Why Are the Prices So Damn High?
Why Are the Prices So Damn High? (2019); ISBN-13: 978-1-942951-55-1
90 Pages Posted: 23 May 2019
Date Written: May 22, 2019
We explore why prices in some sectors are increasing dramatically even as economy-wide technology and productivity improves. Education and healthcare are notable examples of sectors seemingly stricken by constantly rising prices. At the same time, home appliances and telecommunications have become much cheaper. This piece examines and rejects explanations such as bloat and administrative costs and focuses attention on rising labor costs driven by productivity improvements in progressive sectors of the economy, an explanation known as Baumol's Cost Disease.
Keywords: cost disease, health care cost, education cost
JEL Classification: I04
Suggested Citation: Suggested Citation