An unexpected Freakonomics lesson

Walter Park, an associate professor at American University in Washington, DC sends along the following story:

I’m using your book as a required reading in my principles microeconomics class (of 300 students). The students enjoy the book and are better appreciating the course as a result.

Interestingly, as I gave a lecture on “Price Discrimination”, using an example of the demand for textbooks (relatively inelastic) vs. novels (relatively elastic), the students pointed out that in our campus textbook store, “Freakonomics” is on sale at the regular price in the textbook section (1st floor) and at a 30% discount in the General Reading Section (2nd floor). Same college. Same store. Same hardback. Just a floor apart. I don’t know how long before the textbook store manager realizes this. At least the students got to observe some economics principles at work.

When we set out to write a book about economics that would be relevant to everyday life, we didn’t actually expect that the lessons would be this literal.


kramsauer

Unreal.

mhertz

Very funny. Sort of reminds me of the generic drug phenomenon - that is, most consumers are willing to pay 25%-50% more for an ibuprofen manufactured under the Advil label, then purchasing one's local drug store chain brand.

rolocroz

...set out to write a book, I presume?

Steven D. Levitt

Thanks rolocroz. Not enough sleep last night.

montecore

When I was in college, I believe the most-expensive place in town to buy a Bible was in the text book department at the school bookstore.

daltonrooney

I just recently returned to college after a 10 year hiatus (to study Economics, no less). I was surprised to discover that books are still as expensive as ever. I assumed that the Internet would have had some impact on the prices at campus bookstores.

Many of my professors have allowed us to purchase older editions, which means that I can find a used book on half.com for $10 - $25, rather than pay $50 used or $75 new at the campus store. I would like to see the invisible hand of the market step in and get these bookstores in line.

mhertz

I agree, daltonrooney. I, too, am a college student (at McGill), and I can empathise with paying $125 for a new textbook. Though Amazon has begun selling school textbooks, their selection is still limited. University book stores are simply a monopoly.

Rteegarding older versions of text books, though most profs will "allow" you to get them (they have no control whether you do or not!), they always mention that the newest version is your best/safest bet since it has the most updated iniformation and for testing purposes, you don't want to have a version that doesn't have all the information that the prof deems "fair game".

raford

I noticed that when I was an undergrad at MIT: a book in the textbook section would frequently be more expensive than the same book in the general reading section of the store. I even asked about it once and they told me the sections have different inventory systems and return policies, and I should just get whichever I wanted. They didn't seem to care about the overlap.

econopete

One of my professors wrote an op-ed about textbook prices in our local paper. I can't find a free copy of it online, but I do remember a few points that haven't already been brought up.

First, there are few textbook publishers, so there is no pressure for any publisher to reduce prices. (This is why the invisible hand has been replaced by the invisible slap.) These textbook publishers will often sell textbooks at reduced prices in other countries for much less to tap those markets, but they ensure that they cannot be sold back into the U.S. market.

and to respond to mhertz:
Advil tastes better; it makes all the difference. Of course, I could just stuff a generic pill in a marshmallow to give it that nice sugary coating, but that's beside the point :p

bgriffs

There must be a return-policy arbitrage opportunity in here somewhere:)

John S.

Regarding college textbooks, I recall selling new textbooks back to the store. I forget what they paid, maybe a quarter of the original price. So the real price is only 3/4 of the cover price.

I did keep a couple of them, thinking that I'd use them as references. They do look nice sitting on the shelf I suppose, but for all I have used them down through the years, it would have been better to sell them back.

Rachel

After four years and three degree changes, I've finally found one area that wasn't sucking students dry with textbooks that averaged out at around a buck a page - Communication Studies. Four of my five classes this term are working mostly with materials that are online. First year I have a philosophy prof that insisted we MUST buy the copy of Descartes' Discourse on The Method for $45 because it had his notes/essays included...those I know bought it because we were first year and didn't know better. Well, we never used his essays, the text can be purchased for less than $10, and we felt pretty scammed.

And once you've highlighted/bent the book, getting any money back becomes a *big* hassle.

prosa

One of the books on the "required" list for a European History course I took in college was a recently published biography of an obscure French general. This general had been active in a time period largely outside the one which the course covered, and combined with his obscurity this meant that we ended up reading literally no more than two or three pages of the 300+-page biography. It could have been omitted entirely without affecting the nature of the course one iota.

Why was it on the required list at all? Turns out that the professor who taught the course had written the book a short time earlier. Anything to boost sales, I guess.

jon

What you brought up Prosa was the thing that I found most offensive about buying textbooks. We, the students are paying more than one thousand dollars each for the expertise and knowledge of the professor. They then make us go out and buy their book. On top of that, we are still forced to attend all lectures, under penalty of failure.

prosa

jon -
I wouldn't have had any problem with being required to buy the professor's book if its subject matter had been pertinent to the course and we actually had read a non-insignificant portion of it. But when the book requirement was nothing but the professor's thinly disguised attempt to boost sales - motivated more by ego than financial considerations, I'd say - it's a wholly different matter.

funkyj

Here is a topic for research; Why do professors regularly change their required book list for courses in which the material being taught hasn't changed for a century (e.g. beginning calculus)? Especially when the books they are switching from and to are not theirs or their immediate colleagues?

Presumably there must be some economic incentive that motivates them to be complicit in the textbook extortion racket. While there are exceptions (e.g. MIT: http://web.mit.edu/newsoffice/2001/ocw.html) it is remarkable how many proffessors play the "change the text every two years" game.

sophistry

Probably because the bookstore doesn't want to/ or can't order old editions and the professor just doesn't care about minimizing student's book expenditures.

Quotulatiousness

Quick links

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KeithM

I suppose I had a good experience with a professor teaching from his book. He told us not to bother buying it and handed out photocopies of the galleys (for a new edition he was working on) for our class text.

blog.shrub » Blog Archive » textbook pricing scams

[...] Freakonomics readers get a lesson in price discrimination (or bad customer service): Interestingly, as I gave a lecture on “Price Discrimination”, using an example of the demand for textbooks (relatively inelastic) vs. novels (relatively elastic), the students pointed out that in our campus textbook store, “Freakonomics” is on sale at the regular price in the textbook section (1st floor) and at a 30% discount in the General Reading Section (2nd floor). Same college. Same store. Same hardback. [...]