A recent article in the i presented the results of a freedom of information request regarding the total overdue book fines collected by university libraries – the article states that 130 university libraries collected fines totalling around £3.5 million in the academic year 2016/2017. The article’s slant towards university libraries charging fines for overdue books being somehow ‘unjust’ is clear – see, for example, the article’s use of Bath and Chichester as universities that have abolished such fines for students, as well as the quoting of the shadow Education Secretary (for some reason) thinking this is related to Vice-Chancellor’s pay.
However, the article fails to take into account the fact that charging fines for overdue books is actually a good thing – specifically, it allows what economists call the ‘(partial) internalisation of an externality’.
An ‘externality’ arises when someone undertakes an activity but does not incur the full societal cost of such an activity. For example, suppose that a pristine hill view is enjoyed by a large group of people, but now a factory has started producing widgets nearby and as a result also releases copious amounts of black smoke that spoils that view. Although the factory would be paying for things such as the energy and raw materials required to produce its widgets, it would not be paying anything to account for the fact that it was spoiling what was once a lovely view. Hence, the factory’s production imposes an externality on those that used to enjoy the view.
In the same way, someone holding an overdue library book imposes an externality on others that want to borrow that book. It is free for a person to borrow the book, and in the absence of fines for keeping it for too long, it is free for the person to keep hold of the book. This means that other people that would want to borrow the book but cannot do so now incur a cost in terms of a delay in when they are able to borrow it.
Returning to the factory example, now suppose that the factory was required to pay a sum to the local council in order to take account of the amount of pollution it creates when it is producing – in this scenario, the factory will realise that the more it produces, the more it pollutes and the more it will have to pay the council. In this way, the factory would now take into account the costs it creates for society as well as the costs it incurs itself – hence, the factory now ‘internalises’ the externality.
Likewise, charging people for keeping books overdue means that they now realise that they take into the cost to society of doing so. In other words, charging for keeping books overdue is an improvement for society as other students can also borrow the books that they need in a timely manner.
Although one could claim that the size of fines charged by university libraries is too high, from what I can recall they are set at a level lower than those charged by ‘normal’ public libraries (it would be interesting to see if there was much variation in the size of fine charged across the type of library, its location etc).
Moreover, there is an argument to be made that university libraries should charge higher fines than those charged by normal libraries. In particular, there are likely to be between 50-150 people on the same university course, with a sizeable proportion of them wanting to read the same book at the same time, whereas a public library is highly unlikely to have such large contemporaneous demands for a specific book. Hence, the size of the externality resulting from an overdue book in a university library is likely to be higher than it is in a public library, meaning that the fine levied by the university library should be higher than that charged by other libraries.
Nevertheless, the thinly-veiled slant of the article that ‘university library fines are another way that universities are out to get money from students unjustly’ is not supported by simple economic theory. Indeed, it is highly likely that students actually benefit from the charging of fines for overdue books.