Should you rent your textbooks?

According to Greg Mankiw, you can save 50% off the purchase price by doing that at Cengage (his publisher’s) new rental website. If you look at that site, his Principles of Economics text costs $198.49 to buy $109.99 to rent but in the former you have free shipping while in the latter you have to add another $3.99 bringing the total to $113.98 (or about 57% of the purchase price). But, of course, surely that saving is not really the economic saving from renting. The alternative is to buy and then sell the book on the second-hand market. At the moment, you can do that for around $130 (although there may be tax on top of that). So it depends on whether you can actually get that used price or whether it is closer to the rental price. Chances are, if you are at a college, you will be able to get at least $113.98 to re-sell your book and probably more when it is pointed out that the people you are selling to can do that too. In that case, the difference between renting and purchasing may well be negative. That is, you could spend less than $113 to own and sell a book rather than to rent it for a semester. Ironically, you would need to have done an economics course before you likely learned about opportunity cost and could properly make that calculation!

Now, of course, renting is a great deal for the publisher who, at the same time, kills the second-hand market. But they get to do that with electronic versions (although the Kindle price is $143). This suggests to me that the pricing here is yet to find its true equilibrium.

3 thoughts on “Should you rent your textbooks?”

  1. I remember planning to sell many of my text books at the end of a semester. Of course there was not much of a market for it until the beginning of the next semester. By which time I had pretty much forgotten about the whole deal or the course had a new text. To this day have a pile of texts that havent been opened since the exam.
    My point is this: I would consider renting texts to avoid the risk of a failure to resell.

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  2. Yes, but there is also a positive externality from owning the textbook becuase you can keep it and refer back to it in later years when you are doing other courses or just need to clarify something that may have been forgetten.

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