Art Museum Attendance, Public Funding, and the Business Cycle

Abstract

Abstract There are a number of important problems in contemporary museum finance, and this article identifies yet another possible difficulty. An aggregate statistical measure of museum attendance is calculated in this research and the attendance measure is shown to be countercyclical in nature. When set against federal and other allocations to museums, which are clearly pro‐cyclical in nature, an attendance “disease” may be at least tentatively identified. Efficiency criteria, of course, require that costs are covered in real time. We find, however, that, despite the likelihood that museum attendance is income‐elastic and a normal good, attendance varies countercyclically with the business cycle. We suggest that one possible explanation for this phenomenon is that a positive substitution effect on demand outweighs the income effect on demand for museum attendance over the cycle. From a policymaking perspective, these results call for a longer range planning horizon, that is, one that includes the full business cycle rather than just the financial year, as is the current U.S. government practice.

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