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And at some point, bigger houses and nicer cars begin to saturate; a Tesla is nicer than my Hyundai, and I’d love one, but not enough to upgrade for 3x the cost.I know how much better a Tesla is — I’ve seen them.

The main effect of our regulatory and legal system is not so much to directly raise costs, as it is to lessen competition (that is often its purpose). Though textbooks teach that monopoly leads to profits, it doesn’t “The best of all monopoly profits is a quiet life” said Hicks.

Everywhere we see businesses protected from competition, especially highly regulated businesses, we see the cost disease spreading.

Extra medical diagnostics to catch problems, pricier but marginally more effective drugs, chiropractors, probably useless supplements — all are exploding in popularity. I don’t really know — not much, but I’d probably try something if it might be useful. How much better is the $15,000/year daycare versus the $8,000 a year program a friend of mine runs in her house?

I’m spending a ton of money on preschool for my kids. Unclear, but I’m certainly not the only one spending big bucks.

Most large public school systems spend more than half their budget on administrators.

Similarly, class sizes at most colleges and universities haven’t changed that much — but administrative staff have exploded.

Why spend less, if education is the most superior good around?

How much better is Harvard than a subsidized in-state school, or four years of that school versus 2 years of cheap community college before transferring in?

Before the hedonic treadmill kicks in, and he decides to waste all the money on higher rent and nicer cars, he changes his diet. You aren’t going to pay 5 times as much for a slightly better video game or movie — and although you might pay double for 3D-Imax, there’s not much room for growth in that 5%.

But he won’t start eating chicken 10 times a week — he’ll start eating steak. The Atlantic had a piece on this several years ago, with the following chart: Food, including rising steak consumption, decreased to a negligible part of people’s budgets, as housing started rising.

Productivity depends on organizations not just on gadgets.

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