Textbook prices increased at a rate three times the national average between 2015 and 2016, a continuing trend that has been going on for decades.
According to the consumer price index report published by the Bureau of Labor Statistics in July 2016, the price of educational books and supplies increased 5.7 percent compared to the previous year. Table 1 lists the highest general commodity gainers.
According to a June 2013 Government Accountability Office report, textbook prices increased 6 percent per year between 2002 and 2012. The consumer price index increased 2 percent per year over the same period.
In an Oct. 3, 2014 interview, Robert Frank, Cornell economist and textbook author, told NPR he believed the exaggerated price increases were an adjustment to the booming online used textbook market.
Long-term trends don’t agree with Frank’s assessment. According to a NBC News report, textbook prices among American college students increased 1,041 percent between 1977 and 2015. The national consumer price index increased by just 308 percent over the same period. Textbook inflation rates have been tripling the national inflation average nearly two decades before anyone had heard of the internet.
Among the more likely culprits for the outsized price increases are a pair of opportunistic sales tricks– the principal agent effect and the captive audience effect.
The principal agent effect comes into play when the shopper and the buyers are different people. High school textbooks are paid for by the same people who choose them, so they have to pay attention to the prices.
College textbooks are chosen by instructors who care about the content but not the price. According to market analyst Jonathon Pelliwell, college textbooks typically carry a 20 to 25 percent markup, while high school textbooks are typically marked up less than 10 percent.
The captive audience effect comes into play when a buyer is forced to buy from a single vendor. Think about going to the movies. Outside food and drink is prohibited, so a hungry moviegoer is compelled to either pay up at the snack bar or go without a food item/beverage. A bucket of popcorn that costs pennies to make and sells for several dollars, and a single pint bottle of water might cost more in a theater than a 24-pack case of water in a grocery store.
Textbook vendors publish frequent revisions and require online pass codes in an attempt to create the captive audience effect. Many instructors, aware of captive audience practices, protect their students by choosing textbooks that are available from more than one vendor or allow students to use older editions.
One of the largest booksellers, McGraw-Hill Education, is shifting focus from textbook revisions to online educational software. In an Oct. 3, 2014 NPR interview, CEO David Levin said he saw the shift to online software as a way out of the decades-long textbook inflationary spiral.
“We have $150 million going into product creation,” said Levin. “Your grandfather’s textbook company didn’t do that.”
Levin said that his new educational materials will be flexible enough to be tailored towards each individual student and be available at a lower cost than the same educational materials in a hard-copy textbook market.
Percentage increase between July 2015 and July 2016
Motor vehicle insurance
Educational books and supplies
Tax return preparation
Textbook prices rose 6.6 percent. Table 2 lists the top specific commodity gainers.
Percentage price increase from July 2015 to July 2016
Household moving expenses
Admission to sporting events