Textbook pricing

Economics of Money, Banking and Financial Markets plus MyEconLab plus eBook 1-semester Student Access Kit, The (8th Edition) (MyEconLab Series) (Hardcover), Mishkin, List Price: $153.13 Price: $129.67

Principles of Economics, 4th Edition (Student Edition) (Hardcover), Mankiw, List Price: $193.95 Price: $146.35

Macroeconomics (Hardcover), Mankiw, Price: $140.95

I remember as a TA in a Principles class that the then professor (who shall remain unnamed) who had his own textbook said that he was not accountable for the price of his textbook and that it was the publisher's decision. Having said that, he then outlined a theory as to why as an author he would like the textbook to be cheaper thereby earning greater royalties as sales expanded.

While, it's true that the "value" of a $200 textbook may be greater than ten $20 hardcover bestsellers, it's "value" to me is how much I "value" the course - "I have to take this course to satisfy my distribution requirements" versus "I am going to major in this so this book is going to last a life time".

This, from Real Time Economics (circa 2007) shows that you don't have to give it away to earn large royalties:
As governor of the Federal Reserve, Frederic Mishkin pulls down $168,000 a year. He could argue he’s undercharging.

Mr. Mishkin’s financial disclosure report, released Tuesday, shows that in the year before joining the Fed last September, he made a tidy sum dispensing advice to central banks, governments and business groups around the world. He collected a $134,858 consulting fee from the Icelandic Chamber of Commerce; $63,188 from the Riksdagen, or Swedish Parliament, who hired him to co-write a report on the Swedish central bank; $15,600 from the Central Bank of Chile, $15,575 from the Bank of Korea, $9,161 from the Bank of Spain and $4,250 from the Bank of Canada. That’s all in addition to his salary from Columbia University.

The disclosure also shows that while he isn’t quite at Alan Greenspan’s level, Mr. Mishkin is no slouch in the book business, pulling down $434,000 in royalties from Pearson Publishing, whose imprints publish Mr. Mishkin’s popular textbook: The Economics of Money, Banking, and Financial Markets. Pearson also paid him a $75,000 advance and grant for an as yet unwritten textbook. (Penguin, an affiliate of Pearson, paid Mr. Greenspan an advance of more than $8 million for his memoir, due out this fall.)

Chairman Ben Bernanke, like Mr. Mishkin, was a noted academic economist before joining the Fed in 2002 (he was chairman of Princeton University’s economics department.) He co-wrote a book with Mr. Mishkin on inflation targeting, but like other academics, his most lucrative works have been textbooks. His disclosure form reported between $100,000 and $200,000 a year in textbook royalties from Pearson and McGraw-Hill.

Randall Kroszner, the Fed board’s other academic (he taught at the University of Chicago), reported more modest royalties of between $200 and $1,000 for Economic Nature of the Firm: a Reader, published by Cambridge University Press.

But all are starving artists in comparison to Harvard University’s Greg Mankiw, author of some of the best selling economics textbooks in the country (and now one of its most widely read bloggers). In 2005, when he stepped down as chairman of President Bush’s Council of Economic Advisers, Mr. Mankiw reported royalties of between $1 million and $5 million on one book alone: Principles of Economics, published by Thomson Learning. He reported between $100,000 and $1 million in royalties on his book Macroeconomics, published by Worth Publishers. –Greg Ip