Tuesday, January 27th, 2015 9:39 am

Textbook Prices

Question A: Most college professors who assign textbooks would not be able to guess, within 10% of the actual figure, the retail price that their students pay for new copies of those books.

Responses
 

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Responses weighted by each expert's confidence

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Question B: Since students can resell college textbooks or rent electronic versions, the net burden on students is substantially lower than retail prices for new textbook purchases would suggest.

Responses
 

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Responses weighted by each expert's confidence

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Question C:
Even though the professors who select textbooks are different form the people who pay for them, the price of new edition college textbooks reflect classic forces of supply and demand.

Responses
 

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Responses weighted by each expert's confidence

Source: IGM Economic Experts Panel
www.igmchicago.org/igm-economic-experts-panel

Question A Participant Responses

Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Uncertain 1
Bio/Vote History
         
Alesina Alberto Alesina Harvard Did Not Answer
Bio/Vote History
         
Altonji Joseph Altonji Yale Agree 4
Faculty will know what their university book store charges but will not know about foreign editions
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley No Opinion
Bio/Vote History
         
Autor David Autor MIT Strongly Agree 8
Bio/Vote History
         
Baicker Katherine Baicker Harvard Agree 1
Bio/Vote History
         
Banerjee Abhijit Banerjee MIT Did Not Answer
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Agree 3
Bio/Vote History
         
Brunnermeier Markus Brunnermeier Princeton Strongly Agree 8
Bio/Vote History
         
Chetty Raj Chetty Harvard Did Not Answer
Bio/Vote History
         
Chevalier Judith Chevalier Yale Uncertain 8
I have not seen a recent survey. I am reminded to list the price of the texts on my syllabus by the person in charge of HEOA compliance.
-see background information here
Bio/Vote History
         
Currie Janet Currie Princeton Did Not Answer
Bio/Vote History
         
Cutler David Cutler Harvard Agree 4
Bio/Vote History
         
Deaton Angus Deaton Princeton Uncertain 1
Bio/Vote History
         
Duffie Darrell Duffie Stanford Agree 6
Just a guess, based on my own experience.
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Agree 6
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Agree 5
Bio/Vote History
         
Einav Liran Einav Stanford Agree 6
Bio/Vote History
         
Fair Ray Fair Yale Agree 5
Bio/Vote History
         
Finkelstein Amy Finkelstein MIT Agree 2
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale No Opinion
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Uncertain 1
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Agree 3
Bio/Vote History
         
Hall Robert Hall Stanford Uncertain 1
I'd run a survey if I wanted to know
Bio/Vote History
         
Hart Oliver Hart Harvard Agree 7
My guess is that most pick what they think is the best book (or, of course, their own book) without regard to price.
Bio/Vote History
         
Holmström Bengt Holmström MIT Agree 7
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford No Opinion
I am not aware of any data on this question so I would just be guessing.
Bio/Vote History
         
Hoynes Hilary Hoynes Berkeley Agree 5
Bio/Vote History
         
Judd Kenneth Judd Stanford Agree 8
Bio/Vote History
         
Kaplan Steven Kaplan Chicago Agree 4
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Agree 3
Based on asking a few people what they thought a basic principles book costs. Most shocked to learn it is well over $200
Bio/Vote History
         
Klenow Pete Klenow Stanford Agree 5
Bio/Vote History
         
Levin Jonathan Levin Stanford Agree 4
Bio/Vote History
         
Maskin Eric Maskin Harvard No Opinion
Bio/Vote History
         
Nordhaus William Nordhaus Yale Agree 8
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Uncertain 4
Bio/Vote History
         
Samuelson Larry Samuelson Yale Strongly Agree 8
Bio/Vote History
         
Scheinkman José Scheinkman Princeton No Opinion
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Agree 5
Seems right to me, but only based on my own experience.
Bio/Vote History
         
Shapiro Carl Shapiro Berkeley Agree 7
Bio/Vote History
         
Shimer Robert Shimer Chicago Agree 4
Bio/Vote History
         
Thaler Richard Thaler Chicago Uncertain 1
Need data to answer.
Bio/Vote History
         
Udry Christopher Udry Yale Agree 3
Since we have begun putting prices on our syllabi, it's become more likely that we would pass this test.
Bio/Vote History
         

Question B Participant Responses

Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Agree 4
Bio/Vote History
         
Alesina Alberto Alesina Harvard Did Not Answer
Bio/Vote History
         
Altonji Joseph Altonji Yale Agree 8
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Agree 7
Bio/Vote History
         
Autor David Autor MIT Agree 8
Bio/Vote History
         
Baicker Katherine Baicker Harvard Agree 2
Bio/Vote History
         
Banerjee Abhijit Banerjee MIT Did Not Answer
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Agree 3
Bio/Vote History
         
Brunnermeier Markus Brunnermeier Princeton Uncertain 8
Bio/Vote History
         
Chetty Raj Chetty Harvard Did Not Answer
Bio/Vote History
         
Chevalier Judith Chevalier Yale Agree 10
Yes, of course the fact that one can (often) sell the new book back helps, but many students skip buying the textbook.
-see background information here
-see background information here
Bio/Vote History
         
Currie Janet Currie Princeton Did Not Answer
Bio/Vote History
         
Cutler David Cutler Harvard Agree 4
Bio/Vote History
         
Deaton Angus Deaton Princeton No Opinion
Depending on the meaning, seems either trivially true, or just unclear what is being held constant.
Bio/Vote History
         
Duffie Darrell Duffie Stanford Disagree 2
Most of the students I see seem to have new copies. Stanford may not be the norm.
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Agree 6
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Agree 5
Bio/Vote History
         
Einav Liran Einav Stanford Uncertain 6
Bio/Vote History
         
Fair Ray Fair Yale Agree 7
Bio/Vote History
         
Finkelstein Amy Finkelstein MIT Strongly Agree 8
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale Agree 6
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Agree 10
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Uncertain 3
maybe. it depends on several factors, including how active these markets are and the costs of reselling/renting
Bio/Vote History
         
Hall Robert Hall Stanford Agree 8
...to a person who was unaware of the resale market (not me!)
Bio/Vote History
         
Hart Oliver Hart Harvard Agree 8
This seems rather self-evident, although perhaps not all students can do this. Some people no doubt also photo-copy parts of books.
Bio/Vote History
         
Holmström Bengt Holmström MIT Agree 7
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Strongly Agree 10
It is costly to change a textbook much with each edition so students can use much cheaper past editions with little intellectual loss.
Bio/Vote History
         
Hoynes Hilary Hoynes Berkeley Disagree 8
The resale market helps but does not change the net burden by much,
Bio/Vote History
         
Judd Kenneth Judd Stanford Agree 7
Bio/Vote History
         
Kaplan Steven Kaplan Chicago Agree 8
Bio/Vote History
         
Kashyap Anil Kashyap Chicago Uncertain 5
These factors help, but some students would like to be able to keep their books and that cost is much higher now
Bio/Vote History
         
Klenow Pete Klenow Stanford Agree 3
But new editions undermine this.
-see background information here
Bio/Vote History
         
Levin Jonathan Levin Stanford Agree 6
Bio/Vote History
         
Maskin Eric Maskin Harvard Agree 5
Bio/Vote History
         
Nordhaus William Nordhaus Yale Strongly Agree 9
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Disagree 3
Bio/Vote History
         
Samuelson Larry Samuelson Yale Agree 8
The net burden is lower than the retail price, but still scandalously high.
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Agree 6
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Uncertain 4
"Substantially" depends on those markets having few frictions, and I have no idea if that is the case.
Bio/Vote History
         
Shapiro Carl Shapiro Berkeley Agree 8
Bio/Vote History
         
Shimer Robert Shimer Chicago Agree 5
It would be useful to know what fraction of books are rented or resold.
Bio/Vote History
         
Thaler Richard Thaler Chicago Uncertain 1
Bio/Vote History
         
Udry Christopher Udry Yale Strongly Agree 7
See Chevalier, Judith, and Austan Goolsbee. "Are durable goods consumers forward-looking? Evidence from college textbooks."
-see background information here
Bio/Vote History
         

Question C Participant Responses

Participant University Vote Confidence Comment Bio/Vote History
Acemoglu Daron Acemoglu MIT Uncertain 5
Bio/Vote History
         
Alesina Alberto Alesina Harvard Did Not Answer
Bio/Vote History
         
Altonji Joseph Altonji Yale Disagree 4
Bio/Vote History
         
Auerbach Alan Auerbach Berkeley Uncertain 3
Bio/Vote History
         
Autor David Autor MIT Disagree 8
Only if you include agency problems among the "standard forces" of supply and demand.
Bio/Vote History
         
Baicker Katherine Baicker Harvard Disagree 2
Bio/Vote History
         
Banerjee Abhijit Banerjee MIT Did Not Answer
Bio/Vote History
         
Bertrand Marianne Bertrand Chicago Disagree 3
Bio/Vote History
         
Brunnermeier Markus Brunnermeier Princeton Disagree 8
Bio/Vote History
         
Chetty Raj Chetty Harvard Did Not Answer
Bio/Vote History
         
Chevalier Judith Chevalier Yale Agree 8
Professors only partially consider price when choosing textbooks. And consider test banks and other perks.BUT students are P elastic.
Bio/Vote History
         
Currie Janet Currie Princeton Did Not Answer
Bio/Vote History
         
Cutler David Cutler Harvard Agree 4
More than just classic supply and demand, though.
Bio/Vote History
         
Deaton Angus Deaton Princeton Agree 8
In some sense, this MUST be true. What else could it be?
Bio/Vote History
         
Duffie Darrell Duffie Stanford Strongly Disagree 4
Author-publisher search costs are high. Then, second-hand market aside, the publisher has a monopoly on the title, implying pricing power.
Bio/Vote History
         
Edlin Aaron Edlin Berkeley Disagree 8
Bio/Vote History
         
Eichengreen Barry Eichengreen Berkeley Uncertain 5
Bio/Vote History
         
Einav Liran Einav Stanford Agree 7
Bio/Vote History
         
Fair Ray Fair Yale No Opinion
Question too broad
Bio/Vote History
         
Finkelstein Amy Finkelstein MIT Agree 3
Bio/Vote History
         
Goldberg Pinelopi Goldberg Yale Disagree 6
Bio/Vote History
         
Goolsbee Austan Goolsbee Chicago Agree 5
Bio/Vote History
         
Greenstone Michael Greenstone Chicago Agree 2
Chevalier/Goolsbee research suggests demand is price elastic so not divorced from S & D but agency problem surely creates distortions
Bio/Vote History
         
Hall Robert Hall Stanford Agree 5
Provided one takes a broad view of supply and demand--printed books are a sunset product, and thus pricey.
Bio/Vote History
         
Hart Oliver Hart Harvard Disagree 5
In some fields there will be a prominent book with few competitors. The author has some monopoly power; the equilibrium price may be high.
Bio/Vote History
         
Holmström Bengt Holmström MIT Disagree 7
Bio/Vote History
         
Hoxby Caroline Hoxby Stanford Uncertain 8
There is an agency problem (instructors=agents, students=principals) but not severe owing to used books and student evaluations.
Bio/Vote History
         
Hoynes Hilary Hoynes Berkeley Uncertain 5
Bio/Vote History
         
Judd Kenneth Judd Stanford Disagree 7
Product differentiation and lack of incentives for professors to make efficient choices make this unlikely.
Bio/Vote History
         
Kaplan Steven Kaplan Chicago Agree 2
Bio/Vote History
         
Kashyap Anil Kashyap Chicago No Opinion
I don't have a good story for where the market failure or market power comes from, but the relative price has gone way up.
Bio/Vote History
         
Klenow Pete Klenow Stanford Strongly Disagree 5
Bio/Vote History
         
Levin Jonathan Levin Stanford Agree 1
Bio/Vote History
         
Maskin Eric Maskin Harvard No Opinion
Bio/Vote History
         
Nordhaus William Nordhaus Yale Disagree 8
Text prices include bundled ancillaries which students pay for but are benefits for teachers.
Bio/Vote History
         
Saez Emmanuel Saez Berkeley Strongly Disagree 6
Bio/Vote History
         
Samuelson Larry Samuelson Yale Disagree 10
There are too many imperfections and frictions in this market to model it simply in terms of demand and supply.
Bio/Vote History
         
Scheinkman José Scheinkman Princeton Uncertain 4
Bio/Vote History
         
Schmalensee Richard Schmalensee MIT Disagree 3
Bio/Vote History
         
Shapiro Carl Shapiro Berkeley Agree 8
Surely the prices reflect supply and demand, but not nearly so well as they would without the agency issues identified in the question.
Bio/Vote History
         
Shimer Robert Shimer Chicago Agree 7
But demand may be quite inelastic, since once a book is selected for a course, there are no substitutes.
Bio/Vote History
         
Thaler Richard Thaler Chicago Disagree 4
When the chooser is not the user then bad outcomes are common. My views are captured here: http://bit.ly/1Cql4mR
Bio/Vote History
         
Udry Christopher Udry Yale Uncertain 1
Difficult to interpret this question.
Bio/Vote History
         

10 New Economic Experts join the IGM Panel


For the past two years, our expert panelists have been informing the public about the extent to which economists agree or disagree on important public policy issues. This week, we are delighted to announce that we are expanding the IGM Economic Experts Panel to add ten new distinguished economists. Like our other experts, these new panelists have impeccable qualifications to speak on public policy matters, and their names will be familiar to other economists and the media.

To give the public a broad sense of their views on policy issues, each new expert has responded to a selection of 16 statements that our panel had previously addressed. We chose these 16 statements, which cover a wide range of important policy areas, because the original panelists' responses to them were analyzed in a paper comparing the views of our economic experts with those of the American public. You can find that paper, by Paola Sapienza and Luigi Zingales, here. The paper, along with other analyses of the experts' views, was discussed during the American Economic Association annual meetings, and the video can be found here.

The new panelists' responses to these statements can be seen on their individual voting history pages. Our ten new economic experts are:

Abhijit Banerjee (MIT)
Markus K. Brunnermeier (Princeton)
Liran Einav (Stanford)
Amy Finkelstein (MIT)
Oliver Hart (Harvard)
Hilary Hoynes (Berkeley)
Steven N. Kaplan (Chicago)
Larry Samuelson (Yale)
Carl Shapiro (Berkeley)
Robert Shimer (Chicago)


Please note that, for the 16 previous topics on which these new panelists have voted, we left the charts showing the distribution of responses unchanged. Those charts reflect the responses that our original panelists gave at the time, and we have not altered them to reflect the views of the new experts.

We have also taken this opportunity to ask our original panelists whether they would vote differently on any of the statements we have asked about in the past. Several experts chose to highlight statements to which they would currently respond differently. In such cases, you will see this "revote" below the panelist's original vote. We think you will enjoy seeing examples of statements on which some experts have reconsidered.

As with the 16 previous statements voted on by new panelists, these "revote" responses are not reflected in the chart that we display showing the distribution of views for that topic: all the charts for previous questions reflect the distribution of views that the experts expressed when the statement was originally posed.

About the IGM Economic Experts Panel

This panel explores the extent to which economists agree or disagree on major public policy issues. To assess such beliefs we assembled this panel of expert economists. Statistics teaches that a sample of (say) 40 opinions will be adequate to reflect a broader population if the sample is representative of that population.

To that end, our panel was chosen to include distinguished experts with a keen interest in public policy from the major areas of economics, to be geographically diverse, and to include Democrats, Republicans and Independents as well as older and younger scholars. The panel members are all senior faculty at the most elite research universities in the United States. The panel includes Nobel Laureates, John Bates Clark Medalists, fellows of the Econometric society, past Presidents of both the American Economics Association and American Finance Association, past Democratic and Republican members of the President's Council of Economics, and past and current editors of the leading journals in the profession. This selection process has the advantage of not only providing a set of panelists whose names will be familiar to other economists and the media, but also delivers a group with impeccable qualifications to speak on public policy matters.

Finally, it is important to explain one aspect of our voting process. In some instances a panelist may neither agree nor disagree with a statement, and there can be two very different reasons for this. One case occurs when an economist is an expert on a topic and yet sees the evidence on the exact claim at hand as ambiguous. In such cases our panelists vote "uncertain". A second case relates to statements on topics so far removed from the economist's expertise that he or she feels unqualified to vote. In this case, our panelists vote "no opinion".

The Economic Experts Panel questions are emailed individually to the members of the panel, and each responds electronically at his or her convenience. Panelists may consult whatever resources they like before answering.

Members of the public are free to suggest questions (see link below), and the panelists suggest many themselves. Members of the IGM faculty are responsible for deciding the final version of each week’s question. We usually send a draft of the question to the panel in advance, and invite them to point out problems with the wording if they see any. In response, we typically receive a handful of suggested clarifications from individual experts. This process helps us to spot inconsistencies, and to reduce vagueness or problems of interpretation.

The panel data are copyrighted by the Initiative on Global Markets and are being analyzed for an article to appear in a leading peer-reviewed journal.

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