrastructure, it can be deferring maintenance so you can cut taxes - resulting in more expensive repairs when things fall apart completely for want of a bit of paint or grease.
And so on ad nauseum.
Re: Identifying Sources of Cost Disease
#4When I read Scott Alexander's post I couldn't shake the notion that he could have saved himself a lot of writing if he simply read up on how CPI is calculated and noticed that it's a very limited measure of real inflation.
What writing exactly could he save himself? I'm confused.
Re: Identifying Sources of Cost Disease
#5When I read Scott Alexander's post I couldn't shake the notion that he could have saved himself a lot of writing if he simply read up on how CPI is calculated and noticed that it's a very limited measure of real inflation.
What real inflation measure should he have used?
Re: Identifying Sources of Cost Disease
#6Very interesting observations and a very complex subject with many factors.
One theory of economics is that it only actually works if very few of the market participants act like rational economic actors.
In the example of higher education, for instance, universities used to be a great value for students. Now they are approaching break-even on average in terms of cost-benefit for students, with some students losing and some winning.
That is a market based outcome and is exactly what a market should do but people don't like it.
In the past maybe professors and administers thought in non-market ways, such as that they should impart knowledge for the good of society, etc, etc, as opposed to rationally optimizing their income.
Re: Identifying Sources of Cost Disease
#7Serious question: do any reputable economists besides Tyler Cowen believe in cost disease?
Re: Identifying Sources of Cost Disease
#8Here is an example:
School district budget: 11.3m
Salaries: 4.5m
Benefits: 3m
That's for ~220 students and ~30 full time teachers...
http://www.edline.net/files/stream/5D3207F7E11684C4-0000015B...
Re: Identifying Sources of Cost Disease
#9Serious question: do any reputable economists besides Tyler Cowen believe in cost disease?
I think most do... Can you point to some that don't?
Re: Identifying Sources of Cost Disease
#10Very interesting observations and a very complex subject with many factors. One theory of economics is that it only actually works if very few of the market participants act like rational economic actors. In the example of higher education, for instance, universities used to be a great value for students. Now they are approaching break-even on average in terms of cost-benefit for students, with some students losing a…
> That is a market based outcome and is exactly what a market should do but people don't like it.
Maybe... whispers maybe not everything is best determined by the free market?