Monday, February 13, 2017

Scott Alexander on Cost Disease

Here is Scott Alexander on Cost Disease.

"In 1983, the first mobile phone cost $4,000 – about $10,000 in today’s dollars. It was also a gigantic piece of crap. Today you can get a much better phone for $100. This is the right and proper way of the universe. It’s why we fund scientists, and pay businesspeople the big bucks.
But things like college and health care have still had their prices dectuple. Patients can now schedule their appointments online; doctors can send prescriptions through the fax, pharmacies can keep track of medication histories on centralized computer systems that interface with the cloud, nurses get automatic reminders when they’re giving two drugs with a potential interaction, insurance companies accept payment through credit cards – and all of this costs ten times as much as it did in the days of punch cards and secretaries who did calculations by hand."

He talks about average wages, but he doesn't talk about growth in employment in these sectors. Since 1970 employment in these sectors went from 6% of the workforce to 15%. That's very expensive. I'm surprised Slatestar didn't mention this.

Hanson says that healthcare is primarily about signalling care, not health. Caplan says that school is primarily about signalling good work, not education. If either or both of them are right, then the amount we spend and the number of people we employ in these industries seems like one of the worst things in the developed world.