On Tuesday, I handed out more than $150 to my “small group” of Contracts students. It was a strange moment — pulling out your wallet and passing out cash. But I did it because I assigned my contracts casebook and I’m trying to reduce the financial conflict of interest that professors have in assigning their own books. I wrote about doing this in a 2005 New York Times Op-Ed:
[A]t 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.
Rebating the money this year was a great excuse to discuss whether any of the students had a valid promissory estoppel claim against me. In 2005, I said “this year, I am going to … .” Does that promise cover all future contracts and non-contracts Ayres classes? Do I need to pay students who bought used textbooks or bought before they heard of the offer?
In retrospect, I wish I had softened one claim from the Op-Ed: “That way, we will all know that I assigned the book for the right reason.” Disgorging the $11 reduces the conflict, but I still have plenty of self-serving reasons to favor my own work over others. Still, disgorgement is a simple way to reduce the appearance of impropriety.
I was surprised to learn that the Yale Daily News picked up the issue yesterday. One of my university colleagues, in defending his decision not to rebate royalty to his students, noted “that roughly 90 to 95 percent of his book royalties are from books that are not assigned in Yale courses.” This suggests that his books have passed a market test.
Then again, he would only be forfeiting 5 to 10 percent of his book royalties by rebating those paid by his own students. And the more relevant market test is what proportion of other professors choose his book. If only 5 percent of the professors without a financial incentive assign his textbook, then there is more of an appearance that the financial payoff played an inappropriate contributing role.
I’m delighted to report that one of my Yale colleagues emailed me yesterday to say that he was going to join me in rebating his royalty to his students. We are not alone.
When I originally published the Op-Ed, I received dozens of emails from professors around the country indicating that they disgorge their royalty. So students, if your professor has asked you to buy his or her book, ask for a rebate. A small way to make professors more sensitive about the price of the books they are assigning is to think about the royalties they are generating for themselves.
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I hope you mark the book in some way to avoid paying a royalty twice on the same copy!
If I were in your class, I’d collect the rebate, then offer $5 to someone at another school to swap books, then collect another rebate. Unless you already know all the students in your class …
I admire your attempt to live with integrity–and to prove it out of your own pocketbook. However, when you think about it, virtually everything we do is in our self-interest at some point.
The pastor who invites a family to his church shouldn’t have to refund their tithe–ha!–in order to show that he was doing it only out of concern for thier souls.
YOU are in business for yourself. We all are in business for ourselves, even if we work for someone else.
The question is NOT if you are making money. We’re all trying to gain something in this world. The question is if you have acted fraudulently, or have given the students anything less than excellent education. I would not believe either of these things about a man who has treaded as carefully as you do.
Worse, you might wind up in a Pharisaical spiral that causes you to rebate the tuition to the students (or a portion of the tuition) just in case your course isn’t the very best Contracts course on campus.
You see how this can get out of control.
Very simply, you wrote a book to help and assist people. The Bible says that “the workman is worthy of his hire.” You spent time, effort, intelligence, and so forth to provide something beneficial to readers. YOU DESERVE THE MONEY.
That fact that even though you weren’t going to make a dime, you required the book for the course anyway, shows that your intentions are in the right place. That you are choosing the book because you truly believe it to be the best value for the students.
So, being freed from that ethical question (by having shown that you would do the same thing, even if there were no financial gain to be had), you are now free to accept the royalties that are rightly and richly yours.
Or, if you need a compromise, perhaps you could create an “escrow” account and students who feel otherwise can anonymously request a rebate of the royalties you would have received. They would not be penalized–you wouldn’t even know who they were–and you could then move on freely.
Just some thoughts. Again, I very much appreciate you having a heart for integrity. At least I hope it was about integrity, and not just some means of avoiding any legal entanglement (smile).
I understand the economic incentive for textbook companies to release new editions of books on subjects that have not changed at all, but that does not stop me from becoming infuriated every semester.
The 2nd review on Amazon of your book is priceless.
Bravo, Professor.
Of course, there are professors who use material specifically to make money from their students. I once had an organic chemistry professor who had copies made of her transparencies and sold them in the bookstore for a price totaling around 25 cents a page. Most other faculty members used a copy shop that sold lecture notes at 10 cents a page. She ensured that it was impossible to write the notes from her transparencies during lectures, and a copyright notice was clearly visible on the notes. It was quite clear where the extra 15 cents (less the bookstore’s cut) was going.
You are my hero. *standing applause*
When I was an undergrad my professors would pass around a sheet asking students sign up for the Economist or the Wall Street Journal (it would be required). I signed up without thinking.
Well now Im on the other side of the table and this week I received a letter from the economist saying that for every 12 students who signed up, Id receive X amount of free issues!
Assumption- that all professors who use their own book receive royalties. I don’t make a dime on the sale of my book Essentials Sociology, Research & Education Assn of NJ, 1995.
I use it cause I like it and students tell me that they do too.
At the time, I took the job on because it seemed like a good idea and easy/simple way to publish such a book. Still do.