Monday, April 12, 2010

Somehow Princeton economists keep coming up...

An article today in The Huffington Post takes a look at the rising cost of the performing arts, a problem studied by professors of economics emeriti William Baumol and William Bowen. Bowen was also president of the University from 1972 to 1988.

The author of the article, Michael Kaiser, came to McCarter last month to share his thoughts on management in the arts. The event was called "Arts in Crisis".

Baumol and Bowen's claim is that the performing arts will inevitably rise in cost and that their management must take this into account. Applied more generally, this phenomenon is known as "Baumol's cost disease." This so-called disease affects industries that cannot increase in efficiency.

For example, as technology improves most industries can synthesize more X for a lower cost. But, as the article points out "we cannot perform Hamlet with fewer players than when Shakespeare wrote it, nor do we play Beethoven's Ninth Symphony faster and faster every year".

Incidentally, another field that is affected by Baumol's "disease" is education, possibly explaining why our tuition is always on the rise...

By Aaron Hosios, editor for Blogs