Economics of deaccessioning (a bit theoretical) (updated)

sounds temptingWhy is it so wrong that a museum would sell works from its collection? More specifically, why is it wrong to sell works where the proceeds from the sale would not be committed to the purchase of other works for the collection? I know of the policies of the Association of Art Museum Directors against the practice, but I am economist by training, and I remember when first studying in the field of cultural economics to being a little puzzled: what is so bad about having the freedom to manage and trade assets over time to ensure the institution is best using its total resources? What is so wrong about possibly trading objects of art for cash that can be used for building improvement, or endowment to generate increased annual cash flow for operations?

Two, related reasons come to mind. The first is that a prohibition on sales of art acts as a useful constraint on management. It lets the director know that should she fail to prudently manage the organization’s finances, she cannot rely on the museum’s collection as a safety net. There is a literature in the field of financial management that holds that corporate firms will sometimes carry more debt than would seem to make sense, in order to force managers to exercise careful oversight of the firm’s finances, lest it go bankrupt. Rules against deaccessioning can thus be seen as a discipline device over managers.

The second is that it allows the institution to make a commitment to donors of art that the donation will not simply be converted to cash for expenditures on things the donor is not so keen to support. Thus, managers are doubly constrained: the trustees of the organization do not want managers looting the capital represented by the collection, and neither do donors.

But there’s a problem: how does a museum commit to not deaccessioning works to generate funds not being applied to new acquisitions? How do we make promises about future actions credible, such that a potential donor has confidence in the long run ownership of his donation? In general, the best way we have to convince someone of a promise we have made is to make it very costly for ourselves to break the promise, to bind ourselves in some way.

And the museum world seems to do this. By creating a culture against deaccessioning-for-operating-funds, by having strong sanctions against any museum that acts against the rules, museum trustees are able to constrain management (‘don’t think you can sell art if you run into financial troubles – it cannot be done’) and satisfy donors (‘we couldn’t sell your work for operating funds even if we wanted to, the penalties are too great’).

What have I missed?

UPDATE: In other words, I don’t agree with the Times that this is an issue about “ethical standards.”

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  1. Thomas Bornholm says

    I would be interested to know why you do not see this as an ethical issue. You give good economic reasons for the rule against deaccessioning, but does the rule not also have an ethical dimension? I would think that an ethical obligation arises from an institution’s commitment to preserve artworks for the purposes the donors intended. I would also think that when a rule is backed not just by economic logic but also by an ethical imperative, it is more likely to have the power to shape museum culture in the desirable way you have mentioned. Therefore, it seems healthy to encourage the sense of an ethical obligation in this regard.

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