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Comment by dantheman | Hacker News Reader

Is it though? It seems spending on health, education, and housing are all through the roof. Everything else is better and cheaper -- why are these 3 growing at outrageous rates?

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Health is an extremely complicated one, but it seems like it's a classic 3rd payer problem with the added bonus that government regulation limits the profit of health insurance companies to be a fixed percentage of their revenue, so even they want prices to increase. So consumers don't care, and even when they do they can't get an all in price, and even the ones paying have an incentive to let costs rise.

One reason housing is getting more expensive is that more of the population is moving towards cities and out of rural areas. That migration has a positive correlation with housing costs. In addition the typical things used to reduce pricing, automation and offshoring, have had little impact in the construction industry due to the complexity and local nature of the work. I had seen a study previously which showed this for the US but can't find it, in it's place here is a similar study done in China (https://www.newyorkfed.org/medialibrary/media/research/staff...)

Finally, education in the broad sense is now cheaper than ever if you include public libraries and online courses, but I suspect you meant University degrees. University costs have soared, more people than ever need a degree to do even entry level work, and student loan debt is not dischargeable through bankruptcy. New York Federal Reserve did a study that showed an increase in credit was followed by an increase in university prices (https://www.newyorkfed.org/medialibrary/media/research/staff...)

Education costs (college and up) are increasing because institutions have no incentive to manage tuition costs if the default assumption is that people will take out loans to pay them anyway.

That’s undoubtedly part of it, but I think that the real price of an education would be higher now than it was 40 or 50 years ago even in an ideal free market. Society is much more complex now than it was two generations ago, and it makes sense for the value of higher education to increase with an increase in societal complexity.

And people keep taking out loans because the (anticipated) ROI is still positive, eg, there is consumer surplus available to be captured

But the ROI keeps going down, and may be negative soon for many degrees.

I suspect it's already negative for a number of degrees but there isn't enough data to prove that yet.

Well that's the (anticipated) bit...

Education is pretty easy. In 2005 the government changed the law such that even private education loans could not be dismissed in bankruptcy. Prior to that the law was such that only government educational loans could not be dismissed in bankruptcy. Government loans were limited and so the effect of the law was not so huge until 2005.

But in 2005 things went crazy. Now that private student loans could no longer be dismissed it meant private lenders could throw out loans like beads at Mardi Gras. It was basically 0 risk from their perspective since you're not only getting a much higher than average earning demographic, but you get them where you have a claim on them for the rest of their life if they don't pay you off. And if they do pay you off, well you win there too!

Now because students could get practically unlimited funds universities could start to charge arbitrary amounts, and so they did. The one and only reason university costs have started to decelerate is because in 2011 we reached 'peak university'. US college enrollment started dropping even when people could "afford" it, because the perceived value became worth less than the perceived cost. Here's some data [1] from the BLS on costs. Unfortunately it starts at 2006, but it at least shows the deceleration that's started to happen once we reached 'peak university'.

The moral of this is, as usual, good intentions often go astray particularly when messing with economic systems. The reason private loans became guaranteed was ostensibly to ensure that students of all backgrounds and economic situations could afford a college education in large part to help them find a great job and give a better life to their children. It sounds great on paper. In reality, it's created a system where college costs have become completely unreasonable and simultaneously, ironically, devalued college degrees to the point that there's a pretty decent chance the guy serving your coffee not only has one, but is buried in debt over it.

[1] - https://www.bls.gov/opub/ted/2016/college-tuition-and-fees-i...

Middle class income in the US is basically the same if not lower than it was 10 years ago. Household income has all but plateaued since the late 90s[1]

I can assure you that the cost of goods has gone up along with inflation.

Young people can't afford a house even with historically low interest rates.

Household debt is way up there.

[1]https://www.statista.com/statistics/500385/median-household-...

This phenomenon is called cost disease and it's really hard to figure out why exactly it's happening.

https://slatestarcodex.com/2017/02/09/considerations-on-cost...

That summarizes really well the core economic problem faced in the US.

I think almost all of our economic anxieties revolve around the hyperinflation of education and health care costs.

Because they are required, anything else is optional. Note that food and gas are also more expensive. Optional items must be cheaper and better because we can't afford them to be more expensive.

Food is pretty cheap compared to historic standards, so cheap that we have a problem with eating too much rather than too little.

Education is the one that I think can be fixed. We need to separate accreditation from the actual education. Just that would increase competitiveness and lower costs.

Healthy food isn't cheap. Unhealthy food is cheep. Particularly if you are single and trying to eat a variety of fresh things.

God, it's horrible as a single person. My roommate digs on me for what I eat (not superbly healthy, or, if healthy, in small portions) as well as for the fact I make multiple trips to the grocery (I get home at varying times, so don't always have time to cook and sometimes it's too late even to eat a crockpot meal), but also never wants to split and plan a menu for two to avoid costs.

Cooking for one is a bitch, and it sucks.

Cooking for one is a bitch, and it sucks.

Batch cooking is the solution to that, see: https://www.reddit.com/r/MealPrepSunday/

I disagree that it's the solution, unless you can find a few meals that all require the same ingredients but are cooked differently. Otherwise you end up eating the same thing multiple times a week... Which just gets old. I'm fine eating dinner one night and leftovers for a day or two, but I don't wanna do it all week, even if you slightly change it up (mix grilled chicken in a salad, then a burrito, soup, etc)

Foods like potatoes, rice, beans, apples, carrots, and chicken are all healthy and cheap. Generally canned vegetables are just as healthy as fresh.

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