Matthew Yglesias and Fontana Labs discuss how the price of higher education just keeps going up, and wonder when the thin reed that is middle class parent's finances will break, and they'll all send their kids to the University of Phoenix.
In general this phenomena is known as "Baumol's disease," (James Surowiecki has a good introduction here), and it's particularly relevant that the industries afflicted—health care and education—have a large extent of government funding, even in the United States.
I tend to think that part of the problem is that "productivity" in these fields is difficult to measure. If you measure productivity in education by the number of children in a classroom, well, yes, that's not going to rise if you want to keep class sizes small. But to stick with education for the moment, if your measurement of productivity is "knowledge acquired," well there have been an awful lot of improvements in productivity in education and health care in the past century. Calculus, for example, was once a subject reserved for Masters students taught individually or small (2-3) groups of students, now it's introduced at the junior year of high school. Similarly, in health care, if you measure patients treated per hour by a doctor, well sure, there has been little improvement over the years. But the productivity of a doctor's time has increased markedly over the century, thanks to improved drugs etc.
I might be reading Baumol wrong, but the problem with his analysis seems to be that he focuses on productivity measured in units of output: patients seen, children taught in a classroom, for example. But is this the appropriate measure of productivity in health or education? I think not.
Health outcomes are difficult to measure, but there are better measures of productivity in health care than patients seen, such as years of healthy life added, mortality or morbidity avoided etc. In education, the pupils are themselves an input to what is being produced, so it's not clear to me that it's appropriate to count them as an output too.
I was thinking of these issues just last week at the National Archives, where I was photographing 9000 pages of surveys from the 1920s. It's great that the National Archives allow you to do your own copying, and don't charge for you it, because if I had to photocopy all those pages it would have cost about $1500 and I would have boxes and boxes of paper that is easy to lose. The digital camera could make some fundamental changes to the way historians approach archival visits, allowing us to "hit" the archives, copy what we need quickly, and then go analyze it at home. Clearly this wouldn't work for all historical research, including parts of my own, but a lot of trips could be shortened this way.
The laptop too, by speeding up note-taking and making it more legible, has also improved historians' productivity in the archives. But really the method of history is little changed since Ranke. For the most part we sit there and we read.
As any historian whose work covers the turn of the twentieth century will tell you, the productivity of reading for research increases markedly when the costs of printing and typewriters came down. It really is incredible how much more quickly you can do research with printed compared to hand-written sources. But whether this compensates for the increase in the volume of material that can be read is debatable. In short, the productivity of historians will always be limited by the speed with which they can read, and then the speed with which they can think and write.
In research as in teaching, Baumol's disease is apparent. Yet productivity is not just measured in units of physical output. It is also measured in the value of the thing produced. At least in the case of health care and teaching the marginal value of labor may well be increasing, as better health and more knowledge are produced in the same amount of time. Moreover, if people are prepared to pay for the output of these services, and pay increasing amounts over time, then the marginal value product of labor in services can also increase.
By this point, if not way, way earlier I've probably lost most of my audience [Earlier. Much, much earlier. -ed.] But my point is this -- the productivity of labor intensive service occupations like teaching, research, and health care has increased through the application of technology and should continue to do so over time. Even the humble blog has contributed to this; as I've mentioned before, in the not so distant past if I'd wanted to share my thoughts with the world I would have had to print this out, and then send it to people I thought I might be interested. Now I can publish it for all to see, whether that is 1 or 100 people.
Posted by robe0419 at October 19, 2005 03:27 PM | TrackBackWell a more general rule applies namely that most public policy outcomes are difficult to measure. I;m talking about those areas which are the true preserve of government, where the private sector truly can't provide. How for example do you measure productivity of an army private? But do you think the average 21st century solider isn't a hundred or a thousand times more effective than his counterpart from a hundred years ago?
Posted by: Dan Hill at October 25, 2005 11:28 PMThank you for your article, which was quite worthwhile to read. On the one hand you state that there certainly are effects which can be understood as a sort of B's disease, like in teaching, on the other hand you state that even in unexpected fields good productivity gains can be seen. Where you see that productivity increases are dubious, maybe the questions are not correctly stated or the total concept of productivity is not applicable at all.
The comment on the productivity increase of soldiers seems to me to be out of place. I do not see any productivity improvement in nuclear weapons or in the use of gas.
Sicerely yours,
P.G. Dekker, Oosterbeek, The Netherlands
Posted by: Paul G. Dekker at August 17, 2006 07:47 AM