The Cost Disease: Why Computers Get Cheaper and Health Care Doesn't

Kauffman-funded book analyses causes of rising costs of health care and education

The exploding cost of health care in the United States is a source of widespread alarm. Similarly, the upward spiral of college tuition fees is cause for serious concern.

In The Cost Disease: Why Computers Get Cheaper and Health Care Doesn't, the well-known economist William J. Baumol explores the causes of these seemingly intractable problems and offers a surprisingly simple explanation.

Baumol identifies the "cost disease" as a major source of rapidly rising costs in service sectors of the economy. Once we understand that disease, he explains, effective responses become apparent.

Baumol presents his analysis with characteristic clarity, tracing the fast-rising prices of health care and education in the United States and other major industrial nations, then examining the underlying causes, which have to do with the nature of providing labor-intensive services.

The news is good, Baumol reassures us, because the nature of the disease is such that society will be able to afford the rising costs.

William J. Baumol is professor of economics and academic director of the Berkley Center for Entrepreneurship and Innovation, New York University; professor emeritus, Princeton University; and, senior advisor, Ewing Marion Kauffman Foundation. He is the author of more than forty books, including Good Capitalism Bad Capitalism, has been awarded a dozen honorary degrees, and is an elected member of the National Academy of Sciences, the American Philosophical Society, Galileo's Accademia Nazionale dei Lincei in Rome, and the British Academy.