The Mysteries of Textbook Economics

by Henry on February 11, 2009

“Andrew Gelman”: is puzzled.

I received a free copy in the mail of an introductory statistics textbook. I showed the book to Yu-Sung and he said: Wow, it’s pretty fancy. I bet it costs $150. I didn’t believe him, but we checked on Amazon and lo! it really does retail for that much. What the . . . ? I asked around and, indeed, it’s commonplace for students to pay well over $100 for introductory textbooks.
Well. I’m planning to write an introductory textbook of my own and I’d like to charge $10 for it. Maybe this isn’t possible, but I think $40 should be doable. And why would anybody require their students to pay $150 for a statistics book when something better is available at less than 1/3 the price?

… It just mystifies me that, in all these different fields, it’s considered acceptable to charge $150 for a textbook. I’d think that all you need is one cartel-breaker in each field and all the prices would come tumbling down. But apparently not. I just don’t understand.

Well, perhaps “crack economist Greg Mankiw”: might be able to solve this particular mystery. Or, perhaps, not so much. But more simply, I think that the obvious public choice answer is that the costs of this particular arrangement are borne by the students, who constitute a captive market, rather than by the professors, who actually choose the textbook that is required. All that you need are some very moderate side-payments to persuade self-interested professors to adopt particular textbooks (perhaps even just lowering their search costs by sending them free copies). So the cartel-breaker would have to provide sufficient inducement to the professors, which seems rather unlikely given that they would not be making monopoly profits, and hence would be outbid by those who _are_ in a position to capture them.

Of course, if the professor is teaching their own textbook to large undergraduate intro classes and making large amounts of money from each semi-compelled purchase, then no sidepayments at all are needed (not all professors being as conscientious as Andrew Gelman). There’s clearly an opening for some enterprising grad student to write a paper (perhaps for the _Journal of Economic Perspectives_ or some such) on the characteristics of this very interesting market …