Buzz
Starting college as a freshman is filled with excitement. Dining halls! No curfew! Messing with your RA! And, of course, outrageously priced textbooks!
Wait, that last one doesn’t sound nearly as fun. It’s tough to walk into the college bookstore for your required books and not leave with a case of sticker shock. What’s behind the sky-high cost of textbooks? Let’s dive in.
Publishers argue that textbooks are costly to produce. While paying over a hundred dollars for a textbook might seem absurd when you’re used to spending $10 or $25 on a novel, textbooks aren’t produced on the same budget. Those hundreds of vibrant, glossy pages filled with charts, graphs, and visuals cost far more than simply printing black text on plain paper. According to the National Association of College Stores, about 33 cents of each textbook dollar goes toward production, with another 11.8 cents dedicated to author royalties. Creating a textbook is no inexpensive endeavor.
There’s some truth to this argument. Yes, those charts and visuals are costly to create, and the relatively low print runs of textbooks prevent publishers from benefiting from the economies of scale enjoyed by bestselling novels. However, any economist with even a slight pulse (and probably even those who don’t) could quickly find flaws in this reasoning.
In simple economic terms, the steep cost of textbooks reflects a problem of misaligned incentives rather than sky-high production expenses. Students reasonably want to minimize their spending on books, but they don’t really have the freedom to choose which books they need.
Professors choose the course materials, and faculty members have little incentive to consider price when selecting textbooks. Their personal expenses remain unaffected whether the required books cost $100 or $300, so there's no real deterrent to piling on more reading material. If a student needs Class X to graduate, they’ll most likely have to purchase the required texts. This absence of cost-control incentives for professors is a major reason that, at some point in college, everyone encounters the even more frustrating version of expensive textbooks—the Expensive Textbook You Never Even Open.
Furthermore, many students themselves aren’t particularly price-sensitive. While the 'broke college kid' stereotype is widespread, many students’ parents may still cover the costs of textbooks. Unless their parents raise an issue with the semester’s book bill, it’s easy to see how the textbook market becomes one where none of the parties involved have strong incentives to care about the prices.
Publishers also argue that the widespread sale of used books harms their profits. As platforms like eBay and Amazon have expanded and diversified the textbook market, publishers bemoan their lost sales, which in turn drives them to increase prices for the new books they do manage to sell.
Is there any validity to this claim? Possibly, but the impact may not be as significant as publishers suggest. As economist Hal R. Varian wrote in The New York Times in 2005, it's not entirely clear that used textbooks serve as perfect replacements for new ones. (I found this article a bit reassuring, especially since it eased any lingering guilt I had over selling Varian’s own excellent graduate microeconomics book on eBay last year.) As Varian explains, the sales of used books probably eat into the new book market less than we might think.
Fortunately for students, some external factors are exerting downward pressure on textbook prices. A new federal law took effect last year requiring publishers to disclose textbook prices to professors and schools to inform students of required books during registration. Online textbook rental services may help reduce the need for outright ownership, as could electronic reserve programs. While it may take time, college students in the future could potentially complete their required readings without draining their bank accounts.
