Of Casebooks and Trabants

We are all familiar with the explosion of healthcare costs over the past 40 years.  According to the Bureau of Labor Statistics, the price of medical services in the United States increased by 575% between 1978 and 2013.  But that’s child’s play compared to the increase in prices of college textbooks.  The price of college textbooks has increased by 812% over the same time period. 

Why? 

Consider the Trabant.  Manufactured in East Germany between 1957 and 1991, the Trabant had an exhaust-spewing, 26-horsepower two-cylinder engine; went from 0 to 60 in, well, never; was made mostly of resin mixed with cotton; was inefficient to manufacture; and remained practically unchanged for 30 years.  But it was always in such high demand that consumers would wait years for the chance to buy one, and it could cost up to a year’s salary. 

(2nd row from the fence, 6th from left: your theories posted to comments appreciated)

The Trabant has its nostalgic charm now,* but it is doubtful three million consumers would have waited years to buy one at a full year’s salary had not the decision been made, without regard to value, that it would be the only choice. Someone who didn't have to bear the costs of his buying decision made the decision for everyone else.

The purchasing decision for healthcare products is often made by one person (the doctor) who does not bear the cost of that decision, on behalf of many others (the patients) who have no choice but to bear the costs of that decision.  The pharmaceutical industry targets doctors directly; the doctor decides what to prescribe, but does not pay for the prescription.  Often, she has no idea what the retail price of the product she prescribes is.  Often the real price is obscured even from the patient.  The transaction often occurs between the pharmaceutical company and an insurer, barely visible to either the doctor or the patient.

In economic terms, healthcare products are price inelastic.  Because the person making the purchasing decision on behalf of others is unconscious of the price, or at least unburdened by having to pay it, price is not reflective of value to the consumer.     

The textbook market has the same problem.  One person – you, me, every one of our colleagues – makes a purchasing decision on behalf of others, often unconscious of the price and always unburdened by paying it. Think back a moment – how many students have you had in your classes?  I’ve been teaching for 8 years now, and I’ve probably averaged 75 students per semester.  That’s 1,200 buying decisions I’ve been empowered to make.  What about you?  Put your number in the comments section.   

A typical new casebook costs between $200 and $250, and that’s not including a supplement for rules, statutes, and recent decisions.  Now we’re pushing $300.  But our students are clever; they find ways to pay less.  They find used copies, or rent, or share, or find the cases on their own.  [Note that means you don’t actually know what course materials your students are using.]  So let’s say on average they pay $200.  Now let’s say you’ve got 200 students per graduating class, and on average they’ve got 5 classes each, per semester.  That means that the students at your school are paying at least $1 million per year for your faculty’s casebook buying decisions.   

As for me, over 8 years I forced my students to buy about $200,000 worth of casebooks.  I was unconscious of the price at first, but kept doing it even after I learned it.  Casebooks that I used maybe 3/4ths of, that I couldn’t customize, that I supplemented with my own handouts anyway. 

I don’t think we can do that anymore, not in good conscience.  Our students deserve more care than that.  As I've written previously, I’m part of a group of professors that created an alternative – ChartaCourse – that is much better than a casebook and at one-quarter the cost to students.  But there are other alternatives as well.  The key is: we have got to seriously consider them at the very least.  We owe our students that much and more.  Otherwise, we risk joining the Trabant itself as charming relics of a by-gone era.

 (in the photo above, there are 5 Trabants and 1 vehicle capable of achieving high speeds)

*In fact, it may soon re-appear as a much improved Canadian-manufactured electric vehicle.   

Comments

[Orin Kerr]

I wonder how the causal arrow runs between casebook prices and the used book market. Did high book prices create the used book market? Or did the used book market create high book prices? Or both? Also, has anyone tried to calculate the average cost of books given the used book market, which will tend to mean lower costs to many students (both buying and selling used books)? I wonder how the average cost of books today compares to the average cost 20 years ago when you factor in the much larger used book market today.

[Anonymous]

Mark - you hit the head of the nail on this one. Some aspects of keeping law school affordable are difficult, but books should be an area where we can work to keep costs down. ChartaCourse is a great addition to the effort. I hope you make millions while saving students tens of millions!

[Derek Tokaz]

Mark,

I think there may be one additional step in the analysis, which is to ask who would benefit by changing the status quo. Of course the answer that comes to mind is students.

But if you look at the automotive industry, and we ask who benefits by changing the status quo, we can see a very different answer. The consumers benefit, but so do the competing auto manufacturers who are now able to either enter the market (for new companies) or gain a larger share (for existing companies). There's a marriage of being able to profit from change and being able to effect change.

Is there any similar alignment in the law school text book market? I'm not sure. Who stands to profit by making a $40 casebook?

[Sheldon Bernard Lyke]

I am often frustrated by the economics approach that dominates almost every conversation that law professors have about almost any topic. Not because I am anti-economics, but often because much of the general conversation focuses on private actors and rational choice. Mark Edwards, I think that your analogy to the Trabant is spot on. While Derek Tokaz brings up an interesting question i.e., that there are private actors who benefit from competition in the automotive industry, and the same does not exist in the law school world. Your company, Chartacourse, would be the corresponding private entity in the law school text book market.

However, I think that Tokaz's analysis ignores a very important point. Change in the textbook market does not have to come solely from the private sector. Most law schools are nonprofit, and while some are private institutions, many are public institutions. Surely these institutions have an interest to change the textbook market not just to benefit students, but to improve the educational process, and make legal education more accessible. Some schools have done this. I vaguely remember Harvard Law School creating an open source textbook project.

I think it is important to have a broad view of ALL the players in the law textbook market--its not just students and textbook companies.

[VAP]

Tenured profs have to do this first. Students are already suspicious of the VAP and untenured. Even using a popular, but different, casebook from the more senior professor teaching another section invites trouble.

[James Grimmelmann]

VAP, maybe your experience was different than mine, but in my second year of teaching, I used three casebooks that no one else on the faculty was using, and in my fourth year I used my own materials. The only casebooks students have complained about were the popular, "safe," blue-chip market leaders.

I find that students respond well when professors are up front about why they use a particular casebook. Done right, it's part of demonstrating that we care our students and our teaching and have thought hard about what we do and why.

[Derek Tokaz]

I don't recall ever even being aware of what text books professors in other sections were using.

[Mark Edwards]

Good questions, Orin. I think I can say with relative certainty that high book prices (and improved communications technology) created the used book market. I don't know whether the mean price students pay now is higher than it was 20 years ago before the growth of the used book market. Of course, one problem with the casebook is exacerbated rather than solved by the used market -- in some areas (like Crim Pro, as you know better than anyone) the law develops so quickly that casebooks risk being out-of-date before they arrive on shelves. Used books are often earlier editions.

[Mark Edwards]

Derek -- I doubt that anyone can profitably publish a $40 print casebook. But ChartaCourse, for instance, sells chart subscriptions for $49, and the charts are casebooks and supplements combined in one.

VAP -- interesting point. I haven't heard that perspective before, but it makes some sense to me. Most of our adopters have been tenured faculty.

Anonymous -- thanks Mom.