The College Textbook Racket

Harvard economist Greg Mankiw has banked an estimated $42 million for his textbook 'Principles of Economics,' reports say.

Shane Ralston | March 7, 2017

Harvard economist Greg Mankiw has banked an estimated $42 million for his textbook 'Principles of Economics,' reports say.

The business of selling college textbooks is a racket. As Ernie Smith of Atlas Obscura notes, it has a long history. Every academic year a new edition of practically every college textbook is released by the publisher. The prices of college textbooks are horrendously high, sometimes in excess of $200. Since textbooks are required reading in almost every college course, students must buy or rent the newest, and thus the most expensive, edition.

Academic publishers send professors sample copies of their texts over the summer. Publishers’ reps inundate professors with e-mails and phone calls begging them to choose their textbooks. Sometimes publishers contact professors asking them to write textbooks. The profit motive for publishers is immense. So is it for the professor who writes a widely used textbook. Royalties from a single book have been known to pay entire mortgages. 

But why do college textbook publishers charge so much? George Washington University political science professor Henry Farrell offers an explanation:

“College textbook publishers charge vast and extortionate amounts for their textbooks for one simple reason. They do it because they can. Students usually have to take a few required big courses for their major, and they have to buy the required textbooks for these courses. This means that the market is price insensitive (which is economic jargon for saying that demand doesn’t go down as much as it should when prices go up). Professors often don’t care as much as they should about the costs of the textbooks — after all, they don’t have to pay those costs themselves. Students do usually care, but they don’t have any choice in the matter — they have to buy the textbooks they are required to buy. Businesses can make big, big profits from selling to price-insensitive markets, since they can jack up prices without weakening demand for their product. It’s a sweet deal for academic publishers, but not so great for students.”

About a year ago, I decided to stop using college textbooks and instead supplied photocopied texts of reading materials, which copyright law permits me to do under the fair use for educational purposes exception. Students were elated. They saved themselves a lot of money. I felt like I had chosen an ethical alternative. Still, I miss teaching from an actual textbook. To me, the heft and feel of a book is preferable to a stack of photocopied articles.

I’m not the only professor seeking to save students a few bucks. California State University at Fullerton math professor Alain Bourget assigned his students an $80 alternative to the textbook that his institution suggested. For helping his students, he received a formal reprimand. Scott Jaschik at Inside Higher Ed reports: “Bourget maintains that his choices are just as effective educationally and much less expensive--so he should have the right to use them. But the university says that it makes sense for courses that have multiple sections to all use the same textbooks.” What’s that saying?  No good deed goes unpunished. 

Other professors are making a killing off of the textbook pricing racket. Harvard University Economics professor Gregory Mankiw wrote the introductory textbook Principles of Economics, which retails for $356 on Amazon, and rents for approximately $50 on Chegg. It is estimated that through all the editions, Mankiw could bank (or already has banked) an estimated $42 million in royalties from this textbook alone. (He has written another eight textbooks.)  No wonder he has an ear-to-ear smile in the picture available on his professional website.

What do you think? Should professors and publishers be permitted to profit so immensely from students? Is the college textbook pricing racket unethical since the marketplace is "price insensitive"?