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In this era of Amazon and Google, could we finally drastically lower the cost of textbooks?

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Check out the chart above. It’s from here (AEI) via here (The Atlantic), and basically it captures this idea: since 1978, the cost for college textbooks has exceeded the rising rate for medical services, new home prices, and even inflation. While the number has declined — in early 2013, students said they paid about $655 annually on books and supplies, down from $702 annually in the study prior — it’s still a fairly sizable number. After student aid, the out-of-pocket tuition cost at a four-year university is about $2,900; it can be hire for grad programs. So you’re essentially tacking on 25 percent of the total to the top just for books.

Here’s a personal story: during my first semester of grad school, I used Amazon Prime and used copies of textbooks; whenever I saw a class with a series of case studies, I just found them online (you can find almost anything on Google, even the HBR stuff). I probably paid about $230 all-in using this route. I ended up barely ever cracking 2 of the 3 more expensive books, so the second semester (I just began my fourth) I started not buying books. I have a 3.7 GPA, and believe me, I am not that intelligent, so the bigger point here might be that books are a little bit of a racket. A kid I know in grad school dropped $1,130 on one semester of books. Books. His rationale was that when he got older books, it distracted him to see what others had underlined/highlighted, so he went with all new stuff. If you factor in course packets and some of the real big, glossy numbers, the total can hit four digits. It’s not the norm, but it can happen.

So let’s tackle these issues one at a time. First, why are textbooks so expensive? The commonly-held idea is that they cost more to produce — charts, graphs, glossy pages, thick — and because they have relatively limited runs of printing, there’s no real economy of scale for the publisher (which they might get with an insanely popular textbook, or, say, a vampire novel).

Problem is, basic economics pokes hole in that theory. To cue up Mental Floss:

In the simplest economic terms, the high price of textbooks is symptomatic of misaligned incentives, not exorbitant production costs. Students hold the reasonable stance that they’d like to spend as little money as possible on their books. Students don’t really have the latitude to pick which texts they need, though.

Professors pick the course materials, and faculty members don’t have any strong incentive to be price sensitive when it comes to selecting textbooks. Their out-of-pocket expense is zero whether the required texts cost $100 or $300, so there’s no real barrier to heaping on more reading material. If a student needs Class X to graduate, they’ll likely need to procure the required texts. This lack of cost-control incentives for professors is a major reason that at some point in college, everyone meets the expensive textbook’s even more maddening cousin, the Expensive Textbook You Never Even Use.

Now, remember above in the chart, where medical costs were one of the comparison points for textbook prices? Well, there’s similar context here. Doctors can prescribe drugs that they themselves never have to pay for. Professors can do the same.

Think about this, though: if you’re in your early 30s, you grew up checking the encyclopedia for certain things. I actually learned about Idaho — and did a small report on it — entirely from the encyclopedia. I feel I learned about photosynthesis the same way. Very few people use encyclopedias anymore. Some call this “The Wikipedia Effect.” Professors and bosses are weary of Wikipedia because false information can get on there, and that is a valid concern (although I’ve also seen professors put up Wikipedia entries in class), but the question remains: couldn’t something like “The Wikipedia Effect” happen to textbook sales?

In sum? Yes and no.

This is from a December 2012 Slate article:

Now a startup called Boundless.com is trying to change that with a service it calls “textbook replacement.” Over the last decade, a great deal of academic content has been made available on the Internet, for free. The open educational resources (OER) movement has produced high-quality texts, videos, charts, problem sets, and other useful content in a huge array of subjects. Some of the authors are college professors who want to share their work at a larger scale; others are sponsored by nonprofits promoting education in the developing world that embrace the ethos of the open Internet.

In fact, there’s so much open content out there now that sorting through it all can be daunting. Boundless curates OER and organizes it in a way that mirrors popular textbooks. So if you’ve been assigned to read Chapter 4 (“Principles of Supply and Demand”) of Mankiw’s book, you can simply head to Boundless and get free content that covers that same ideas and concepts, optimized for your tablet or e-reader. For students stocking up on textbooks for their spring 2013 classes, that sounds pretty appealing.

Seems reasonable. Like I said above, I do this all the time and my grades are fine. Of course, because this is litigation-friendly America, Boundless got sued and eventually settled out of court. The terms are confidential, but in the process of the lawsuit, 2 of the 3 founders left the company. Their CEO wrote this blog post after the settlement, noting:

The transition to a digital educational content foundation has been slowed by a conservative industry, a search for new business models, and a lack of great products.

Thankfully, we’re finally on the verge of solving this.

In the long run, something like MOOCs might be the answer — in an ideal world, MOOC professors would just take the content in PDF form and share it with the class when they enroll. In the short term, your best bet is probably what I did; for the textbooks you absolutely need, use Amazon used copies (provided you’re comfortable with that). For article readings, use Google. You may have to spend $6 here and there on an article, but it won’t be a ton. If you’re a really grade-focused person, look at the context of different readings, find an area with a ton of research/writing/current news applications, and when the syllabus hits that week, write a really thoughtful e-mail to the professor about all the current applications you’re seeing of what’s happening in class. It’s impossible to get lower than a B-Plus in a course after you do that. Believe me. And, you learned how something written 10 years ago and revised three times to gauge your wallet actually applies back to the modern day. Isn’t that something?

If you want to grind your gears over this topic, here’s the most egregious story of them all: Jim Stewart becomes a millionaire writing calculus textbooks ($245 or so retail), ends up building himself a $24 million house. Calculus hasn’t actually changed a lot since the 1700s, but a ton of that money is from new editions (often paired with CD-ROMs, etc.). It’s a racket. But hopefully, a new model is coming.

Ted Bauer

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