This tweet caught our eye last week, posted by John Schmitt, a research associate at the Economic Policy Institute and until recently research director at the Washington Center for Equitable Growth:
“Good god. Econ text book $348 new. $262 used. And even *renting* a used copy is $166!”
See the picture he posted, above. There’s a reason why we wanted to make sure The Economy increased the emphasis on market failures and economic rents: students see them everywhere, even in their economics departments. But we can do something about this. At the end of Unit 11, we explain that although we complain about economic rents, they can be a force for change: “they encourage innovation,” we wrote, “[to] encourage new entrants to a market and thereby lower prices for consumers.”
The price of textbooks, not just in the US but worldwide, was one of the incentives that drove us to innovate.
Of course, monopoly rents can also drive policy. Last week, four US politicians proposed The Affordable College Textbook Act. You can read about it here. It “seeks to reduce the cost of textbooks at US colleges and universities by expanding the use of open textbooks (and other open educational resources) that everyone can use, adapt and share freely.”
“Many of my students have broken down in tears during my office hours this semester due to stress and anxiety, at least partly attributable to financial worries.”
Those who argue in favour of the bill point out that textbook prices have risen 88% in the last 10 years, and the annual student budget for books and supplies in the US is more than $1,200.
There is a role for traditional publishers, especially university presses, which continue to make a great contribution to scholarship. For textbooks, print still provides credibility that may be hard to achieve with digital-only for some audiences. Yet digital can scale and be available open access. With a reasonable price – as in our recent partnership with Oxford University Press where the price of The Economy is less than $50 – print and digital are complementary.
Thad Jackson teaches economics at Arkansas State University, and he showed us some calculations that he had done on the effect of textbook prices for his students. Arkansas is one of the poorest states in the US, with a poverty rate of about one in five, partly driven by long-term low educational attainment. The headline figure: switching to CORE’s open-access text and open-source supplementary material will save his students $100,000 this academic year.
“The real median household income in Arkansas ($41,995) is roughly three quarters of the US real median household income of $55,775,” he says, “The number one reason former students report for dropping out of Arkansas State is ‘financial concerns’. Note that the $455 my Economics Issues and Concepts students spent on textbooks last year is the same amount I spend on rent each month for a five-year-old, fully-furnished, house in a good neighbourhood, all utilities included. In other words, textbook costs amount to real money in places like Arkansas.”
We often focus on the returns to education, but fail to fully appreciate the avoidable sacrifices that those students will need to make. In Arkansas, Thad admits that the struggles his students have to complete their education have open his eyes. In the 2015-2016 year, 8,267 students out of 13,410 relied on federal and institutional loans. “These figures fail to capture the large proportion of our students who hail from small, rural, poverty-stricken towns, and who face financial constraints which seriously hamper retention rates and affect student outcomes – about one-third of my students are working their way through college.
“University can be very tough, especially for those students enduring economic hardships. Many of my students have broken down in tears during my office hours this semester due to stress and anxiety, at least partly attributable to financial worries.”
Thad isn’t asking for handouts from politicians (“nothing scares me more”, he jokes). He just wants to lift the financial burden on low-income students who deserve better than being compelled to rent a used textbook for $166.
If you’re visiting the 15th Annual St. Louis Fed Professors Conference (2-3 November 2017), Thad is presenting “Introducing CORE: A New Paradigm in Economics and Instruction.”