What is the deadweight loss from museum art collections?

by on January 31, 2013 at 7:36 am in Law, The Arts | Permalink

Steven Kopit, a loyal MR commentator, asks:

Tyler -

Let’s have more on the economics of museums. That’s actually an interesting topic.

Only a very small portion of the collections of the Louvre other major museums is on display at any given time. I think it would make a great deal of sense to provide additional venues for shows–including in China. In the end, holdings of art (like income, per SS) only matter is someone actually consumes them, ie, gets to see them.

I say the deadweight loss here is not so large.  Most art exhibitions are not self-financing from the side of the viewers, which suggests that the demand to see the pictures is not higher than the costs of mounting the exhibit.  Arguably you can throw in philanthropic support as another part of “market demand,” but I consider that a separate valuation issue.  Maybe our current artistic institutions are under-providing marketing opportunities for businesses and foundations, but that still won’t get you a major pent-up demand to view the pictures, again not relative to cost.  The very popular pictures, such as the good works by the Impressionists and post-Impressionists, are shown quite frequently, including in traveling exhibitions.

Context matters a great deal in this setting.  Currently most of the Louvre is not being viewed at any point in time, as the crowds tend to cluster in a few very well-known areas.  Many people would want to go see anything they are told they ought to go see.  What is underfunded is some kind of “demand for participation in a public event,” not the viewing of art per se.  If only they could create more hullaballoo around the more obscure Flemish painters.

Almost all museums have large stretches of empty walls.  I would put up many more pictures there, as indeed I do in my own home.  That museums do not do this I find striking and indicative.  Nor do I see viewers and visitors demanding this, if anything the unspoken feeling might be to wish for a bit less on the walls, so that one may have the feeling of having seen everything without exhaustion.

The costs of storing art are high.  Perhaps the Louvre should sell some of its lower-tier works to private collectors.  But the general public just doesn’t want so much more art to see, not if they have to pay for it and maybe even if they don’t.

Frederic Mari January 31, 2013 at 8:07 am

It might be that youra poster was talking about the fact that most museums store a lot of ‘stuff’ that is fairly abundant (Roman amphorae, iirc, for ex) and while they might show 1 or 2 of the best, keeping the other 98 out of 100 in storage is rather pointless.

http://www.nationalmuseums.org.uk/media/documents/publications/too_much_stuff.pdf

Basically, selling a lot of the duplicate stuff and/or lower tier unique paintings on the private market, thus also contributing to satisfy private demand for art that might otherwise looked to criminally sourced items (not thefts so much as stuff coming from poor countries unable to defend their heritage and their historical sites).

dan1111 January 31, 2013 at 9:51 am

Some of the items in storage would be much more valuable depending on location. We recently went to Italy and saw hundreds upon hundreds of Greek and Roman statues. The twentieth-best statue in the Vatican Museums was not that exciting. But it would have been quite exciting to see the same statue in a museum anywhere near where we lived in America, because there it would be one-of-a-kind.

DocMerlin January 31, 2013 at 12:27 pm

Won’t happen, because of statue nationalism.

dan1111 January 31, 2013 at 12:55 pm

Maybe the statues can sneak over the border.

Willitts January 31, 2013 at 3:01 pm

Then we would deport them but give the chip off the old block a path to citizenship.

MD January 31, 2013 at 4:45 pm

I don’t like the idea of putting hard-working AMERICAN statues out of work just because some FOREIGN statue is willing to work for slave wages. Learn to speak ENGLISH, Cambio!

Richard January 31, 2013 at 8:50 am

Anyone that made it to the original Barnes Museum (Philadelphia) got to experience “many pictures on a wall” taken to the extreme. It was distracting for viewing any one piece, but almost created a new composite work of art. Haven’t been to the new Barnes location downtown, but I hope they preserved much of the craziness in how things were displayed.

Orange14 January 31, 2013 at 8:54 am

Tyler writes, “Almost all museums have large stretches of empty walls. I would put up many more pictures there, as indeed I do in my own home. That museums do not do this I find striking and indicative”

What is your data set here? It’s certainly been my experience at virtually every art museum that I’ve gone to both in the US and Europe that this is not the case at all. Last summer we we suffered from overload at the Uffizi in Florence with everything that was on display. Certainly there were no blank walls.

DanC January 31, 2013 at 9:33 am

I agree. The first assumption maybe incorrect. Major works are displayed. Minor works that the museum bought on speculation that they may increase in value (artistic or monetary) may be in storage but so what.

Matt January 31, 2013 at 8:56 am

Your last paragraph seems like the only relevant one. I would not pay $25 every day to see exhibits of the Louvre’s tenth-best collection, but I might consider paying thousands of dollars to acquire and hang in my home a painting that is of near-Louvre quality but currently sits in the Louvre’s expensively air conditioned basement. The deadweight loss comes from the collecting decisions, not the exhibiting ones.

Brian Donohue January 31, 2013 at 1:29 pm

Me too.

Maybe the answer to European public finance problems is in the basement.

JWatts January 31, 2013 at 3:22 pm

“Maybe the answer to European public finance problems is in the basement.”

I see a problem with that approach.

1) Rich citizen buys French art work.

2) Rich citizen moves to Belgium to pursue other tax regimes.

3) French officials react in horror at the thought of French art work leaving France and move to block the looting of the Louvre.

Sam January 31, 2013 at 3:13 pm

And if the museum wants to maintain speculative ownership of the piece, why not rent it out? In fact, I imagine an “art of the month club” where you rented a painting and it was exchanged for another one every month or two might be quite popular.

Mike February 1, 2013 at 7:37 pm

I thought the main point was that the Louvre has many works that may not be good enough to hang on their walls (compared to what’s actually on display) but that many 2nd or 3rd tier museums would trip over themselves to display. Granted, some of this is dealt with by traveling exhibitions (“Monet’s obscure works from our basement! 90 different paintings of the same water lilies”) but as someone who has lived in a couple of cities with 2nd-tier museums, I’d be happy to see far more of what’s in the Louvre’s (okay, MOMA is my usual example) basement.

RPLong January 31, 2013 at 8:57 am

The Pantheon de la Guerre comes to mind.

http://www.theworldwar.org/s/110/new/index.aspx?pgid=1222&gid=1

Ted Craig January 31, 2013 at 8:57 am

In Detroit, we recently passed a millage to fund the DIA. The main argument was not having a major art museum hurt in attracting business to the area. Of course, that’s the argument for everything. I was wondering if Tyler or anyone had an opinion on that?

By the way, it was a tri-county millage and needed to pass in all three. It barely made it in the blue collar county, which made sense to me. This kind of tax always strikes me as regressive, a factory worker subsidizing the wealthy’s choice of leisure.

DocMerlin January 31, 2013 at 12:29 pm

Its a completely bogus argument. Businesses look at median income, road quality, talent in the area, airports nearby, cost of doing service, closeness to rail lines, etc.
They don’t look at museums.

Urso January 31, 2013 at 2:38 pm

Rail lines? If by “businesses” you mean “large manufacturers,” yes. But that’s a pretty limited slice.

Anyway you point out that businesses look for “talent in the area.” Museums, and cultural institutions in general, are good markers (not the only ones, obviously) for a highly educated workforce.

Of course there is some chicken and the egg here. Highly educated employees follow high-paying jobs, and then businesses follow the highly educated employees. I think Detroit does have a problem that it is generally seen as not a nice place to live for young professionals and young families, and lack of museums and cultural institutions is certainly a part of that. But here it’s pretty obviously a symptom instead of a cause.

dan1111 February 1, 2013 at 3:35 am

Surely Detroit’s chronic mismanagement is the biggest barrier to attracting business. Raising taxes in three counties to fund a museum while the entire city government is on the verge of bankruptcy is not sending the right message.

Ed February 1, 2013 at 3:50 am

Detroiters should fund the DIA so they will have a nice museum to go to.

The “attract businesses” argument is somewhat bogus. However, Detroit is almost certainly going to shrink to a Milwaukee sized city, and this is no matter who is running things there (though bad governance will shrink the city even further). They will have a cultural infrastructure appropriate to a city 2-3 times this size. Other rust belt cities (St. Louis, Pittsburgh, for example) have had or will have this problem. Its a nice problem to have.

Now the thing with the cultural stuff is that places without it experience tons of growth, in fact you can make an argument that cultural institutions have been negatively correlated with growth in the US since World War II. But the lack of cultural institutions puts restrictions on how much and in what way an urban area can grow. Its sort of like how higher education may not be needed or even hurt you at your current job and the one you can immediately be promoted to, but the lack of higher education will limit how far you can eventually rise.

AndrewL January 31, 2013 at 9:00 am

This is the job of the museum curator. It would not be a good experience for the museum viewer if the museum hung every single piece they have.

If you look at a museum schedule, certain pieces are cycled on and off the viewing galleries to showcase a theme or time period or whatever. Other pieces are loaned to other museums.

Museums will often get way more pieces of art donated than they have space to show them. So a lot of art work is in storage, undergoing renovation, being cataloged/researched, or lent out.

I consider public access to museums as advertising to get people to fund the museums research and study efforts.

Steve Fritzinger January 31, 2013 at 9:01 am

This is another instance of the hoarding instinct that drives governments and many non-profits.

I love Mythbusters, but it drives me crazy when Adam and Jamie say they are going to the abandoned air stripe in Alameda, the abandoned naval yard at Mare Island, or the entire abandoned town in Marina. How much does it cost us directly to maintain these useless facilities? What is the opportunity cost for the communities that surround them?

John Schilling January 31, 2013 at 10:44 am

But don’t forget the other relevant questions: What would be the cost of closing the facility, and what would be the cost of recreating the facility if it turns out you need something like it ten or twenty years down the road?

Particularly for major industrial facilities, closing costs are not trivial if you propose to literally abandon the site to the wilderness. They are generally located near population centers, if only the population center that grew up to support them and didn’t quite go away when operations ceased. And they tend to be full of valuable leftovers, hazardous materials and attractive nuisances. If you think “closing” means “last one out turns off the lights and locks the door”, the lock will be picked or crowbarred by looters the day after the last guard leaves, and the neighborhood kids will be playing hide-and-seek in the wreckage next week.

If the place is going to revert to wilderness eventually, sure, might as well get it over with. If it is going to be redeveloped to support a new human activity, the rational economic calculation may be to pay for a minimal security and housekeeping force until a developer shows up with a real proposal backed by real money. Even more so if there is any chance that the new use is going to be similar to the old use and might benefit from the infrastructure already in place.

Careless February 7, 2013 at 6:47 pm

The air strip is waterfront property on the Bay. Should be really profitable to redevelop it for residences, assuming there isn’t really awful industry on the other side, which there isn’t. Looking it up, it just seems to be a typical Californian anti-development thing.

Willitts January 31, 2013 at 1:52 pm

The government does lease out, develop, and hire professional managers for abandoned military bases. The Presidio of San Francisco, Ft. Mason, and Treasure Island all have trusts that lease old military quarters for housing and for commercial and non-profit enterprises. Ft. Irwin, CA has also leased some of its property. Lowry Air Force Base in Denver is gone and all the old buildings have been replaced, sold, or leased.

I can’t say why Alameda or Mare Island have not been fully developed. Sometimes there are serious waste remediation issues on old military bases. In other cases, the government has a contingency interest in keeping the space just in case it needs it later. In other cases the demand is low or no one wants to pay the government the price it wants.

Is there some inefficiencies? Of course. But for any particular asset you have to look at it case by case. I would thing Alameda would be prime real estate.

Highgamma January 31, 2013 at 9:57 am

There are ways to deal with the deadweight loss. When I was an undergraduate at Harvard, the school would allow you to rent art from their collection for the cost of the insurance. Students all over campus had great art on their walls, often for less than the cost of framing a poster. This type of bargaining is not allowed by museums which have become, for the most part, large vaults of unconsumed art.

Urso January 31, 2013 at 10:20 am

I was going to make this precise argument. I imagine one major reason museums don’t sell art has to do with the brooding fear of frittering away a country’s “cultural patrimony.” You may say this is a vague and amorphous concept, but that does not make it less real.

But leasing the art – that’s a different story. I imagine wealthy folks would be very pleased to take out a ten year lease on some undisplayed art. In fact, it may give the art *more* cache to be able to say it is actually owned by a famous museum. You can even write a clause into the contract where the museum retains the right to reclaim the art at any time, subject to full repayment of all rent.

dead serious January 31, 2013 at 11:07 am

It seems unlikely that the cost of insurance for a piece of art held by an institution would be the same as that held by an undergrad.

Rahul January 31, 2013 at 12:18 pm

Wonder if there was a spurt in reported art thefts?

Jon January 31, 2013 at 10:15 am

The Louvre has been moving in this direction since 2007 with the Louvre Abu Dhabi. Construction begins this year.

karl January 31, 2013 at 2:11 pm

The Louvre opened a satellite last year in Lens, near the Belgium border, with a few star attractions and a bunch of the stuff we’re writing about. Haven’t been there, but it has, temporarily, one of the eight paintings I specifically wanted to see at the (real) Louvre over the holidays.

Being run by the state, France can take the chance on it. But if the secondary (and tertiary, and whatever comes after that) works were sold, would they likelier be seen than if they stayed in the Louvre’s basement?

Not sure I really care, strangely.

Owen January 31, 2013 at 10:17 am

Tyler, you seem to be making Steven’s point… if the art market in Paris is saturated, with the supply of art exceeding demand to the extent that museums have to dial back their “supply” significantly, doesn’t that suggest that excess supply could be literally exported elsewhere in order to maximize profit (or minimize losses, for a non-profit)? Art consumers in Chile or China or Turkey or Russia–I’m thinking emerging markets with plenty of class-conscious new money–might not be cultural naifs, but they’re probably more likely to view a third-tier Romantic painter as a closer substitute to a first-tier painter than the more “discerning” Parisians.

The question would be economic: what is the cost of bundling up and shipping these works of art vs. the profits one could gain? Storing art may be expensive, but it’s much less so (I assume) than packing, safely shipping, unpacking, and preparing art for exhibition in another country. I imagine you save some money by paying lower wages for exhibit designers/installers in the destination country, though, while admission prices for art museums are still fairly high, since they’re a luxury good. All in all, I imagine museums could make a decent sum renting out their lesser collections to the culture-hungry developing world.

RPLong January 31, 2013 at 11:11 am

Everyone agrees that this would be very beneficial if someone else is footing the bill. But is it beneficial to whomever is paying for it? Is it beneficial to the Louvre to ship the art to Dhaka? Only if someone in Dhaka is paying for it. Will the Government of Bangladesh pay for it? Maybe, but couldn’t that money be better spent elsewhere?

Owen February 1, 2013 at 7:49 am

I’m not proposing anyone subsidize this art distribution. I’m just suggesting that it may be mutually beneficial for the Louvre to rent out art to private museums in emerging markets with reasonably-developed cultural elites. What I’m not sure of is whether the economics work for both sides–perhaps it’s simply not worth the expense for the museum, in Argentina or Malaysia or what have you, to pay for the shipping and setup. One thing I didn’t think of is that my assumption about art preferences in developing countries–people are less quality-sensitive–may be incorrect. They could be more “brand-sensitive,” in fact, preferring to concentrate lots of money on getting an big-name, recognizable artist and filling out the rest of their galleries with cheap local or regional art. This would be similar to preferences for designer fashion and iPhones even when those items are so expensive–these goods are a form of conspicuous consumption.

Again, I’m making a lot of assumptions here, but it’s not prima facie unbelievable that renting out collections could be economically feasible.

RPLong February 1, 2013 at 10:04 am

My (limited) experience is that emerging markets tend to prefer local artists to old, forgotten European stuff. My experience is also that they are correct in this preference, but that’s a matter of taste. ;)

The Other Jim January 31, 2013 at 10:24 am

Note to wannabe artists:

There are already way, way, way too many good paintings.

Urso January 31, 2013 at 10:42 am

You could say the same for symphonies, operas, popular songs, short stories, novels, video games, statues of generals on horseback, sonnets, etc etc etc. There’s clearly more high-quality art extent than any one human could ever possibly appreciate in an entire life time. So should we, as a culture, decide to just pack it up and go home?

dead serious January 31, 2013 at 11:08 am

Or iPhone apps.

Gene Callahan January 31, 2013 at 11:44 am

What the world still lacks, however, is flippant blog comments.

karl January 31, 2013 at 2:13 pm

+1.5

Tom T. January 31, 2013 at 5:46 pm

Of which Tyler displays far too many. :-)

dan1111 February 1, 2013 at 3:40 am

Why leave some of the space on the page just empty? The posts, sidebar, and header all have lots of empty space that could be displaying more valuable comments.

Jess R. January 31, 2013 at 10:26 am

The question in this article is fairly shortsighted in its assumption that museum’s collect primarily for the purpose of exhibition. Rather, if you looked at the mission statements of most major art museums, they would indicate that they exist for the collection, preservation, and interpretation (and/or exhibition) of artifacts. All exhibitions are a balance between preservation concerns of the collection. Collections are exposed to a greater amount of light, heat, and humidity swings while on exhibit, not to mention the risk assumed when collections are packaged and shipped.

Eric January 31, 2013 at 12:16 pm

This. I believe the Smithsonian displays far less than 1% of its collection. That said, I’m glad someone is protecting this stuff.

As an aside, I once got to hang out in the bowels of the Field Museum in Chicago. Remember the end of Raiders? It was like that. Very cool.

Bill January 31, 2013 at 10:59 am

What is art?

It is whatever appreciated property I can take a charitable deduction for giving that lowers my income tax so that someone else can bear my tax burden. Then, I can go to the museum and see my name proudly displayed, along with the artist’s, next to the picture.

Brought to you by a generous Donation from the Collection of Bill.

dan1111 February 1, 2013 at 3:43 am

After more than four years, it has finally been definitively proven: Obama has not ended cynicism.

Ricardo February 1, 2013 at 11:10 am

An excellent reason to cut spending.

Steven Kopits January 31, 2013 at 11:12 am

Well, first, thank you. It’s gratifying to be elevated to Post Suggestor.

However, might I quibble with the adjective “loyal”? I consider myself quite promiscuous intellectually. I read here because it’s intellectual, with an econ bais, and wide-ranging. My participatory impulse is really more slutty than loyal. (On Econbrowser I might legitimately be considered loyal. Except when I’m not slumming it over it.)

I think “loyal” also connotes “subordinate” and “dependent”. I don’t consider myself either (although one could question whether I would rather give up coffee than MR). I strongly do believe, however, that blogs are equal-opportunity venues. I’ll almost always read comments by Andrew’ (whose real name is Optimus), Claudia, and Tall Dave, when he’s inclined to comment. I don’t consider any of the aforementioneds comments as inherently superior or inferior to anything Tyler writes. The comment, like the post, must stand on its own. Thus, I am not sure that loyalty is the motivating or organizing force.

Consequently, I think we might consider an adjective other than “loyal”. Should it be “regular”, or something more neutral “MR commenter”, or something different still?

And while I am at it: Is it “commenter” or “commentator”? Now, the Free Dictionary informs me that these can be used interchangeably, but I think there’s a difference. A commenter is a lower form of life, one who might truly be driven by loyalty. A commentator, by contrast, is someone who is filling out a story. Cris Collinsworth of Sunday Night Football is the best commentator since John Madden. I don’t know if he’s a commenter, but I’d certainly get a rush to feel I’m in a class with Cris. Probably not true, though.

So are we mere commenters, or more exaulted commentators?

I’d be interested in the thoughts of some loyal commentators, or regular commenters, as the case may be.

Andrew' January 31, 2013 at 12:01 pm

I, like Adam Carolla claims, have basically zero ego. Noone believes it when that crazed narcissist says it either, but ego and narcissism are, I suspect, orthogonal.

Steven Kopits January 31, 2013 at 12:09 pm

“Except when I’m slumming it over here.” And then I’m exalted. Brain is not in gear today.

Claudia January 31, 2013 at 12:59 pm

Steven, words are special here, almost stretchy. I know someone who actually queried TC on the “loyal reader” tag after he got it (cause how in the world would TC know?) And if I recall it was something like a regular or someone with a self-expressed interest in MR. To be clear, that was our interpretation of his terse answer. As I see it, loyal is for regulars, excellent is for friends, and vivid is for the silly geese. It is fun to contemplate words here, as yes, I say that despite my grumps this week and even though definitive interpretations are scarce. As much as I tried to branch out to commenting serious econ blogs, it’s not as much fun…I get to talk serious econ all day with serious economists. But I don’t have anywhere to talk/think about whether my house to should be an art museum or I should leave the taxi route to the professionals (which I always do). I keep working on substitutes. As for your last question. I wouldn’t want different labels on commenters…names (assumed or real) seem sufficient. Plus anyone who’s willing to submit a comment seems “loyal” by making a connection to the site.

PS: Andrew’ is Optimus Prime? … all makes so much more sense now.

Steven Kopits January 31, 2013 at 4:15 pm

Prime humor. Silly, really.

So what do you think of GDP growth rates? Why is growth coming in below Fed expectations? For example, in June 2010, the Fed estimated that 2011 U.S. GDP growth would be 3.5% to 4.2%. It was 2.0%.

In Nov. 2011, forecasts for 2012 growth in U.S. gross domestic product from the five Fed Board members and 12 reserve bank presidents centered around 2.5 percent to 2.9 percent, measured from the fourth quarter of this year to the fourth quarter of next year. Actual came in a 1.5%.

Why these misses? Both forecasts was post Reinhart / Rogoff, ie, the assertion of slow recoveries post financial crises should have been factored in.

I have long claimed that we’re constrained on the oil supply, and that’s hurting growth. I presented a version of this thesis at SF Fed in July 2011, but it doesn’t seem to have found much traction there. I am writing an article now on the pace of oil efficiency gains per unit of GDP, and it looks to me that 3.8% about tops out what this economy can do. So if oil consumption declines at a 1.5% pace (see my 2009 paper on the topic), then GDP growth looks to be capped out in the 2.3% range in a better (expansionary) year.

I’m not sure anyone believes this because so few economists are familiar with the data sets, and even fewer know how to do supply-constrained forecasting. (Apropos of which I’ll be guest-teaching Steve Levine’s graduate class at Georgetown on the 12th on just this topic: “Oil Demand and Price Forecasting in the Age of China and a Constrained Oil Supply”).

In any event, I’d be curious about where the Fed stands now, ie, what explains poorer than expected GDP growth.

Claudia January 31, 2013 at 4:25 pm

Steven, I am in the blackout until midnight tonight … and even then I have to be a limited participant in such conversations out in the real world (and blogs). And yet, I can assure you it is a very big part of my work and the work of many, many others. I appreciate all the ideas, and sounds like an interesting lecture.

Steven Kopits January 31, 2013 at 5:12 pm

My presentations are generally interesting. I do a lot of them, and I’m very good at it.

Forecasting, as it’s taught and practiced, is almost exclusively of the demand-constrained variety. So economists–and commodities analysts, I might add–typically struggle with a supply-constrained approach. You need a couple methodological adjustments to make it work, but it’s not hard, just unaccustomed.

Having said that, there’s a huge internal disconnect between supply and demand driven approaches in the oil industry today. Exxon, Shell, BP, EIA, IEA, API, Goldman, Citi–just about everyone uses an aggregate demand-limited models. But look at oil majors’ strategies: They’re almost all supply driven. Take Shell, for example. Its headline projects: Gas-to-liquids, the technology of wartime Germany and embargoed apartheid South Africa; floating natural gas liquefaction, a floating gas production unit the size of four US aircraft carriers lashed together–the first of its kind (no smoking!); and Alaska, a diffcult and expensive (but singularly important) project on the far side of the moon, for all practical purposes. Why would you approve these projects if you thought the world was going to be awash in oil? Shell’s strategy, as a practical matter, is pure peak oil. Read the company’s (or BP’s or Exxon’s) outlook, however, and life looks so much better.

Or take the EIA. Every year their forecast bends more to our model. But they don’t have any explanation for what’s going on. They just lower their forecasts within the incumbent forecasting framework–exactly like the Fed.

It was just this debate that got me into Steve Levine’s class. He keeps writing about all this abundant oil which I just don’t see. (Here’s the related article: http://qz.com/#38802/why-the-world-is-headed-toward-more-oil-scarcity/) So I offered to show him how we forecast oil markets, leading to an invitiation to present to his students.

So, yes, this should be an interesting presentation. I’m always happy to present elsewhere, too.

liberalarts January 31, 2013 at 11:15 am

Is this an appropriate use of the term “deadweight loss?” I don’t think so. Deadweight loss follows from resources not being allocated to their highest value. In a fully free market world, unused hoarded art would not create deadweight loss. So, the deadweight loss flows from the wedge between taxes paid by museums (or government subsidies received by them) versus those of potential private collectors. Suppose museums are free from taxes, and I think that is not far off the mark, then the deadweight loss caused by reduced art demand by income-taxed private collectors is no different than the deadweight loss of taxed individuals not buying as much of anything as they would if they too were untaxed. The deadweight loss that we might allocate to the art is really then just an assignment of the deadweight loss caused by the wage or investment taxes paid by the individuals who then lose out on certain marginal auctions to the untaxed museum sector. Collectors in untaxed seasteads, by the way, would end up with more art than the taxed private individuals here, and their use of the art would then be equivalent to untaxed museums. Or am I missing something?

Willitts January 31, 2013 at 2:09 pm

See my comment below on public goods.

Yes, there is a lot of talk here about art and very little on welfare or public economics. Or rather, people are making very well informed statements about art but only alluding to economic issues of efficiency.

The funding or ownership of the art is irrelevant to the efficiency of its provision. Public goods are typically underprovided by the free market, and art possesses some aspects of a public good.

Preservation of art has some aspects of a public good.

If the museum owners maximize profits by rotating their collection to maintain high marginal utility for repeat visitors, that is not inefficient.

I am depriving most of the world of the beauty of the art in my home, just as the art in storage at the Louvre or Smithsonian deprives the world. But because the marginal utility of each piece for each person is so infinitesimal, the total deadweight loss is small, particularly compared to any proposed measures to reduce the deadweight loss. In other words, some of the deadweight loss is sunk, and the net present value of making the art available is negative. So the beautiful art is stored.

Acad Ronin January 31, 2013 at 11:38 am

Part of the problem is the assumption that art has to be in museums proper. I have noticed that more and more airports have a few cases in waiting areas and along corridors that exhibit contemporary arts and crafts. It should be possible to have an exhibit on say obscure Flemish painters that would spend some months at Concourse A, then a few months at Concourse B, etc, then go on hiatus for a couple of years, while at the same time an exhibit on Ashanti gold weights was in Concourse B, then C, etc. One might be able to sell sponsorship to firms that have a tie to the subject matter of the exhibit. Similarly, an exhibit on trains (or trains in pictures) might well fit into one or more of the great train stations such as Grand Central, Philadelphia 30th St, or Washington’s Union, just to mention a few I have passed through in the last few months. The point is to bring the art to where people are and might be in a receptive mood, even if only because they are essentially a captive audience.

prior_approval January 31, 2013 at 12:27 pm

I’ll just note that many museum located art collections were at one time private collections – DC providing several excellent examples of this. I can think of at least three museums on the Mall alone – two with the name of the patron (well, one museum with two names, the other with its own garden), and one with its patron’s collection still at its core, as it is considered the National Gallery.

Willitts January 31, 2013 at 2:18 pm

Ownership is not substantially relevant to the efficiency conditions.

People confuse publicly provided private goods with public goods.

The free market underprovides public goods, so a central planner might be able to do better. But there are forms of government failure and transaction costs that can make government provision inefficient also.

Art is a quasi-public good, and as such it will always have some inefficiency in its provision. Public goods are a form of market failure. By definition, market failures are inefficient.

I own art, and you cannot view it unless we become friends and I invite you to view it. Your marginal utility of viewing my art is infinitesimal and diminishes rapidly.

prior_approval February 1, 2013 at 6:32 am

Actually, my point was that public collections can arise from private ones – it isn’t as if great works of art aren’t recognizable to most people, and to share art with a larger number of people can be considered a public good in itself. Don’t get me wrong – there are also a couple of private DC art museums I can name as quickly as those on the mall, whose collections are worth the time to explore.

Great art is not merely the judgment of a single society or generation – and its availability tends to be considered a hallmark of civilized societies, at least to the extent they preserve art for the future, regardless of current possession.

Willitts January 31, 2013 at 1:13 pm

There is a bit of understandable confusion here.

A public good is characterized (or defined) by two properties: non-rivalry of consumption and non-exclusivity.

Art is non-rivalrous up to a point because it is congestible. Only so many people can surround a painting, they don’t all get their choice of viewing angles, and their viewing time is restricted by social pressures.

But most art is excludable. The oil paintings in my house are consumed only by my family and guests. The paintings owned or borrowed by the Louvre can similarly be shielded from view.

To the small extent that art is non-rivalrous, there is some inefficiency. But as Tyler says, this is incredibly small. I have seen the Mona Lisa, and I would lobe to have a private viewing where I could actually touch it. But I would also likely be unwilling to pay the price the market would bear for that.

CD January 31, 2013 at 1:34 pm

This ignores curation and what exhibitions can do. You learn a lot about El Greco, to pick a random example, from seeing his work in the company of other El Grecos from different periods of the artist’s life, and in the company of other painting of the same period; you can trace ideas to him and after him. Smart curation can juxtapose in interesting ways. That central room in the Prado with Las Meninas is giving you a rich story about royal portraiture if you look across the different pictures. The Louvre, as you would expect, devotes a lot of effort to tracing the development of French art. You miss the point if you reduce this one-dimensionally to good versus bad paintings.

And who knows, even people who just visit to tick off items on their greatest-hits list may end up seeing something new. A museum should be a place of discovery.

Stuart Williams January 31, 2013 at 2:10 pm

On the argument that art galleries could stack paintings three high: the Pitti in Florence has always done this: it’s an awful way to view pictures. Anything that is displayed well above eye-level is completely wasted. This is one area where reconstruction of contemporaneous practice demonstrates that we have improved on historical precedents (IMNSHO).

CD January 31, 2013 at 2:53 pm

Exactly. Quantity is not quality. And as illustration of my point above, I remember my visit to the regular Pitti collection as an eyestraining chore, but they also had a fabulous temporary exhibit with a bunch of on-loan stuff about the influence of Dutch painters in northern Italy. That exhibit was well-mounted, easy to see and follow, and really illuminating.

One of the reasons you want large back-room collections is as a source for exhibitions: new insights, new research, new connections. Any idiot can hang a famous painting on a wall.

Doug M January 31, 2013 at 2:20 pm

The museum argues that it exists to protect the culteral heritage, and wherehousing it is protecting it for the future. But, if it is never going to be displayed, are they perhaps destroying it. A painting exists to be seen. What is the difference between locking it away and burning it up?

Perhaps we should petition large museums to sell their collection of werehoused paintings under the arguement that the best way to preserve the history of this art is to set it free.

Willitts January 31, 2013 at 3:17 pm

A reasonable suggestion.

So why don’t they do it? Selling the family jewels. Bureaucrats get paid based on the value or size of their collection. Snobbery. Sentimentality.

It reminds me of the movie Equilibrium where the government destroys art because of its emotional content. So why does the “underground” preserve the Mona Lisa if all they can ever do is hide it? Theoretically, the value of the art should be soaring as art is destroyed, and even poor works of art would eventually become precious.

Aside from the behavioral aspects, it may be financial. Museums are cornering the market on art, keeping the price high. If they started selling items from their collections, the values would likely have to be marked down.

Four of a kind beats two pairs. A flush beats trips. A full house beats a straight.

Same logic applies to art – relative scarcity, complements, and diversity contribute to value. A large art collection produces a large number of combinations of art. The arrangement of art in space, order, and time has value unto itself. Just as arranging flowers is greater than the sum of its parts.

TheCrankyProfessor January 31, 2013 at 3:31 pm

One confusion here is that the only or main point of museums is to SHOW art. That may be the main point of modern museums (I’d argue their main point is to run gift shops and other merchandising, but that’s another story). Another important reason for museums is providing stable collections for the study of art (or other objects – like all the loose dinosaur bones the New York Natural History Museum undoubtedly has in the basement). And in that game, the winner is always the curator with the most pieces.

TheCrankyProfessor January 31, 2013 at 3:40 pm

Oh – check over at my blog (crankyprofessor.com) for a picture of what the Met does with some of its millions of American objects – it’s a study gallery (I forget who it’s named after.

Michael H January 31, 2013 at 3:55 pm

Great point, Tyler! Edinburgh’s National Gallery uses what I think is a Victorian style, where they hang as many as 3 pieces vertically on top of each other. That means that you get to enjoy a significant portion of their collection. It was overwhelming at times, but I found it a far more enriching experience.

mulp January 31, 2013 at 7:58 pm

Let me ask a related question:

What is the deadweight loss from libraries full of “old” books?

Take for example the libraries in Timbuktu. Why haven’t those books been sold to people who value them more because they will pay for them as art objects?

In fact, the criminals who invaded and occupied seem to have looted some of the books when the French came in to oust them, and we know these criminal gangs have been ransoming hostages and stealing and looting to make money as criminal enterprises. It has been argued that Vikings and Barbarians were good for the economy of Europe for reducing the dead weight loss to the economy of the mercantile power centers, whether Kings and Lords or Monasteries that hoarded resources which would have been better used elsewhere.

Thousands of libraries have almost secret collections of books and documents that are hidden from view and used by only a small select group of readers.

David February 1, 2013 at 9:11 am

The real secret is that much of what museums don’t show is either low-grade or duplicative of what they are showing. In many instances, they acquire an entire collection, of which only a very few pieces are worthy of being exhibited. Often the museums sell or trade the less desirable pieces to other museums or private collectors for things they want. Markets at work! :-)

The French are in many ways the exception to the rules of curation. They have immense museums full of stuff, chock-a-block on the walls, and they have a national system of museums under which pieces that can’t make the cut in Paris are sent to regional or local museums outside the metropole (David Ricardo, call your office!).

It has to be said that much of what museums deaccession has to do with fashion. The Orsay in Paris is famous for its Impressionist collection but–as I discovered the first time I went there–it is really a museum of 19th-century art and the entire first floor is filled with Academic-style pieces that no one has even the slightest interest in any more. You have to work your way up to the upper levels to get a glimpse of the Impressionists, and even then, there are fewer than you might think.

Also, lesser museums with less buying power tend to specialize in lower-tier niches. The art collection at Vassar specializes in Hudson River School art, which is no longer very popular. Yet that works for them, because it’s of local interest and it’s cheap (as the curator artlessly told me in 1999, their entire collection wouldn’t pay for even one of the then-hugely popular Impressionists). But as a result, they have the best collection of Hudson River School work on the planet.

A lot of this is discussed (not in explicitly economic terms, to be sure) in Thomas Hoving’s Making the Mummies Dance [http://www.amazon.com/Making-Mummies-Dance-Inside-Metropolitan/dp/0671880756/], which is also very entertaining to read.

R Richard Schweitzer February 1, 2013 at 2:08 pm

Of course everybody here has read Edward Banfield!

Some may also have read “The Culture We Deserved,” by Jacques Barzun

remember Banfield’s suggestion that the museums should display accurate copies of all art and sell the originals to those who think they can tell their difference and value.

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