Summary of The Cost Disease

Looking for the book?
We have the summary! Get the key insights in just 10 minutes.

The Cost Disease book summary
Start getting smarter:
or see our plans

Rating

8 Overall

7 Importance

9 Innovation

7 Style


Recommendation

In 1966, economist William J. Baumol and his colleague William Bowen introduced their “cost disease” concept. Since then, their hypothesis, which explains why health care and education expenses always will always increase, while manufacturing costs will always fall, has proven accurate. Baumol says that their theory could “be the longest valid forecast ever to emerge from economic analysis.” He tracks why these fees constantly skyrocket – and it’s not the nonsense that poorly informed politicians spread. He also clarifies why people will continue to be able to afford health care and education. getAbstract recommends Baumol’s important, expert explanation to those seeking to learn why some costs rise while others fall, and how to extrapolate such costs to construct an idea of future expenses.

In this summary, you will learn

  • Why the price of personal services such as health care and education rises faster than the rate of inflation,
  • Why the price of manufactured products will decrease,
  • Why society will always be able to afford health care and education, and
  • How to control future health care costs.
 

About the Author

William J. Baumol, the academic director at the Berkley Center for Entrepreneurship and Innovation at New York University, is a professor emeritus at Princeton University.

 

Summary

An Epidemic of Rising Costs

Medical fees, tuition fees and other expenses involving personal services are certain to outpace the rate of inflation and may go through the roof. This is because automating such services is almost impossible, and that is the primary symptom of the “cost disease.” These services require personalized human labor, impervious to automation, stable in productivity and closed to the kinds of innovations that reduce costs in non-service fields.


More on this topic

By the same author

The Invention of Enterprise
The Invention of Enterprise
7
The Free-Market Innovation Machine
The Free-Market Innovation Machine
9

Customers who read this summary also read

Healthcare Disrupted
Healthcare Disrupted
8
Managing the Myths of Health Care
Managing the Myths of Health Care
9
The Lucky Years
The Lucky Years
8
Chronic
Chronic
8
The Tyranny of Metrics
The Tyranny of Metrics
8
Cancer Pill Costs Soar as Drug Companies Retain Pricing Power
Cancer Pill Costs Soar as Drug Companies Retain Pricing Power
8

Related Channels

Comment on this summary