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William J. Baumol: 2 ideas worth knowing

2 ideas from William J. Baumol, each explained in a minute and credited to the original work. Free on Savvy.

• A string quartet needs the same four musicians it did in 1800, at far higher cost

  Playing a Beethoven quartet still takes four musicians the same time it took two centuries ago; there's no factory-style productivity gain available. Yet their wages must keep pace…

  — William J. Baumol and William G. Bowen, Performing Arts: The Economic Dilemma

• There's a mathematically optimal number of times to go to the bank each month

  Holding cash costs you the interest you'd have earned leaving it invested, but withdrawing money every time you need a little costs time and fees. William Baumol in 1952 and James …

  — William J. Baumol, The Transactions Demand for Cash: An Inventory Theoretic Approach

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