Further thoughts on Cost Disease

Matthew Skala:

The lovely and talented Scott Alexander has a posting on Cost Disease: the costs of some things, notably education and medical care especially in the USA, have increased in the last few generations to a really unfathomable extent. He gives detailed statistics, but it’s typically about a factor of 10 after accounting for general inflation. Why has this happened? He gives some hypotheses, and in a followup posting shares some ideas contributed by readers, but it’s not at all clear what’s going on. And it seems like knowing might be valuable, because the fact of this phenomenon’s occurrence (whatever the cause) is causing a great deal of misery for a whole lot of people, bearing on many other important issues.

I don’t know either, but it made me think of some things.

The Horror of the Mall
I don’t like shopping malls. When I go to one, I can feel my mental protective filters kicking in. It’s like I don’t even really see a majority of the stores – because the mall is mostly clothing stores. The fraction of storefronts devoted to clothing alone feels grossly disproportionate. If I go to a mall’s Web site and visit the alphabetical list of tenants, maybe there’ll be a name on it I don’t recognize. So I click on it, thinking it might be something interesting – but no, it’s just another damn clothing store. What is with all these clothing stores? How many do we need?

Clothing is a basic necessity. Everybody needs to buy it on an ongoing basis. I don’t keep exact records of this, but I figure I myself spend a few hundred dollars per year on clothing, out of my income which is a few tens of thousands of dollars per year. So, maybe I spend 1% to 3% of my income (probably nearer the low end of that range) on clothing. On that basis at first glance it would seem we need somewhere around one clothing store per mall complex. Maybe not every mall really needs to have a clothing store. So when I go to the mall I mentally do that calculation and then am horrified at how it differs from reality.

Much more on cost disease, here.

Despite spending more than most, now $18k/student and rising, Madison has long tolerated disastrous reading results.