Textbook Maintenance Organizations

Commenting upon a GAO study that found that the price of college textbooks has been rising at double the rate of inflation, Ian Ayres compares this phenomenon to the "eerily analogous" inflation of prescription drug prices.

In both cases you have doctors (Ph.D.'s or M.D.'s) prescribing products. In neither case does the doctor pay for the product prescribed - in many cases, he or she doesn't even know what it costs. And the clincher is that in both cases, the manufacturers sell the same product at substantially reduced prices abroad.

His solution, then, is to build price-capping incentives into universities in the same way that HMOs contain costs. Textbooks, he proposes, could be provided to students gratis as part of their tuition package. As he notes: "Of course tuition would have to rise, but for the first time universities would start caring about whether their professors were too extravagant in the selection of class materials." Professors, then, could be put upon a strict budget, and "those who exceeded the budget would have to seek their deans' approval. Some enlightened colleges might even give a share of the savings to professors who don't use up all of their budgets."

As a professor at a state university that has taken its hits from the state budget axe (and seen double digit tuition increases as a result), I'm both intrigued and horrified by his proposal. On one hand, I've always been concerned with the price of books I order for students, and recognize the inflationary tendencies of those prices (which I would attribute to diminished competition and the privatization of the textbook market, as well as to the monopoly pricing of college book stores). On the other hand, though, administration bean-counters "assisting" in text selection decisions on cost criteria alone presents a rather unattractive picture. Often, the high cost of texts in my fields (political science and philosophy) owes in part to the royalties and permissions required to assemble a high-quality anthology or edited volume (though low cost/low quality alternatives abound), and this proposed "textbook maintenance organization" may well end up delivering a significantly lower quality product in line with its slightly (though this is a bit hard to comprehend, given recent tuition increases in Minnesota) lower costs.