Michael O’Hare

Implementation of many policies intended to reduce fuels’ contribution to global warming require an estimate of the global warming intensity (GWI) of various fuels. Determining the climate effect of a direct substitution of fuels is not the same as determining the official value of each fuel’s GWI used to implement the policy. Choosing the second, which depends in part on estimates of the first and their intrinsic uncertainty, is a decision that should reflect the shape of the probability distribution of the first and of the cost of error (the difference between the chosen value and the ‘real’ value. Decision analysis helps clarify the difference between these GWI’s, how they relate to each other, and how standard engineering practice like a safety factor applies to the regulator’s decision.

This paper was commissioned for a plenary session at the Association for Cultural Economics International 2008 Research Conference recognizing the 25th anniversary of the publication of Patrons Despite Themselves: Taxpayers and Arts Policy.  It proposes five “big questions” to which arts policy research should attend if carried on in the spirit that animated the book, namely that arts policy should seek to generate “more, better, engagement by more people with better art.”  The five issues are:

1. Waste of cultural resources represented by works that are not heard or seen, such as unperformed music and works in reserve collections of museums.
2. Design and implementation of a workable business model for works in digital form (recordings, video, text, etc.).
3. Increasing the value created by amateur participation (in contrast to passive consumption of art provided by professionals).
4. Withdrawal of elites, especially economic elites, from their historic participation in arts governance and support.
5. Fragmentation of collective patrimony as people have fewer and fewer works commonly experienced and art serves niche markets.

Though standard accounting practice requires that all assets of a firm be manifest in accounts, an exception to this principle allows museums to omit their entire collections from their balance sheets. As the collection of any top-rank museum has more value than the rest of a typical museum's assets put together, this practice greatly obstructs good institutional decisionmaking. The practice is justified by an assertion common in the museum community that the collection is not a financial asset, neither available for sale nor obligation as a loan security, and by a variety of other assertions regarding the cost of assessing it. These assertions are shown to be choices with no fundamental support beyond museum management comfort, or to be erroneous. 

The allocation of artistic patrimony across museums generates a return on investment below 1%, indicating that these assets are not being used efficiently to create the benefits museums (whether non-profit or public) are supposed to provide: no other organization would be allowed to control assets with such a low rate of return. Capitalizing collections is practical and would lead to a variety of beneficial changes in museum practice, on the criterion of inducing "more, better, engagement with more art by more people."