Monday, October 25, 2010

Why Are Textbooks So [EXPLETIVE DELETED] Expensive?

This is a very simple problem in economics. Textbooks are irrationally expensive and have a price inflation rate far above the general economy for the same reason American health care is absurdly and increasingly expensive. In both cases it's because the market is driven by people spending other people's money.

Professors decide what textbooks must be purchased, but students pay for them. Similarly, patients and doctors decide what care will be purchased, but insurance companies (and the government) pay the bills. When you are spending other people's money, there is an incentive for maximum consumption without any incentive to restrain costs.

The solution in the case of textbooks is simple. Colleges (who decide what textbooks to use) should also pay for them. If that happened, I guarantee that the many high quality open source (i.e. free) textbooks available online, would suddenly become very popular among college administrators. As a response, the price premium of textbooks over other types of books would vanish. A $29.95 textbook might be purchased, but one priced at $159.95 would not.