Baumol’s cost disease
Etymology
Named for the economist William Baumol, who with William Bowen described it in a 1966 study of the performing arts, using the enduring example that playing a Beethoven quartet still takes four musicians and the same time it always did. "Cost disease" was their metaphor for a chronic, built-in pressure rather than a fixable inefficiency. The concept has since become central to debates over why the price of human services outpaces the price of manufactured goods.
noun phrase · /BAW-molz kawst dih-ZEEZ/
The tendency for costs to rise in labor-intensive sectors that can’t easily get more productive, because they must still pay wages competitive with sectors that can.
What it names
Why healthcare, education, and live music keep getting more expensive even without getting better — a string quartet needs the same four players it did in 1800 — which reframes those price spirals as structural rather than as pure waste or greed.
Example
Tuition keeps climbing faster than inflation partly because of Baumol’s cost disease — you can’t automate a seminar the way you can a factory line.
Related idea
Ordinary inflation raises prices across the board as money loses value; Baumol’s cost disease is a relative shift, where stagnant-productivity services grow costly against ever-cheaper manufactured goods.