Are Durable Goods Consumers Forward-Looking? Evidence from College Textbooks

Judith Chevalier and Austan Goolsbee

The Quarterly Journal of Economics, 2009, vol. 124, issue 4, 1853-1884

Abstract: We test whether textbook consumers are forward-looking, using a large new data set on textbooks sold in college bookstores during the ten semesters from 1997 to 2001. The data strongly support the hypothesis that students are forward-looking with low short-run discount rates and that they behave as if they have rational expectations of publishers' revision behavior. Data from a second new data set on the market prices of used books at Amazon Marketplace also support the hypothesis of rational, forward-looking behavior. Simulation results indicate that students are sufficiently forward-looking that publishers cannot consistently raise revenue by accelerating current revision cycles.

Date: 2009
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Working Paper: Are Durable Goods Consumers Forward Looking? Evidence from College Textbooks (2005)
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The Quarterly Journal of Economics is currently edited by Robert J. Barro, Lawrence F. Katz, Nathan Nunn, Andrei Shleifer and Stefanie Stantcheva

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