Why My Students Don't Get Rebates

Ian Ayres recently posted about returning to his students the royalties on his book that he assigned to them.

This has caused me trouble: one of my students read it and asked why I don’t do that as well for my little book, Economics Is Everywhere. I have done this before, when I assigned my labor economics text to a class of 35 students, but not in her class.

The reason I don’t now, I told her, is transactions costs. With 550 freshmen, there is no way to determine which students have bought the book or to hand out the money efficiently. Instead, I make a donation to the university about equal to the royalties earned from my class. My guilt is assuaged and my very scarce lecture time is not disrupted. But if the transactions costs (and my class) were smaller, giving the money back to the students would be a Pareto improvement: the students would be better off. (Hat tip: R.W.)


Once again, I must remind you that in hypotheticals with more than two parties present for a transaction, pareto improvements are difficult if not impossible.
In this case, the university is clearly losing your donation if the money goes to the students instead. In order for it to be a Pareto Improvement, *no one* must be made worse off.

Also, I think it's very possible to remunerate that number of students. Have them present their book on a specified day, and make a sharpie mark on the inside cover for each book you remunerate. You may also check student ID's to ensure they are enrolled in your class.


Isn't the university profiting off of the sales of the book in the first place?

So you are donating to the same people who are profiting that money back anyways?


Wouldn't the Pareto-optimal result be to keep the money yourself and give all your students higher grades?

Rich S

How about not making them buy the book at all? You have the material, send out PDFs of the relevant information and let the students print it, or even better, use it in the computer or with a reader such as Kindle.


Isn't a donation much more likely to benefit you as the professor rather than any of the students?

If the money goes to capital improvements or is invested in your school's endowment, the returns on that investment benefit you over the many years you will teach. Your students only see the returns (if at all) during the short period of time in which they matriculate.

And that's assuming that the money is spent on something that both of you can enjoy. My slightly cynical guess is that a donation to the university is much more likely to be spent on salaries for academics or administrators than on anything benefiting students. With no market for corporate control, the agency costs in higher education dwarf anything found in the private sector.

Conor - Ireland

This whole concept makes no sense to me, why on earth should students care who gets the royalties?

The best text for a course taught by professor x, is going to be a book written by professor x, there is absolutely nothing wrong with that.

Using another book is just going to raise questions such as 'if he doesn't use his own book, it must be total rubbish, and therefore he must not know what he is doing'.

The students have to pay for a book, at that point they don't really care whose book it is. Don't feel bad for precribing your own book, plus giving the money to the university is a pareto improvement of sorts, if that money benefits the students eventually.


Once again, while I am thankful for the desire for integrity, I am despondent over the false guilt!

Sir, if you have written a book that is so good that you think you ought to use it in your class EVEN if you have to "rebate" the royalties, then you ethical dilemma is solved--you have shown, by your actions, that this is not about greed. So rebates are unnecessary.

Now, to be fair (ha!), it may be about self-aggrandizement--"We will be using MY AWESOME BOOK for this class"--which is likely sin of another color. But at least it doesn't require rebates.

"The workman is worthy of his hire." You likely wrote the book because of the deficiencies you felt were in other books. You've done the students a favor! The SHOULD be paying you.

If somone asks why they didn't get a rebate, tell them that it's for the very same reason that the U.S. charges us taxes to live in a country most of us could not afford to leave--BECAUSE IT'S WORTH IT!

In any case, all the best for aspiring to integrity, even if I happen to think it is a misplaced effort in this case.



Wouldn't it be just as easy to have cookies and coffee brought into class a few times? You pay for that with the amount you return to the school and exchange the food / caffeine as a barter. Put up a sign or mention that you'll be doing this and why and that those who didn't buy the book should exercise restraint. You could turn this into a neat little experiment.

Rich Wilson

Wouldn't it be easiest to just publish it online with a Creative Commons license? Or are you only concerned with not profiting from your own students?


Joel, how does giving students higher grades really help if they've done nothing to earn them?


Text books are expensive, and I haven't seen one yet that was worth it. Sure , my chemistry book from 35 yrs ago was a good book, but its the same content as those published today, maybe even better. That's true for many texts. Let's use the same book more than once and over time everyone wins.
PS, if you really wanted to, you could easily come up with a simple way to credit buyers of new books.

Peter Norvig

You could host a party for the students at the end of the year, spending an amount equal to the rebate.

Jeff Bowles

I believe that Jonathan's suggestion is the most polite, most productive, and makes the point to the students in a way that they will remember.

Pedagologically speaking, the lessons might be best served if the students puzzled through much of what is in this thread of comments, first.

Then feed them. Students remember "free food."

Glinkus Meerkat

Guys at my high school used to keep all the royalties they received for the textbooks they authored all the time, even if they were using the book in the class. It was no big deal.

I mean, really. You wrote the book, right? You're teaching the class, right? If you think someone else wrote a better book, then you should either (a) use that book and apologize (to someone) for writing your book, (b) use your book and not apologize, or (c) find another way to make a living.

Make up your mind. Are you qualified, or not?

Janet V

@Conor from Ireland: US students often pay 2-3 times what students from the rest of the world pay for the same exact book, same edition, sometimes even the same pagination.

That's why the first place I look when I'm assigned a new text is Amazon to see if some re-seller has the International edition. I don't care if the book says it shouldn't be sold in the US. One marketing text I had warned that the International edition had a more global spread of case studies. But when I compared it with another student's US edition, there were no discernible differences. Same cases, same chapters, same everything.

Also, remember that there is no free market when it comes to textbooks. I have absolutely no choice in what to buy. I cannot say that, since Professor X's economics textbook is better, I'm going to use that for the class instead of assigned Professor Y's inferior text. If that's the case, then I suck it up and buy Prof. Y's book, but if I really want to understand the material, I'll buy a used copy of Prof X's book. That may be intellectually optimal, but it far from economically so. That was how I made it through my undergraduate statistics class. By the time I took it in grad school at another university, the text was much better.


Kevin H

What about signing the book for each student in a particular place? This seems like a win-win as it ensures that you'll only pay for a book once, and if anything benefits the student making the copy of the book more valuable.


How about you sign a deal with the campus book store so they automatically give a discount on the book?


Well, you could just donate copies of your book/s to the university's library and explain to your students the benefits of these donations in the context of an overlapping generations model.


When Ian posted his story, I told of how my professor made an un-erasable mark on a random page in the books, and any book that has this mark was bought used. Then the students with the marked books don't get the $.


The point no one seems to be mentioning is that rebates avoid the problem of an apparent conflict of interest that appears when an authority (often in a mandatory class), mandates that his students purchase a book which he profits from the sale of.

A professor who makes a point of not profiting off his students gets instant integrity points from me.