The always-interesting Scott Alexander asks probably one of the most important questions of our modern age:
Why the heck is everything getting so much more expensive?
So, to summarize: in the past fifty years, education costs have doubled, college costs have dectupled, health insurance costs have dectupled, subway costs have at least dectupled, and housing costs have increased by about fifty percent. US health care costs about four times as much as equivalent health care in other First World countries; US subways cost about eight times as much as equivalent subways in other First World countries.
I worry that people don’t appreciate how weird this is. I didn’t appreciate it for a long time. I guess I just figured that Grandpa used to talk about how back in his day movie tickets only cost a nickel; that was just the way of the world. But all of the numbers above are inflation-adjusted. These things have dectupled in cost even after you adjust for movies costing a nickel in Grandpa’s day. They have really, genuinely dectupled in cost, no economic trickery involved.
I've done a lot of looking in to this and I'm with Alexander on this. No one knows. There's lots of theories but I don't think there's any convincing arguments out there.
As Alexander touches upon, this phenomenon is the root cause for a large part of the divisions in our modern world.
Considerations On Cost Disease
I. Tyler Cowen writes about cost disease. I’d previously heard the term used to refer only to a specific theory of why costs are increasing, involving labor becoming more efficient in some ar…