in healthcare, we have an increasing number of doctors and nurses in the US per capita
This is something we’d expect as the population ages. But to the extent that increasing healthcare expenditure is driven by demographics, it’s not really relevant to cost disease. This was also a major beef I had with Tabarrok’s book.
On education:
maybe people get value out of personal teacher attention that doesn’t show up in test scores
One possible factor here is a Cambrian explosion of academic specialties: looking at e.g. the length of Berkeley’s course catalogue by year, the number of different classes is increasing in proportion to the teacher/student ratio—they’re not just teaching more sections of the same courses. All that extra education expenditure is buying smaller classes, but maybe that because it’s buying a wider variety of classes. If all this academic specialization reflects increasing professional specialization, then it has a possible value mechanism independent of people intrinsically valuing teacher attention. Unfortunately I don’t know of a simple way to test this hypothesis.
Great post! A couple miscellaneous comments...
On healthcare:
This is something we’d expect as the population ages. But to the extent that increasing healthcare expenditure is driven by demographics, it’s not really relevant to cost disease. This was also a major beef I had with Tabarrok’s book.
On education:
One possible factor here is a Cambrian explosion of academic specialties: looking at e.g. the length of Berkeley’s course catalogue by year, the number of different classes is increasing in proportion to the teacher/student ratio—they’re not just teaching more sections of the same courses. All that extra education expenditure is buying smaller classes, but maybe that because it’s buying a wider variety of classes. If all this academic specialization reflects increasing professional specialization, then it has a possible value mechanism independent of people intrinsically valuing teacher attention. Unfortunately I don’t know of a simple way to test this hypothesis.