The Economics of Art Museums.

• Author: Waits, C. Richard

In December 1989, thirty-nine participants met in a conference to exchange views and information on four themes: (1) The Museum's Collection, (2) The Museum and the Public, (3) Museum Finances, and (4) The Museum and the Government. The conference was organized and hosted by the National Bureau of Economic Research. It was underwritten by the J. Paul Getty Foundation, the Mellon Foundation, the New York Times Foundation, and Mr. David Rockefeller. Participants had the advantage of six background papers each of which represented the results of substantial amounts of research on the subjects of finances, economic history of art museums, tax policy, government policy (2), and marketing. Five discussion sessions were held, one for each of the four topics mentioned above and a general overview of the economics of art museums. The intent is to share these experiences with all of us who did not attend.

Each of the five discussions was facilitated by semi-formal remarks by five prominent practitioners and researchers in the field of cultural economics. The ensuing discussions are included in the book. According to the editor, the two "cultures" (economists and museum administrators) were "successfully bridged" in the discussions.

This feeling appears to derive from the fact that a certain view of the economics of art museums was common to all participants. Art museums are considered to be much more important to a society, especially in the United States, than the level of funding indicates. In semi-technical terms, the marginal social benefit of art museums greatly exceeds its marginal social cost. The public, then, should be willing to surrender a larger share of its aggregate income to the management of these institutions. While the marginal cost of one museum experience is zero, the marginal cost of one museum activity is much greater than zero.

There are considerable differences between the advocates of various mechanisms by which this flow of funds should be accomplished. Three mechanisms are suggested. First, charges might be imposed on those who benefit from the services rendered by art museums. This is the "market" solution to the problem of funding museum activities. However, outside of commissary sales and store sales and a few travelling exhibitions, it is conceded that this mechanism will not produce an "adequate" level of funding.

Second, governments might contribute larger sums to support the budgets of museums at levels that are...