The Unsustainable College Textbook Bubble
I've been covering the "higher education bubble," see posts here and here. One reason for the still-inflating higher education bubble for college tuition and fees is administrative bloat, see CD post here.A direct partner in the "higher education bubble" is the unsustainable "college textbook bubble," captured graphically in the chart above. To put the textbook bubble in perspective, consider that the unsustainable housing bubble started in the late 1990s when home prices started appreciating much faster than the consumer price index, and the housing bubble peaked in 2007 when median home prices had increased by a factor of about 4 since 1978. By comparison, increases in the price index for educational books and supplies have outstripped rises in the general price level for the last three decades, and are now more than 8 times higher than in 1978. Simply put, the textbook bubble displayed graphically has inflated to more than twice the size of the house price bubble.Prediction: Just like the unsustainable housing bubble eventually peaked and crashed, the textbook bubble is likewise unsustainable and is set to crash. As Michael Barone wrote about the higher education bubble, "The people running America's colleges and universities have long thought they were exempt from the laws of supply and demand and unaffected by the business cycle. Turns out that's wrong." I think the exact same thing can be said about the people running today's college textbook companies.