Mason  🏃‍♂️ ✂️

Why have prices of health care & education gone up SO much? (~200% in just 20 years) My latest podcast is with economist @ATabarrok who blames a phenomenon called the Baumol Effect. Audio + transcript: http://rationallyspeakingpodcast.org/show/rs-236-alex-tabarrok-on-why-are-the-prices-so-dmn-high.html … Lots of interesting questions here! Thread: (1/n)

I'm skeptical: have wages skyrocketed across all skilled-work sectors with low productivity growth? Clearly not; see e.g. yoga classes. Additional features seem necessary: the goods/services aren't fungible with others & there are significant barriers to entry for providing them

This is consistent with Alex's huckleberry example; to most people, huckleberries & other berries are roughly fungible. As other berries become cheaper, it's reasonable to expect more people to eat those & price-insensitive consumers to buy *some* huckleberries at a high price

Show me a sector — *any* skilled sector — where productivity is flat(ish) AND there are minimal barriers to entry/enforced caps on entry AND there are alternatives to consumption that *aren't* under these same pressures... where costs have risen anywhere near so substantially.

US population increased ~20%, doctors ~ 33% over the last 20 years Economics would suggest that prices should fall, but they didn't. So either more need medical treatment and/or more complexity and cost for treatment and/or more regulation is behind it https://www.statista.com/statistics/186260/total-doctors-of-medicine-in-the-us-since-1949/ …

Important: an insurance-based industry model means it's possible for *any* healthcare access to be extremely expensive while *additional* "units of healthcare" are cheap. Under these constraints, it's very feasible to lock out many consumers while increasing overall consumption

In other words: it's possible that many people who need or strongly desire healthcare can't afford it, and many people who *can* afford it are consuming tremendous amounts of it despite having only a minor need or desire for it.