Previously, we posted What do high healthcare costs and high tuitions have in common?
A loyal reader reminded me of the connection between high tuitions and “Baumol’s cost disease”
To that point …
The NY Times ran a piece by Harvard Prof Greg Mankiew summarizing his views re: high and increasing college tuitions.
One of Mankiw’s identified causes is “Baumol’s Cost Disease”
Many years ago, the economist William Baumol noted that for many services — haircuts as well as string quartet performances — productivity barely advances over time.
Yet as overall productivity rises in the economy, wages increase, so the cost of producing these services increases as well.
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Education is a case in point …
The Homa Files 