IN 1946, a British newspaper shocked its readers by running an article with this ominous-sounding headline: “Nearly Half of U.K. Student Grades Are Below Average.” Read that back to yourself slowly, and you’ll realize, of course, that the law of averages would have it no other way. But man, does it sound bad.

In his new book, “The Cost Disease: Why Computers Get Cheaper and Health Care Doesn’t” (Yale University Press) William J. Baumol uses that headline to help us understand his central idea about the diverging paths of certain costs in our economy.

Mr. Baumol and a Princeton colleague coined the term “cost disease” in the early 1960s. Put simply, it refers to the concept that the costs of health care, education, the live performing arts and several other “personal services” depend largely on human evaluative skills — a “handicraft element” that is not easily replaced by machines. These costs consistently rise at a rate much greater than that of inflation because the quantity of labor required to produce these services is hard to reduce, while costs in other areas of the economy can be brought down via technology or other factors What that means, writes Mr. Baumol, a professor at the Stern School of Business at New York University and a professor emeritus at Princeton, sounds pretty frightening: “If health care costs continue to increase by the rate they have averaged in the recent past, they will rise from 15 percent of the average person’s total income in 2005 to 62 percent by 2105.” In other words, our great-grandchildren will have less than 40 cents of every dollar to spend on everything besides their health. Like the British headline, that surely sounds like cause for alarm.

It’s a testament to Professor Baumol’s lucid prose, though, that economists and noneconomists alike will find it easy to grasp his surprisingly comforting argument for why we shouldn’t panic. In fact, he asserts, we will be able to afford the cost of these services in the future — unless we fail to understand the nature of this phenomenon.