Conflict of Interest Scandal Rocks Volokh Conspiracy

and hundreds of law professors' offices throughout the country. Lawprof Ian Ayres complains, in the New York Times, about textbook prices -- a matter on which I express no opinion -- but goes on to say this:

[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. The textbook isn't included with my students' tuition, but at least in my contracts class the royalty will be.

I actually worried a little about this when deciding what to do when teaching my own First Amendment class. Anyone trained to worry about potential conflicts of interest should indeed spot this one.

But on reflection, it struck me that the conflict of interest is illusory. Presumably I sincerely think that my textbook is the best one, quite apart from the modest money I make from textbook sales. It takes a tremendous amount of time to write and maintain a textbook -- probably in the thousands of hours, at least in the high hundreds. I make several thousand dollars from the textbook a year; I didn't write the book for the money. Rather, I wrote it because I thought I had a better way of organizing the material. The volume of effort, and the very modest financial reward, is a pretty good sign of my good faith. Perhaps this is different for some of the most popular undergraduate textbooks; but I suspect that the great majority of all textbooks make their authors only a fairly small amount of money.

Now it may well be that I'm wrong, and that other textbooks are better. (It's pretty clear that lots of other law professors think so!) But in any event, if my judgment is clouded here, it's clouded by my inflated ego, not by filthy lucre. And beyond that, even if other textbooks may be better for others to teach from, my textbook is probably better for me: I at least know my textbook inside and out, and can teach more effectively from it as a result; plus at least this way students don't get conflicting messages from the teacher and the book. (There is an argument that it's better for students to occasionally get such conflicting messages, but on balance I find that argument unpersuasive.)

So I don't think we need to worry too much about professors' judgment about which book to assign to their own student being swayed by their financial interest. I think people ought to indeed think about such potential conflicts; but here, there seems to me to less than meets the eyes. Aeon Skoble makes a similar point; Paul Caron blogs some more on it.