How much does it cost to operate a Rembrandt?

Greg Sandow is guilty, once again, of forcing me to think. His latest post is a comparison of sorts between orchestras and museums. It’s too late and I have too much to do tomorrow to give it the complete response it deserves. But I did want to point out one issue about which Greg is wrong (and I know I’ll have to concede that he’s right about several others when I get into more detail.)

Orchestras are like museums. They display the art of the past. Or as one of these people got in my face (delightfully) and demanded to know, "What’s the difference between Brahms and Rembrandt?"

Finally, Rembrandt just hangs in the museum, costing nothing (except the museum’s general expenses), demanding nothing, requiring nothing. Brahms has to be enacted over and over again at great expense by large numbers of musicians, who work together, drawing on their years of training and experience to act out Brahms’s music.

It is true that musicians have to be paid in order to realize a
performance of Brahms, whereas a Rembrandt requires no infusion of cash
in order to be realized as great art. But it’s not true that the
Rembrandt costs the museum nothing.

One of the more important concept in microeconomics is the notion of
“opportunity cost,” which is a measure of what is lost by using
resources in one way and not another. If one buys a new car for
$25,000, for example, the opportunity cost of that purchase is the
economic return that $25,000 could bring if invested in a bond fund
rather than spent on an automobile (say around $1,200 per year at
around 5% return). And, of course, that opportunity cost goes on
forever in the case of a depreciating asset.

A Rembrandt has an opportunity cost as well. It doesn’t matter that the
museum that owns it may not have bought it, but rather acquired it as a
gift (which is often the case with art museum acquisitions, I
understand). Once the museum owns it, it incurs an opportunity cost by
definition, which is the income that the purchase price that the
Rembrandt would fetch, were it to be sold, would earn if it were

Rembrandts seem to go for lots of money these days (here’s one that
went for over $25 million last year). $25 million, invested
conservatively, would return at least $1 million per year forever. One
could produce a significant number of very decent performances of Brahms symphonies for $1
million per year.

One of the reasons that orchestras look so expensive and cash-hungry,
compared to some other cultural institutions, is that orchestra costs
happen in the here and now. But that doesn’t mean that orchestras are
more expensive; it just means that their costs are met in a different


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