A Contingent Valuation Analysis of the Galway City Museum: Welfare Estimates for Attendance in the Absence of an Admission Fee

The Economic and Social Review, Vol. 49, No. 4, Winter 2018, pp. 489-514 POLICY PAPER A Contingent Valuation Analysis of the Galway City Museum: Welfare Estimates for Attendance in the Absence of an Admission Fee Vincent G. Munley* Lehigh University, Bethlehem Pennsylvania Abstract: This paper provides empirical evidence about the demand for museum attendance in the absence of an admission fee based upon a survey of visitors to the Galway City Museum. The contingent valuation model results provide estimates of the total value (consumer surplus) of annual museum visits. Using these results it is possible to determine the welfare effects of predicted reductions in the number of visits at various levels for an admission fee. The results also provide insight about the impact of fees on the demand for subsequent versus initial museum visits, a focus of continuing interest within the cultural economics literature. I INTRODUCTION hile the question of how, and by whom, museum services should be financed Wis of long-standing and continuing interest within the cultural economics literature, there exists surprisingly scant evidence about the actual demand for museum attendance at point of entry. There are several potential reasons why this is the case. First, many museums offer free admission, limiting the availability of Acknowledgements: Earlier versions of this paper were presented at seminars at the National University of Ireland, Galway Department of Economics and the Economic and Social Research Institute (ESRI) in Dublin and also included in the programme for the 2018 Meetings of the Public Choice Society in Charleston, South Carolina. Extensive, helpful comments by two anonymous referees motivated revisions that improved the paper substantially. The author is solely responsible for the content and the views expressed. * Corresponding author: [email protected] 489 490 The Economic and Social Review data relating to attendance and admission fee level. Second, museums that do impose an admission fee typically do not change the level of the fee with sufficient frequency to provide adequate data for a time-series analysis. Third, in the case of general interest museums there is sufficient variation in the foci of exhibits across museums to limit the ability to conduct a comparable cross-section analysis. Fourth, even in the case of museums of the same genre, the size, scope and location differentials across museums present a challenge to identifying the ceteris paribus control measures necessary to isolate the underlying relationship between attendance and admission fee level. To help fill this void, this paper presents the results of a contingent valuation demand analysis for the Galway City Museum based upon survey data derived during the month of June over the period 2007 through 2010 and then again in 2017 following a six-year hiatus. The structure of the paper is as follows. The next section provides a thumbnail summary of previous research that provides a foundation for the analysis presented here. Section III explains the institutional context for the Galway City Museum and includes a description of the survey used to obtain the data that serve as the basis for this analysis. Section IV specifies the empirical model used to estimate the demand relationship, with Section V presenting the empirical results of this estimation. Section VI presents the methodology to calculate economic welfare measures for consumer surplus and total revenue generated at a series of hypothetical admission fee levels, and the deadweight loss associated with a reduction in attendance resulting from the imposition of an admission fee, all based on the demand estimates presented in the previous section. Finally, Section VII offers some concluding comments. II PREVIOUS RESEARCH Economists have been interested in museums as a topic of inquiry going back at least to Jevons (Johnson and Thomas, 1998). In the modern literature such notable scholars as Martin Feldstein (1991), Bruno Frey (1994) and Alan Peacock (1995) have focused attention on museums within the broader context of cultural economics. While the production and cost of providing museum services has attracted limited attention (see, for example, Bishop and Brand, 2003, and Jackson, 1988) the question of how, and by whom, museum services should be financed has been the most prominent focus of economic inquiry. This focus, in turn, derives from a popular conviction that the intrinsic nature of the services that museums provide requires that they be afforded universal public access. At a conference convened in 1998 at Durham University, Anderson (1998 p.179) representing The British Museum, London summarised the sentiment of the curatorial and museological profession by opining that: A Contingent Valuation Analysis of the Galway City Museum 491 Those museums which do not charge declare their implacable opposition to the concept, not surprisingly. Of those which do, some say that they would rather not, but that financial issues make it a necessary evil; others are quiet on the matter. Also focusing on the UK where debate within the public policy arena as to whether or not museums should charge admission fees has a long and active history, Bailey and Falconer (1998, p.169) cite the conclusion of research conducted under the auspices of the Museums and Galleries Commission (MGC) that … whether or not museums charge for admission (and at whatever level), their governing bodies overwhelmingly believe that admission charges should not be levied as a matter of principle. In many cases, however, adherence to that principle has had to give way to financial necessity. A not unreasonable interpretation of this perspective is that museums at their core are not providers of a leisure service activity intended to compete with popular entertainment and sporting events for consumers but rather are the repositories of society’s heritage whose mission is to provide venues for the public to view, learn about, and ultimately appreciate more fully the curated assets which belong to them. O’Hagan (1995, 1996) provides an excellent analysis of the challenges involved in defining and measuring the extent to which museums are able to achieve equitable public access to their services. Strategies to accomplish this in the presence of admission fees include concessionary pricing for targeted groups such as children, retirees, individuals with disabilities and members of low income groups; a reduced admission fee at certain time of day or day of week; annual memberships; and bundled (multi-facility) passes. Frey and Steiner (2012) propose the intriguing idea of pricing museum visits based on the duration of visit. The economics literature addressing the appropriateness of charging an admission fee for museum attendance has identified a number of salient dimensions of museum services and adopted practices of particular interest that deserve explicit mention in any discussion of this topic. Among these are: (1) the potential impact on government funding and philanthropic donation levels that instituting an admission fee may have; (2) differences in museum types: national versus local and general interest versus specialised; (3) the practice of actively soliciting voluntary donations in the absence of an admission fee; (4) the practice of charging a separate fee for special exhibits in the absence of a general admission fee; and (5) the distinction between visits and visitors. This final issue relates to subsequent versus initial visits to a particular museum and how the demand for each may differ. This is an important dimension in considering memberships that provide annual passes. 492 The Economic and Social Review Given the substantial attention that has been devoted to accommodating the goal of achieving breadth and equity in public access to museum services in the presence of an admission fee, there is surprisingly scant empirical evidence available about the nature of the demand for museum attendance. Bailey and Falconer (1998, p.171) note that conventional wisdom suggests that “in general it appears that demand for museum visits is price inelastic and income elastic”, consistent with the more robust empirical evidence that is available for the performing arts such as orchestral music and theater (Zieba, 2009; O’Hagan and Zieba, 2010; and Zieba and O’Hagan, 2013). The frequently cited empirical estimates of price elasticity for museum attendance provided by Luksetich and Partridge (1997) are indeed inelastic, though some care is necessary in interpreting these results given the strategy that the authors employ to include within the estimating sample a large number of museums that do not have an admission fee under a constant elasticity empirical demand function specification.1 Another notable nuance regarding the financing of museum services is that it is not uncommon both within and across countries and within and across genres of museums for some museums to charge an admission fee while others do not. Given this status quo Bailey and Falconer (1998, p.168) argue: “that decisions of whether to charge (at what levels) can only be determined at the level of the individual museum.” To this end Johnson and Thomas (1998, p.82) note: “Where museum entry is free or subsidised, estimates of visitors’ valuation of their visits, through, for example, contingent valuation studies, would be valuable.” The sections that follow present a framework that can inform individual museum administrators about the likely impact on visitor attendance and consumer welfare measures that will result at alternative admission fee levels. III INSTITUTIONAL SETTING The empirical framework utilised here is a contingent valuation model based on the stated willingness to pay of visitors to the Galway Museum in Galway City, Ireland. The National Museum of Ireland has four locations. Three (Archeology, Decorative Arts and History, and Natural History) are located in Dublin. The Museum of Country Life is located in county Mayo. Admission to the National Museum is free. In addition to the National Museum, the Republic of Ireland hosts 12 local museums, operated by local government at city and/or county level.

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