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For What It's Worth

Michael Rushton on pricing the arts

On charging admission at the Met

April 28, 2017 by Michael Rushton 2 Comments

i should payThe New York Times reported that the Metropolitan Museum of Art is looking at options to make its “suggested” entry fee into something a little stronger than a hint, at least for people who live outside the city or state. A few years ago Derek Thompson reported that about six out of ten visitors do not pay the full suggested fee, and so the numbers at stake are large.

What can we say about this? It’s a bit over the top to refer to charging those visitors who reside outside the local tax base that supports the museum, but not residents, as “xenophobia“; many cities do this, and to my knowledge state higher education systems charging differential tuition fees to out-of-state students are not subject to the charge of xenophobia.

But consider another aspect: why should visitors pay anything when the museum has such a large endowment, largely financed by the very rich. Why not let the 0.1% pay? I wrote about this in a recent paper of mine on museum pricing, and here’s what I had to say:

…if a museum suddenly had a significant financial asset that it did not previously have, would moving to free admission be the best use of the returns from that asset? There are opportunity costs, in terms of other types of programming that could be financed from the asset sale, such as covering the costs of lending (or giving) works to smaller, poorer museums, programs for school children, creation of studio space and workshops, expanding paid internship programs, and so on. That some museums may be sitting on collections-in-storage [or endowments] that could be used as an asset to fund free admission does not in itself make free admission a sound use of funds.

There is an interesting parallel with the case of wealthy universities. In what has become a very publicly contested election to Harvard University’s Board of Overseers, one slate of candidates has taken the position that Harvard’s endowment of over $36 billion generates so much revenue that there is no reason to charge tuition to any undergraduates (New York Times 2016; The Economist 2016). The arithmetic of Harvard’s being able to afford free tuition is beyond dispute. Harvard, like most large American universities, already engages in significant variation in net tuition (tuition minus gift aid) at the individual student level (Waldfogel 2015), and the option of free tuition for all is “affordable.”

Without wanting to overegg the analogy, the use of the financial returns from Harvard’s endowment, like the returns to the endowment of a museum, comes with opportunity costs. It is not enough to say free tuition (or admission) is feasible given the wealth of the institution; we also must ask whether it is a prudent use of funds given the alternative possible uses.

So, yes, many large museums could manage with free admission. But that’s a choice on the use of endowment proceeds with an opportunity cost. Is it the best use of those resources? Maybe it is, but consider the alternatives. I’m not sure the Met giving me free admission, when I’m perfectly willing to pay, is optimal.

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Comments

  1. William Osborne says

    April 28, 2017 at 6:43 am

    Free museum entrance? Free tuition? Yes, let’s consider the options, and how about a few outside the usual American perspective. In continental Europe, orchestra, opera, theater, ballet, and museum tickets are a small fraction of the cost in the USA. And there are far, far more performances and museums per capita. We could also note that continental universities almost never charge more than $2000 per year, if there is any fee at all. There is no such thing as student debt in continental Europe. So let’s not have the 0.1% pay through donations, which creates cultural plutocracy and starves the arts. Let’s create a social democracy like every other developed country in the world. Higher taxes, especially for the rich, and more egalitarianism and intelligence in our society. Oh, I forgot. That option isn’t allowed in the States. Instead we get the lie that taxes should be low for the rich because money trickles down. Never mind the obvious reality that money trickles up, that it stays there, and that donations by the rich never keep pace with the kind of arts funding provided by social democracies. Nothing is going to change of course, but at least we can be aware of the lie that we live as a country.

    Reply
  2. Red Oxide says

    April 28, 2017 at 3:08 pm

    So- the Met misspent money at an astonishing pace, covered up quite shaky behavior on the part of the now dismissed director and is now being run by the board.
    They close galleries without warning and their answer is to make the outsiders pay.

    What will they do? Charge on the basis of accents? Anyone can get fake I.D.

    The Met will become another toy of the rich. It has in part already.

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Michael Rushton

Michael Rushton teaches in the Arts Administration programs at Indiana University in Bloomington. An economist by training, he has published widely on such topics as public funding of the arts, copyright, nonprofit organizations and tax policy, and served as Co-Editor of the Journal of Cultural Economics. At IU he teaches Read More…

About For What It’s Worth

What’s the price? Everything has one; admission, subscriptions, memberships, special exhibitions, box seats, refreshments, souvenirs, and on and on – a full menu. What the price is matters. Generally, nonprofit arts organizations in the US receive about half of their revenue as “earned income,” and … [Read More...]

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