Dear
Friends,
The New York Times
today published an oped of mine that grows out of a lunch conversation that I
had with my father in law:
Just What the Professor Ordered
By
IAN AYRES
Published:
September 16, 2005
IN time for the
new school year, the Government Accountability Office has released a sobering
report on the soaring price of textbooks. Over the past two decades, the report
tells us, "college textbook prices have risen at double the rate of
inflation."
We're used to
paying $25 for a hardcover novel, but my casebook on contracts now sells to
students for $103, and the best-selling general chemistry textbook (co-authored
by my father-in-law) costs $148. At state universities, textbooks and supplies
account for 26 percent of all student fees, including tuition. At junior
colleges, they are a whopping 72 percent.
The G.A.O. report
falls short, however, by attributing this run-up in prices to the development of
"CD-ROM's and other instructional supplements." The real problem is the lack of
price competition. A series of mergers has ensured that although there are
hundreds of textbooks to choose from, the five largest publishers control 80
percent of the market.
It's easy for
prices to drift upward when the person choosing the product doesn't really care
how much it costs. Instead of competing on price, publishers compete for
professors' attention with an excess of computerized bells and whistles.
Indeed, the
pricing problems with textbooks are eerily analogous to those affecting
prescription drugs. 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.
The analogy to
prescription drugs suggests a possible solution. Perhaps universities can take a
lesson from managed health care. Health maintenance organizations are often
criticized for being too stingy, but let's not forget that they've played an
important role in containing health care costs.
So just imagine
what would happen if universities started to provide textbooks to their students
as part of the tuition package. 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.
This "textbook
maintenance organization" wouldn't require a huge centralized bureaucracy.
Universities would probably give professors a textbook budget per student. 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.
Even publishers
might not do so badly under this new system. Under the current arrangement, many
students protest exorbitant prices by simply refusing to buy textbooks. They
make do with slightly older editions, read library copies or share with other
students.
Not only do
publishers lose these sales, but teachers are irritated because students cannot
read along in class or look up information that is relevant to the discussion.
Under textbook maintenance organizations, we'd return to the old days where
everyone was on the same page.
Still think a
system where schools provide free textbooks would never work? Well, we already
have one at the elementary and secondary levels. Unlike Hogwarts, which requires
Harry Potter to buy books each year, most American public schools own their
assigned books and buy new editions only when it's absolutely
necessary.
Such a system at
the university level would also do away with some conflicts of interest. Because
at the moment, professors' incentives in choosing textbooks are in some ways
more distorted than doctors' incentives in choosing drugs. You see, I earn a
$10.30 royalty on every copy of my textbook that a student buys. Instead of just
trying to get the best book for my class (and to do so I should weigh both
quality and price), I might also consider assigning my own book and increasing
my profit.
This is a
self-dealing transaction, which would be presumptively illegal if professors
owed a fiduciary duty to students. Some professors realize this and donate to
charity the royalties they earn when they assign students their own
books.
So this year, I am
going to do something different. I will give $11 to each of my contracts
students who buys my book. That way, we will all know that I assigned the book
for the right reason. The textbook isn't included with my students' tuition, but
at least in my contracts class the royalty will be.
Ian Ayres, a professor at Yale Law
School, is a co-author of the textbook "Studies in Contract
Law."
Here’s a link to a Marketplace
public radio commentary where I argue that Roberts and other judges should sell
their investments in individual stock to minimize the need for financial
recusals. Justice Roberts Should Sell His Stock (Sept. 14,
2005) (Real
Audio)
And finally, here’s a fresh draft of
a long law review article (coauthor with Sydney Foster) criticizing the Supreme
Court’s recent opinions on affirmative action:
Don’t Tell,
Don’t Ask: Narrow Tailoring After Grutter and Gratz
Ian
Ayres,
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ABSTRACT:
The
Supreme Court’s affirmative action decisions in Grutter v. Bollinger and Gratz
v. Bollinger changed the meaning of “narrow tailoring.” While the narrow
tailoring requirement has always had multiple dimensions, a central meaning has
been that the government must use the smallest racial preference needed to
achieve its compelling interest. We might have expected, therefore, that if the
Court were to uphold one of the two programs at issue in Grutter and Gratz, it
would, all other things being equal, uphold the program with smaller racial
preferences. We show, however, that the preferences in the admissions program
upheld in Grutter were larger than the preferences in the admissions program
struck down in Gratz.
This result was not necessarily
wrong, but the Court’s analysis was wrong. The Grutter and Gratz Courts replaced
the “minimum necessary preference” requirement with a requirement that
admissions programs provide “individualized consideration,” which we show
amounts to a “Don’t Tell, Don’t Ask” regime. The Court will not “ask” probing
questions about the size and differentiation of preferences as long as the
government decisionmaker does not “tell” the Court how much of a racial
preference it is giving. Indeed, as an example of the differential standards the
Court applied, we demonstrate that while the Court impugned the admissions
program at issue Gratz for making race decisive for “virtually every minimally
qualified minority applicant,” in fact the fraction of qualified minority
applicants for whom race was decisive was smaller in the admissions program
struck down in Gratz than it was in the admissions program upheld in Grutter.
We call for a return to the
minimum necessary preference requirement. Instead of examining whether
preferences are “individualized,” courts should determine whether the
constitutionally relevant benefits of granting preferences of a given size
outweigh the constitutionally relevant costs, both overall and at the margin.
Ian
Ayres
William K. Townsend
Professor
203.432.7101 (o), 203.432.4769 (f),
203.624.5654 (h)
www.ianayres.com (downloads and audio
clips)
www.whynot.net (ideas to improve the
world)