Cost Disease

Now, what news on the Rialto?
Post Reply
User avatar
Apollonius
Posts: 1065
Joined: Tue Dec 13, 2011 5:32 pm

Cost Disease

Post by Apollonius »

Considerations on cost disease - Scott Alexander, Slate Star Codex, 9 February 2017
http://slatestarcodex.com/2017/02/09/co ... t-disease/



Some interesting thoughts here, for example:

Fifth, might the increased regulatory complexity happen not through literal regulations, but through fear of lawsuits? That is, might institutions add extra layers of administration and expense not because they’re forced to, but because they fear being sued if they don’t and then something goes wrong?

I see this all the time in medicine. A patient goes to the hospital with a heart attack. While he’s recovering, he tells his doctor that he’s really upset about all of this. Any normal person would say "You had a heart attack, of course you’re upset, get over it." But if his doctor says this, and then a year later he commits suicide for some unrelated reason, his family can sue the doctor for "not picking up the warning signs" and win several million dollars. So now the doctor consults a psychiatrist, who does an hour-long evaluation, charges the insurance company $500, and determines using her immense clinical expertise that the patient is upset because he just had a heart attack.

Those outside the field have no idea how much of medicine is built on this principle. People often say that the importance of lawsuits to medical cost increases is overrated because malpractice insurance doesn’t cost that much, but the situation above would never look lawsuit-related; the whole thing only works because everyone involved documents it as well-justified psychiatric consult to investigate depression. Apparently some studies suggest this isn’t happening, but all they do is survey doctors, and with all due respect all the doctors I know say the opposite.

This has nothing to do with government regulations (except insofar as these make lawsuits easier or harder), but it sure can drive cost increases, and it might apply to fields outside medicine as well.

Sixth, might we have changed our level of risk tolerance? That is, might increased caution be due not purely to lawsuitphobia, but to really caring more about whether or not people are protected? I read stuff every so often about how playgrounds are becoming obsolete because nobody wants to let kids run around unsupervised on something with sharp edges. Suppose that one in 10,000 kids get a horrible playground-related injury. Is it worth making playgrounds cost twice as much and be half as fun in order to decrease that number to one in 100,000? This isn’t a rhetorical question; I think different people can have legitimately different opinions here (though there are probably some utilitarian things we can do to improve them).

To bring back the lawsuit point, some of this probably relates to a difference between personal versus institutional risk tolerance. Every so often, an elderly person getting up to walk to the bathroom will fall and break their hip. This is a fact of life, and elderly people deal with it every day. Most elderly people I know don’t spend thousands of dollars fall-proofing the route from their bed to their bathroom, or hiring people to watch them at every moment to make sure they don’t fall, or buy a bedside commode to make bathroom-related falls impossible. This suggests a revealed preference that elderly people are willing to tolerate a certain fall probability in order to save money and convenience. Hospitals, which face huge lawsuits if any elderly person falls on the premises, are not willing to tolerate that probability. They put rails on elderly people’s beds, place alarms on them that will go off if the elderly person tries to leave the bed without permission, and hire patient care assistants who among other things go around carefully holding elderly people upright as they walk to the bathroom (I assume this job will soon require at least a master’s degree). As more things become institutionalized and the level of acceptable institutional risk tolerance becomes lower, this could shift the cost-risk tradeoff even if there isn’t a population-level trend towards more risk-aversion.



Disappointingly, the author (along with no one else) seems to be able to explain why the cost of education has skyrocketed without any improvement in student performance.

... no, it’s not just because of special ed; no, it’s not just a factor of how you measure test scores; no, there’s not a "ceiling effect". Costs really did more-or-less double without any concomitant increase in measurable quality.
So, imagine you’re a poor person. White, minority, whatever. Which would you prefer? Sending your child to a 2016 school? Or sending your child to a 1975 school, and getting a check for $5,000 every year?

I’m proposing that choice because as far as I can tell that is the stakes here. 2016 schools have whatever tiny test score advantage they have over 1975 schools, and cost $5000/year more, inflation adjusted. That $5000 comes out of the pocket of somebody – either taxpayers, or other people who could be helped by government programs.

Second, college is even worse:

Inflation-adjusted cost of a university education was something like $2000/year in 1980. Now it’s closer to $20,000/year. No, it’s not because of decreased government funding, and there are similar trajectories for public and private schools.

I don’t know if there’s an equivalent of "test scores" measuring how well colleges perform, so just use your best judgment. Do you think that modern colleges provide $18,000/year greater value than colleges did in your parents’ day? Would you rather graduate from a modern college, or graduate from a college more like the one your parents went to, plus get a check for $72,000?
User avatar
Nonc Hilaire
Posts: 6168
Joined: Sat Dec 17, 2011 1:28 am

Re: Cost Disease

Post by Nonc Hilaire »

Education costs have risen because of easy access to non-dischargable student loans. The schools are not charging based on costs; they are charging what the market will bear.

Healthcare costs are not even discernable. You cannot even get a valid price quote on hospital procedures, which are routinely run up several hundred percent and then discounted heavily for those who are insured.
“Christ has no body now but yours. Yours are the eyes through which he looks with compassion on this world. Yours are the feet with which he walks among His people to do good. Yours are the hands through which he blesses His creation.”

Teresa of Ávila
User avatar
Typhoon
Posts: 27242
Joined: Mon Dec 12, 2011 6:42 pm
Location: 関西

Re: Cost Disease

Post by Typhoon »

Nonc Hilaire wrote:Education costs have risen because of easy access to non-dischargable student loans. The schools are not charging based on costs; they are charging what the market will bear.

Healthcare costs are not even discernable. You cannot even get a valid price quote on hospital procedures, which are routinely run up several hundred percent and then discounted heavily for those who are insured.
Image

Anecdote. Last spring a colleague visiting from the US had to go see a doctor.

As this was to be an out-of-pocket expense, he was a bit concerned, even though he had traveller's medical insurance.

The total cost of the consultation, including prescription, came in under USD $50.

His comment was "How much does it cost to see a shrink? I may need to have my head examined."
May the gods preserve and defend me from self-righteous altruists; I can defend myself from my enemies and my friends.
User avatar
Apollonius
Posts: 1065
Joined: Tue Dec 13, 2011 5:32 pm

Re: Cost Disease

Post by Apollonius »

Nonc Hilaire wrote:Education costs have risen because of easy access to non-dischargable student loans. The schools are not charging based on costs; they are charging what the market will bear.


Yes, after reading through the comments to this piece, I see where some people have expressed it just as you have.


In fact, it seems that many people think they can nail the increase in education costs to administrative costs, including some specific programs:




The university as total institution - John Paul Wright, Quillette, 2 January 2017
http://quillette.com/2017/01/02/the-uni ... stitution/


... For whatever good the diversity agenda has created, and there has been some good, it is well past time we take note of the harm done under the diversity banner. First, a wealth of data show that since 1975 the relative number of full time professors has remained relatively flat. The number of administrators, however, has exploded. The University of California system, for example, contains 10 universities. Since 2000, the number of administrators, which topped 10,539 in 2015, has increased over 60 percent and now exceeds the number of full time faculty (8,899 in 2015). Nor is the California example unique. On many other campuses, the number of administrators approach or exceed the number of faculty.
Unfortunately, the hiring of administrators has continued unabated so maybe it should not be surprising that the New York Times found that in the last 18 months 90 universities hired chief diversity officers — often with accompanying staff. As David Frum in The Atlantic pointed out, "As diversity officers proliferate, entire learned specialties plunge into hiring depressions." So, while diversity offices continue to expand in size and prevalence, we have relatively fewer historians, philosophers, and chemists teaching history, philosophy, and chemistry. In return we get more people teaching about microaggressions, social justice, and discrimination.

The point is, diversity offices are not inexpensive to create or to operate. Their existence is paid for by taxpayers, by student tuition and fees, and through the indirect costs tacked on to grants obtained by faculty. Their addition hikes the costs of education for students and reduces resources for instruction and research.

Second, empirical studies tell us that diversity efforts that sharpen group identities and that reinforce victimstance narratives cause harm. Students report more anger overall and more anger directed at their perceived victimizer. Students also spend less time around others not like themselves, in effect creating the very social bubble diversity efforts were designed to reduce. Moreover, compelled diversity efforts generate suspicion of others and are often viewed by students as ideologically motivated. And there can be little doubt that the winner take all approach of many diversity requirements, where minority groups are privileged at the expense of all other groups, creates the stage for backlash born from distrust. No psychological theory of mental health would encourage these outcomes and no responsible psychologist would enliven such resentments.

It is time to understand that the experiment with coerced campus diversity has failed and that its failure has given us a Total University. Yet it is not too late to roll back the harms done and to reset the course of our institutions. As Jonathan Haidt points out, university faculty and administrators can make a choice to revitalize and reprioritize the pursuit of truth over the pursuit of social justice. Indeed, there remains room on many campuses for a revaluing of classical principles of free speech, free thought, free association, due process, and for the return of the institution as an impartial seeker of truth. Having experienced the human toll caused by diversity warriors, many administrators may actually desire a change. ...
Simple Minded

Re: Cost Disease

Post by Simple Minded »

Apollonius wrote:
Nonc Hilaire wrote:Education costs have risen because of easy access to non-dischargable student loans. The schools are not charging based on costs; they are charging what the market will bear.


Yes, after reading through the comments to this piece, I see where some people have expressed it just as you have.


In fact, it seems that many people think they can nail the increase in education costs to administrative costs, including some specific programs:




The university as total institution - John Paul Wright, Quillette, 2 January 2017
http://quillette.com/2017/01/02/the-uni ... stitution/
excellent article. I believe Typhoon has previously posted this. Oddly enough, yutes used to go to college to learn skills to enhance their lives.

I remember my BSME adviser asking me why I was seeking that degree. After some confused silence on my part, he suggested "I think the answer you may be looking for is that you wish to acquire the knowledge and disciplined thought process that will enable you to solve problems."
noddy
Posts: 11318
Joined: Tue Dec 13, 2011 3:09 pm

Re: Cost Disease

Post by noddy »

I cant coment so much on merkia but in straya the cost disease is a house of cards, you can add more to it but you cant remove from it without causing a collapse.

the government just mumbles, hoping for a new boom to appear out of nowhere and stop the grind downwards we can all see.

booms are noxious things, so easy on the way up, so hard to correct back to normal - private sector wages get cut quickly and efficiently but public sector costs take alot of pain to scale back to suit.

we have barely started this work and trump is going to need a shitload of cocaine and meth to power through the hate.
ultracrepidarian
User avatar
Zack Morris
Posts: 2837
Joined: Mon Dec 26, 2011 8:52 am
Location: Bayside High School

Re: Cost Disease

Post by Zack Morris »

Simple Minded wrote: excellent article. I believe Typhoon has previously posted this. Oddly enough, yutes used to go to college to learn skills to enhance their lives.
Um. That's still why people go to college.
I remember my BSME adviser asking me why I was seeking that degree. After some confused silence on my part, he suggested "I think the answer you may be looking for is that you wish to acquire the knowledge and disciplined thought process that will enable you to solve problems."
Nothing has changed there. That's still very much how colleges view the service they provide.
User avatar
Typhoon
Posts: 27242
Joined: Mon Dec 12, 2011 6:42 pm
Location: 関西

Re: Cost Disease

Post by Typhoon »

Zack Morris wrote:
Simple Minded wrote: excellent article. I believe Typhoon has previously posted this. Oddly enough, yutes used to go to college to learn skills to enhance their lives.
Um. That's still why people go to college.

. . .
Depends greatly on the subjects read.
May the gods preserve and defend me from self-righteous altruists; I can defend myself from my enemies and my friends.
User avatar
Zack Morris
Posts: 2837
Joined: Mon Dec 26, 2011 8:52 am
Location: Bayside High School

Re: Cost Disease

Post by Zack Morris »

Of course some subjects are more lucrative than others. But were people studying those subjects in the hallowed past? I'm skeptical. If you look at successful examples of the Boomer generation (and older), you won't find a lot of STEM majors. They studied all kinds of "useless" but "respectable" subjects, like philosophy, history, the classics, literature, etc. In fact, it is the parents of the current generations who are responsible for their children's predicament (those that are struggling to launch, that is). The parents had it easy in a non-competitive world. They could take time to find themselves and then settle into a cushy career. Hence, they've raised their children in a carefree manner, emphasizing happiness over grit, sports over academics. The chief difference today is that the world is far more competitive. But the possibilities (and possible rewards) are greater, too!
Post Reply