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We just received notice from our campus bookstore that Congress really cares a lot about helping cash-strapped students. In the recently passed Higher Education Opportunity Act (HEOA) a provision was passed that requires colleges to provide accurate textbook information at the time of course registration. Here is one law professor’s take on the idea. I’m not really in the mood to debate the merits or demerits of the law, just wanted to add a comment about what I do.

Each year, I teach about 260 Introductory Economics students, 90 Environmental Economics students, 150 Intermediate Microeconomics students and 110 Money, Credit and Banking students (aside from the other seminars and independent studies I run, but the issue is not germane to them). This amounts to just over 610 students per year. The typical new textbook in these classes runs from $150 to $200 and my best bet is that students can resell them back at the end of the term for about half that. In other words, the net cost of textbooks in my classes would be about $75 to $100. Let’s pick $85 as a reasonable midrange for this.

For both pedagogical and economic reasons, I do not assign a single textbook in any of my classes. You can see an example of why I don’t assign one in Environmental here.  The most popular Money and Banking textbook on the market has only one mention of the idea of seigniorage in a 700 page tome. And it is only brought up in the context of why perhaps a foreign country might not want to pursue dollarization. Hundreds of pages on US monetary history and policy and not a single word about how much money the central bank can generate by “making” money. For example, the Federal Reserve made $40 billion of “profits” for the US government two years ago. This year it is on pace to double that. Yet not a mention in this book.

So, how much do I “save” students by not assigning books? About $51,000 per year. But think about the incentives that are set up for me to do that. First, I don’t stand to gain from helping the students lower their costs. In a typical competitive business, if we lower costs we can sell more product and make higher profits, which further incentivizes business to contain and lower costs. Not here. In fact, figuring out how to replace all of those textbooks with original and other source material is extremely costly in both time and opportunities – and this is an ongoing cost. Second, if I manage to “save” students from spending $51,000 on books, I am certain that the University itself will figure out a way to capture those savings by spending more on University projects totally unrelated to the academic success of the students.  The analogy would be that a husband and wife put their monthly cash in an envelope for both to access. If the wife decides to hold back her spending, the husband simply increases his on nights out with the boys and lottery tickets. There are other things going on, perhaps we’ll explore them in the future.

I like the idea of saving money on textbooks, but why the focus is only on textbooks and not the overall cost of obtaining an education is awkward at best.

4 Responses to “Helping Students Save Money on Textbooks”

  1. Speedmaster says:

    >> “I like the idea of saving money on textbooks, but why the focus is only on textbooks and not the overall cost of obtaining an education is awkward at best.”

    Great summary.

    I also dislike the all too common belief that for-profit somehow means bad for consumers, or evil. To wit …

    For-Profit Colleges May Lose U.S. Aid Over Violations – BusinessWeek
    “Nov. 22 (Bloomberg) — For-profit colleges that pay recruiters on the basis of the number of students they sign up may lose access to U.S. government student aid, which provided the colleges with $26.5 billion last year and can account for as much as 90 percent of company revenue.”

  2. Asa says:

    Apart from Intro and Intermediate Micro classes and Econometrics, the University of Washington, where I got my Econ degree, used very few text books in their courses. Beyond the basics, learning from current events or academic papers is much more useful. What textbook would you use for an Economics of the European Union course for example? Any book on the topic is immediately out of date as soon as it’s printed. However, you bring up a good point that this is much harder to pull off as a professor. It requires constant work to source the material and keep it up to date. I don’t think I appreciated all the work my professors put into this. And certainly never thought about whether or not they were saving us money.

  3. chuck martel says:

    ” It requires constant work to source the material and keep it up to date.”

    Yeah, that’s why they call it “work”. That’s the role of the instructor, to have an up-to-date knowledge of the subject matter, organize and interpret it and then expose it to the students. While the ideas of Adam Smith, Bastiat, David Ricardo, etc. are still relevant, events that have occurred and are occurring at this moment require pedagogical techniques that textbooks cannot completely perform.

  4. Tom Crown says:

    Nicely said. I agree completely with your points; stepping over dollars to pick up dimes.
    BTW, “incentivize” is a terrible non-word. “Incent” would suffice.

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