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June 2011

Pricing at the Metropolitan Museum

Last week the Metropolitan Museum announced that it would raise its suggested price of admission from $20 to $25 (see this New York Times blog post and article). The museum's strategy is unusual in the sense that its admission fee is not mandatory; in fact, visitors can pay as little as they please. Other museums have free admission at specific times - for instance, MoMA is free on Fridays after 4pm thanks to the financial support of Target - but do charge a specific price most of the week.

According to the blog post, the increase in the suggested admission fee is due to the fact that "the average amount paid by visitors – who can decide to contribute as little as a penny if they want – has been lower recently". In other words, when visitors react to a high suggested admission fee by paying less than what is recommended, management increases the suggested admission fee to squeeze more money out of the fewer people willing to pay full price - asking them, in effect, to subsidize the purse-tightening practices of their fellow tourists without any direct benefit in return.

This does not strike me as particularly sound management - it runs the risk of alienating even more visitors, especially due to the media coverage related to the increase, in which journalists point out any chance they get that people do not have to pay the full amount. More and more visitors will begin to ask themselves: "Am I really going to spend enough time in there to make the visit worth $25?" and, when they decide they won't, might end up contributing even less than the $20 they would have been willing to pay if the policy had not changed.

I am a member of the museum, so I don't have to think about paying the full recommended amount or not when I visit, but before I became a member (many years ago), I always paid the full amount, which was admittedly lower in those days. In my opinion, a $20 (or $25) fee remains a bargain given the size of the collections, but you do probably want to spend several hours at the museum to make it worthwhile - note that you can go out of the museum for lunch and come back in later that day.

I do think that the fees at the Whitney and the Frick Museums are much more objectionable, given the much smaller collections they have. I have never felt that my money was wasted when I visited the Metropolitan Museum. I was recently at the Whitney and afterward the thought of having spent $18 "for that" (insert vague gesture toward art I found really mediocre here - to be honest their fifth floor paintings are usually good but the ones I like were not on display that time) made me very sad. Really, I could have given $18 to a homeless person instead - that would have had a much more positive impact. I have been twice to the Frick so far, and after the first time, when I paid full-price, I made sure to come and see the exhibition I was interested in on Sunday morning when it is "pay as you wish" (I paid $10 instead of the regular $18 fee. I thought that was fair, or at least, that's what a visit to the Frick was worth in my eyes).

The NYT article linked above mentions that the current policy of all-week voluntary contribution at the Metropolitan Museum came about "in 1970... at the suggestion of an honorary trustee, an investment banker, who got the idea from church bazaars." Why the investment banker thought he could compare a museum with one of the largest collections of holdings in the world (two million items!) to a church bazaar is not explained. I am surprised that this idea has survived that long.

According to Wikipedia, the museum sees approximately five million visitors a year. I would love to see some numbers as to how many people pay the full fee, and how much people who do not usually contribute. Without numbers, it is hard to suggest ways to improve the current admission strategy, but it is very clear to me that increasing the suggested admission fee will only make matters worse.

I don't think museums have an obligation to let visitors come in for free all the time, but I like the policy of free admission some evenings, to draw visitors who might not be able to afford to come otherwise, while the admission fee the rest of the time helps support educational programs and other services. For me it makes a lot more sense than having a blanket "recommended fee", and raising the fee when people don't want to pay it.

Here are a few ideas that could help improve the Met's pricing strategy:

  • introduce free admission on specific afternoons/evenings only. (This is my favorite option.) Since the museum takes the issue of affordability at heart, it could have twice as many "pay as you wish" or free afternoons as other museums. It would underline its commitment to making its art accessible while ensuring people who visit outside these hours pay the full amount. Since the Whitney and the Frick already charge $18, and MoMA $20, per visit for adults, it seems unlikely that the Met, with its enormous collections, would decide to charge less than that.
  • request a minimum donation of, say, $10. (This is my second favorite option.) Drawback: some people who would feel guilty of not giving the recommended amount if nothing else was suggested might feel that giving the minimum is fine. Seeing the admission-fee data would be very helpful to design a system that improves the current situation instead of making it worse.
  • ask people to contribute depending on the time they are going to spend in the museum, or the collections they plan to see. This is more complicated, is going to confuse some visitors, and relies heavily on the honor code.
  • encourage people to visit multiple times at a discount within a certain time frame, for instance a month. People would have to pay a set fee, say $50, and can come as many times as they want in, say, three or four months. (Met membership fee for individuals is currently $100 for a year, so you'd want people who commit to the full year membership to be better off.)
  • charge extra for access to special exhibitions. This would be a big departure from the museum's current policy and is my least favorite option.   

Ultimately, with a $2.3 billion endowment, the Metropolitan Museum is not headed for financial trouble. It has a stellar educational program, including superb online resources such as the collection database and the Timeline of Art History. I doubt, though, that raising the suggested admission fee is the right way to go about generating a more sustainable inflow of money. Maybe it is time that the policy of an all-week recommended fee is no longer working.

Real-time price data: The Billion Prices Project

The May 30 issue of the New Yorker has an interesting article by James Surowiecki about the difficulty in assessing the real state of the economy when indicators use data collected months earlier.

For instance in December 1930, Herbert Hoover (who had famously claimed that "the Depression is over" a few months earlier) put the number of unemployed Americans at 2 1/2 million when it wa in fact at 5 million. The reason for the discrepancy was that the available numbers when Hoover made his speech were 8 months old.

The Second World War "accelerated the trend toward quantifying things" (indeed, operations research became widely used during and right after the war to help the military improve its logistics), and it would be easy to believe that, in this day and age, our data collection process has become instantaneous and perfect - but it is not.

In fact, "the government continues to track inflation... much as it did in the 1950s"; in particular, it surveys consumers by phone, neglecting the ever-growing segment of people who do not have a landline. Most importantly, the Comsumer Price Index uses data that is a month old - better than in Hoover's days, but still too slow in fast-changing environments.

To address this issue, a team of M.I.T. economists has devised the Billion Prices Project, in which they track half a million prices daily (five times the number of prices that the government tracks) for goods sold over the Internet. This is, in essence, a real-time inflation index. You can read more about the B.P.P. on its project page and look at the chart comparing the B.P.P. with the government's Consumer Price Index over the past three years.

An important caveat is that services tend to be underrepresented among online goods. Surowiecki also points out that the availability of more accurate numbers does not mean politicians will use them.

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