An impossibly crude theory of museums
The ever-insightful David Nishimura asks why museums are so strongly discouraged from selling works in their inventories. I have seen (informal) estimates that U.S. museums display no more than five percent of their collections over a few years. Nishimura asks:
In fact, museums often end up with stuff that they cannot exhibit or that is of little or no relevance to what they are all about (it’s not only relatives who end up receiving gifts that are better intentioned than chosen!). Storage space is another issue, as is the cost of insurance.
Museums also evolve over time. Nearly all older American museums, for example, started out with collections of European paintings of decidedly mediocre quality. Skip forward a few generations, and those museums’ galleries are at an entirely different level — the legacy of wealthy patrons, vastly improved connoisseurship, and the dispersal of so many old European collections. And so what was once exemplary is now the stuff sold in bulk by third-rank auction houses. Is it so bad that such works be sold off, especially if the proceeds can be used to acquire better items not well represented in the collection?
In practice, museum directors who “deaccession” artworks come under heavy criticism. Why? Here is where a very crude theory, too crude to possibly be true, comes in.
Stop thinking of visitors as the museum’s customers. Instead the customers are the donors. Donating a picture is like spending money. The donor gives a Picasso to MOMA, in return purchasing the feeling of “having given a Picasso to MOMA.” This yields tax, networking, and other privileges in this life, as well as a long-term legacy. Museums, in turn, take some care to attract viewers, so that their real customers — the donors — have greater feelings of satisfaction about the whole enterprise.
In this “model,” selling off artworks makes customers (donors) nervous. “How do I know they won’t sell off my [sic] Picasso once I’ve died?” It is only a slight reassurance to respond: “We only sell off the second-rate pictures in our inventory.” So museums sit on their huge and growing stashes of art. In this manner they signal their trustworthiness to future donors.
Under some assumptions this outcome is roughly efficient. Donating a picture to a vault is how that donor wishes to “spend” her resources. The donor may self-deceive into thinking that the donated work is a masterpiece. By the time the truth is revealed, she has passed away. Subsequently selling the work to a museum in Topeka would damage future donors more than it would benefit Kansas viewers. The museum community, of course, does not like to admit that its donors are the primary customers (how would viewers and government funders feel?), so it must present other reasons why deaccessioning is bad. At the same time the museum faces a “time consistency” problem, and would like nothing more than to sell off its dross.
The policy bottom line: Government funding eases museum needs for funds, and makes it easier for museums to keep pictures in vaults. The funding subsidizes the legacies of dead donors, eases time consistency problems for future donors, and limits the real supply of art, to the detriment of viewers. That’s just in this fantasy model of course, not in the real world.
The world’s highest suicide rate
The highest suicide rate in the world has been reported among young women in South India by a new study. The research is of major importance, according to the World Health Organization, as it brings to light Asia’s suicide problem.
The average suicide rate for young women aged between 15 to 19 living around Vellore in Tamil Nadu was 148 per 100,000. This compares to just 2.1 suicides per 100,000 in the same group in the UK.
The global suicide rate stands at 14.5 deaths per 100,000, with suicide the fourth leading cause of death in the 15 to 19 age group. However, in the Tamil Nadu study, suicide was the number one cause of death among these adolescents.
Notably, young women were much more likely to kill themselves than young men – the reverse of the rest of the world. In Western countries, men are three times more likely to commit suicide than women.
Here is the full story. Here is an NBER paper on the determinants of teenage suicide in the United States. Earlier Alex wrote about suicide as a social phenomena involving tipping and multiple equilibria.
High school students and the deficit
My wife teaches high school AP Government. She recently gave her students the assignment of balancing the federal budget using this simulation. Some of the results are instructive.
A note on the econoblog market
Tyler and Alex want to “dominate the market in econ blogs.”
When an industrial organization economist reads such a statement–O.K., maybe not all industrial organization economists, but at least this one–he asks: “How do you define the market?” I first thought, “Economists who blog regularly about a wide range of topics from an economic perspective.” On second thought, that definition has problems. (Market definitions usually do.) Should econoblogs be restricted to just “economists”? What’s a “blog,” anyway? How often is “regularly”? Should the definition include blogs that specialize in just one area of economics, such as taxes, international economics, neuroeconomics, oligopolies? What about some of the fine public policy blogs?
On third thought, since the antitrust authorities aren’t suing Alex and Tyler yet–but Institutional Economics cracks, “It is just as well Marginal Revolution are only intellectual entrepreneurs. Commercial entrepreneurs would be setting themselves up for anti-trust action were they to put in writing their intention to dominate a market”–there’s no need to overthink this. At least not unless readers express interest, and offer to help, and someone provides major, major financial support. I’ll just note 20 other blogs–one is actually a list of links to blog posts, a list that changes weekly– that I think would probably belong in the market and that I think are worth a look.
The first four are already listed in Tyler and Alex’s links and are probably the dominant oligopolists in the market. I especially recommend EconLog, by Arnold Kling. It is consistently interesting, thoughtful, and free of cant.
EconLog
The Knowledge Problem
Dynamist Blog
Brad DeLong
Sixteen more:
A Random Walk
Agoraphilia
Asymmetrical Information
Atlantic Blog
Ben Muse
Carnival of the Capitalists
Cold Spring Shops
Deinonychus antirrhopus
EconoPundit
Jacqueline Mackie Paisley Passey
Law and Economics Blog
The Angry Economist
The Idea Shop
The Proximal Tubule
The Sports Economist
Truck and Barter
Future Imperfect
Economist David D. Friedman has posted a draft of his manuscript, Future Imperfect, and he welcomes your comments.
This book is about technological change, its consequences and how to deal with them.
. . .
Much of the book grew out of a seminar I teach at the law school of Santa Clara University. Each Thursday we discuss a technology that I am willing to argue, at least for a week, will revolutionize the world. On Sunday students email me legal issues that revolution will raise, to be put on the class web page for other students to read. Tuesday we discuss the issues and how to deal with them. Next Thursday a new technology and a new revolution. Nanotech has just turned the world into gray goo; it must be March.
Since the book was conceived in a law school, many of my examples deal with the problem of adapting legal institutions to new technology. But that is accident, not essence. The technologies that require changes in our legal rules will affect not only law but marriage, parenting, political institutions, businesses, life, death and much else.
Yes, you can make money playing video games
ReHomesteading the Great Plains
Frederick Jackson Turner defined the frontier as a density of less than 6 people per square mile and declared that in 1893 the frontier was closed. But in the past fifty years, farming has become more efficient and millions of people have moved from the Great Plains to the coastal cities. As a result, the frontier has been reborn. Kansas is more of a frontier state today than it was in 1890!
Some people see the depopulation of the Great Plains as a wonderful opportunity to create the world’s largest wildlife reserve – the Buffalo Commons. Depopulation, however, is not pleasant for the people who remain who find themselves unable to afford those public goods and amenities supportable only with a larger population. Residents are fighting back, however, with an old policy, homesteading.
It’s not Lincoln’s 160 acres but Marquette, Kansas is giving away a little less than an acre to anyone willing to homestead (literally build a home) on nearby land. Several other small towns in Kansas have competitive offers (one even offers free cable).
Thanks to Curtis Melvin for the link.
Can this be true?
Here is a surprise:
So far there appears no evidence whatsoever of the “tax cut for the rich” charge. Changing regulations have reduced the burden of each income quintile except that at the very top. From the standpoint of all federal taxes, 2001 represents increased income progressivity as compared with the previous decades.
That’s Econopundit and here is the full post and data, thanks also to Bruce Bartlett for publicizing these results. The original source, I might add, is the non-partisan Congressional Budget Office. Note that the figures include the effects of excise, payroll, and corporate taxation, not just income taxes.
My take: We have to be careful how we interpret the figures. If “the rich are getting richer,” the top quintile can be paying more, in relative terms, even if the top marginal rates are falling. That being said, the top quintiles still appear to be carrying their share of the burden. Thanks to Brock Sides for a useful email.
Addendum: Here is some critical analysis, I am heading to my conference and don’t currently have time to evaluate it.
Markets in everything, the continuing saga
Leading British authors have auctioned off the names of characters in their new books to raise funds for charity.
Successful bidders at the third charity auction for victims of torture included a man who paid £1,000 to see his mother’s name appear in the next novel by the Irish writer Maeve Binchy. Another secured a role in books by two authors, bidding £950 for the children’s writer Philip Pullman and £240 for Sue Townsend, the creator of Adrian Mole.
And one author was also a bidder. Martina Cole, whose own work raised £220, paid £1,000 for her name to appear in the next book by Sarah Waters, who wrote Tipping the Velvet. Tracy Chevalier, whose novel Girl With A Pearl Earring, was adapted into a film, raised £300.
Adi McGowan, a City trader, paid for his mother, Muriel, to appear in the next Binchy book as a surprise birthday present. He said his mother was a fan of the author, whose novel Circle of Friends was adapted into a Hollywood film.
“I usually give a book as a birthday present,” he said. “Maeve’s a favourite. My mother has been waiting eagerly for her next book – now she’s actually going to be in it.”
Here is the full story. Here is a blog post about buying personalized romance novels more generally. Here is a related story of a couple who tried to auction off the naming rights for their baby. No company was willing to pay $500,000, so they named him Zane.
My take: To get mentioned on this blog, all you have to do is send us a useful link, failing that try $100 or more.
People resond to incentives, parts 10371 and 10372
Price discrimination is profitable, so firms try to price discriminate. But consumers don’t like paying high prices, so they try to avoid price discrimination. An April 7 Wall Street Journal article (registration may be required) by Scott McCartney illustrates these propositions nicely.
A one-way ticket from Washington, D.C. to Louisiana (the article doesn’t state which city) costs $698. A round-trip ticket costs $218. Travelers who want to fly one way buy round trips and throw away away the return-trip tickets.
Flying round trip in the middle of the week is especially expensive. New York to Houston and back is $1972. But a round-trip ticket that includes a Saturday stay is much cheaper. One such ticket for New York and Houston is $232. So some travelers buy a round-trip ticket that includes Saturday from New York to Houston and a second round-trip ticket that includes Saturday from Houston to New York. Savings: $1508.
Flying into some hub airports is expensive. New York to Detroit is $559. But New York to Detroit to Akron is $221. Guess what some New York to Detroit travelers do? (If they don’t have baggage to check.)
Courtesy of Craig Depken, economist at U. Texas–Arlington, comes another example. The Texas Rangers are giving to some of their ticket holders scrip that is good for free food and beverages at their ballpark. The scrip seems to be easily counterfeited. Guess what will happen. Extra credit: how long before the Rangers declare the scrip invalid?
(Mrs. Newmark, who has no economics training but who’s been living with an economist for 26 years, suggests that maybe the Rangers expect counterfeiting and are using the free food as a way to sell more tickets. Alternatively, she hypothesizes that the ballpark food is poor enough, and travel and ticket costs high enough, that counterfeiting will impose small costs on the Rangers.)
Microsoft: damned if it does and damned if it doesn’t
Lynne Kiesling, Brad Delong, Steven Bainbridge, Arnold Kling, Alex, and others recently had an interesting discussion about Microsoft and bundling. (Lynne links to the main posts, but see also the comments and trackbacks.)
Here’s an amusing and possibly instructive footnote to that discussion. According to the Los Angeles Times, “. . . Microsoft is coming under fire for what it isn’t bundling.“
As Windows users are being plagued by computer viruses, spam, buggy software and Web pop-up ads, some are questioning why the Redmond, Wash.-based software behemoth has failed to integrate security and repair features that would make computers less prone to problems.
. . .
But bundling security features directly into Windows isn’t so simple, Microsoft supporters say.
The company, after all, has been punished by regulators in the U.S. and Europe for leveraging Windows to take over lucrative new markets, including Web browsers and software for playing audio and video files. Presumably, a move to add security software would face the same kind of regulatory scrutiny.
Personally, I don’t think antitrust action is the primary reason why Windows lacks security features. I think the primary reason is that Microsoft was surprised by the extent of the problem, similar to how it was surprised in the mid 90s by how rapidly and deeply the Internet caught on.
But it sure would be hard to prove that.
Copyright carried too far
Prisoners find a particularly nasty way to use the law against law enforcement: they claim copyrights to their names and then file multimillion dollar liens against prosecutors and judges who make “unauthorized” use of their names.
Height
For two centuries, the American man stood tall in the world. Literally. But today the average Dutch man is six foot one and the average American man is much shorter. Even as little as fifty years ago, American men were considerably taller than Dutch or other European men but since the mid 1950s the Northern Europeans have shot up while Americans have grown wider but not taller. No, it’s not a composition effect due to immigration. Native born, English-speaking American men are only five feet nine and a half and this has not changed much in more than a century. Why then the difference?
One possible clue is the enormous impact that nutrition can have on height. In Guatemala the native Mayan man averages only five foot two, so short compared to the Spanish-descended Ladinos that most people assumed the difference was genetic. But lo and behold when a million Guatemalans fled to the United States a natural experiment began – the children of the American Maya are four inches taller than the Guatemalan Maya of the same age and about as tall as the Ladinos. Good nutrition, especially in the growth years of infancy, 6-8 years and adolescence can increase height in remarkable fashion.
But if the problem is poor nutrition then surely the figures for the average American ought to be masking a growing drift in height between the well-fed rich and the poorly-fed poor? And yet that appears not to be the case. The mystery remains.
The discussion is based on Burkard Bilger’s excellent piece in the New Yorker. See also this interview with Bilger.
Adam Smith on the morality of financial compensation
I have a new article on the shortage of human organs. Regular readers will be familiar with my views so I won’t go into the details but I was especially pleased with the conclusion examining moral objections to organ selling.
Adam Smith noted that in his time there were “some very agreeable and beautiful talents of which the possession commands a certain sort of admiration; but of which the exercise for the sake of gain is considered, whether from reason or prejudice, as a sort of public prostitution.” As examples, Smith lists acting, opera singing and dancing. Today the list strikes us as peculiar, perhaps even foolish. What could possibly make opera singing admirable when done for free but despicable when done for pay?
And yet, however peculiar the views of Adam Smith’s contemporaries were on financial compensation for opera singers we can an at least say this in their favor–no one ever died because of a shortage of singers.
Addendum: I learned of the Smith quote from a wonderful paper on prostitution by Martha Nussbaum, Whether from Reason or Prejudice: Taking Money for Bodily Services. I can’t find the paper online but it is reprinted in Liberty for Women which has a number of other excellent papers.
The stock market prices presidential candidates
…[political] platforms are capitalized into equity prices: under a Bush administration, relative to a counterfactual Gore administration, Bush-favored firms are worth 3-8 percent more and Gore-favored firms are worth 6-10 percent less. The most sensitive sectors include tobacco, worth 13-25 percent more under a favorable Bush administration, Microsoft competitors, worth 15 percent less under a favorable Bush administration, and alternative energy companies, worth 16-27 percent less under an unfavorable Bush administration.
This result was generated by correlating firm-specific equity returns with the Iowa Electronic [Presidential] Market forecasts. In other words, when Bush’s electoral fortunes went up, “Bush stocks” rose as well.
Here is the full paper. Here is the home page of the researcher, Brian Knight.
The bottom lines: 1) Overall the market did regard Bush as “better for business” than Gore. 2) Equity markets moved more rapidly than did the Iowa markets. 3) If the outcome of a Presidential election truly matters to you, your position can be hedged fairly easily. 4) Presumably there are “John Kerry stocks” right now.
Thanks to Eric Crampton for the pointer.