Elon Musk calls the ratio of the final cost of a product to the cost of its raw materials the “idiot index.” A high idiot index suggests a highly inefficient process with a lot of wasteful operations that could be dramatically improved. A low idiot index suggests a process with much less room for substantial improvements. (It was allegedly the high idiot index of rockets that convinced Musk he could beat existing aerospace companies and that SpaceX was worth pursuing.)4
Armed with this concept, let’s look at the cost breakdown of a typical US single-family home, courtesy of Craftsman’s National Construction Estimator. The chart below shows the hard costs of construction: what it takes to put up the actual, physical building.