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

By William J. Baumol, Harold Price Professor of Entrepreneurship and academic director of NYU Stern’s Berkley Center for Entrepreneurship and Innovation; with contributions by David de Ferranti, Monte Malach, Ariel Pablos-Méndez, Hilary Tabish and Lilian Gomory Wu

Baumol's The Cost Disease: Why Computers Get Cheaper & Health Care Doesn't

"The causes and consequences of the 'cost disease' have never been explained more clearly or with more attention to the future economic choices the disease offers societies." —Robert J. Flanagan, author, The Perilous Life of Symphony Orchestras

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 this concise and illuminating book, the well-known economist William J. Baumol, Harold Price Professor of Entrepreneurship and academic director of NYU Stern’s Berkley Center for Entrepreneurship and Innovation, explores the causes of these seemingly intractable problems and offers a surprisingly simple explanation. Professor 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.

Professor Baumol presents his analysis, tracing the fast-rising prices of health care and education in the United States and other major industrial nations, then examines the underlying causes, which have to do with the nature of providing labor-intensive services. The news is good, he reassures us, because the nature of the disease is such that society will be able to afford the rising costs.

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