Michael Rushton

Department of Economics, University of Regina

Regina, Saskatchewan S4S 0A2 Canada

Michael.Rushton@uregina.ca

Paper prepared for the Conference:

Cultural Policy Program, University of Chicago

February 2002

Preliminary Version: Comments Welcome

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California and Massachusetts have enacted laws that declare a "public interest in preserving the integrity of cultural and artistic creations." In each case efforts to preserve the integrity of works of art go beyond the moral rights retained by creators, to create the possibility for a third party, other than the creator or the current owner of the work, to initiate actions that would prevent alterations of the work. The third party must be a public or non-profit entity in the artworld, and can seek an injunction against the "intentional commission of any physical defacement, mutilation, alteration, or destruction of a work of fine art." Moral rights are typically a part of copyright law, and apply to all works of visual art covered by copyright. But the California and Massachusetts preservation laws apply only to fine art of "recognized quality." This paper concerns whether contingent valuation methods could play a useful role in determining whether a particular work of art is of "recognized quality."

We begin with a discussion of the existing art preservation laws and proposals that have been made for a national law. Central to the question is exactly what is meant by the "public interest" in preserving privately-owned works of art even when the owners do not wish to preserve the work, and how we then define "recognized quality." Different conceptions of the public interest lead to different methods for evaluating the extent of the public interest. The California and Massachusetts laws rely on "the opinions of artists, art dealers, collectors of fine art, curators of art museums, and other persons involved with the creation or marketing of fine art" to determine whether a work is of recognized quality and so is subject to the preservation laws. But this essay will question whether expert opinion is appropriate under the circumstances.

Joseph Sax (1999) and Nicole Wilkes (2001) argue that some sort of law is needed to prevent the destruction or defacement of works of visual art beyond the limited set of moral rights contained in the Visual Artists’ Rights Act (VARA). Moral rights are rights held by the creator, not the public, against mutilation of work, and are there to protect the artist’s interests. The title of Sax’s book, Playing Darts with a Rembrandt, is taken from a law text: "[A]n eccentric American collector who, for a Saturday evening’s amusement, invited his friends to play darts using his Rembrandt portrait as the target would neither violate any public law nor be subject to any private restraint" (Feldman and Weil, 1986:w §5.11, p. 434). The title is somewhat off the mark, since although there are no doubt many eccentric art collectors, none have actually turned out to be so eccentric that they would destroy a Rembrandt. Instead, documented cases of art destruction turn on the displeasure of those who have commissioned a work with how it turned out (the Rockefellers’ reaction to a mural by Diego Rivera; Lady Churchill’s reaction to a portrait of her husband by Graham Sutherland), a couple of cases of owners believing that a work could have more value if divided into pieces and sold separately, and, most commonly, a building either slated for demolition or simply fallen into disrepair that has a work of art incorporated into its very fabric.

Moral rights are generally more concerned with the rights of the artist than with any public interest in a work of art. Moral rights are those rights that the creator of a work of art retains even after ownership of the work and/or the copyright in the work have been transferred to someone else. Moral rights include the rights of:

• paternity – the right to be identified as the creator of the work;
• integrity – the right of protection against alteration or mutilation of a work;
• disclosure – the right to publish or not to publish a work; and,
• withdrawal – the right to remove a work from circulation.

The last two rights are contingent upon the creator paying either the person to whom the work was promised or the owner of the work fair compensation. The Berne Convention for the Protection of Literary and Artistic Works includes the rights of paternity and integrity, but not the rights of disclosure and withdrawal. Moral rights provisions in most countries do not prevent the destruction of a work, just its alteration. Hansmann and Santilli (1997) note that creators and owners of their works have a pecuniary interest in preventing the alteration or mutilation of works, since such acts will likely diminish the value of the rest of the artist’s body of work. But destruction of works could possibly increase the value of remaining pieces, and so there are less likely to be objections. In addition, there are costs to preserving works, and so more rationale for allowing works to be destroyed.

The VARA prohibitions against destruction are limited. First, the provisions apply only to the destruction of work of "recognized quality", rather than the blanket coverage given for other moral rights to all art works eligible for copyright. However, Landes (2001) notes that in the (very) few cases that have been litigated, there is a low threshold for "recognized quality": a mention in a newspaper or some expert testimony will suffice. Second, it is only the creator who has the right; there is no provision for third-party actions. Wilkes (2001) finds the VARA provisions inadequate to the task of preservation: "the communitarian goals of art preservation are ill-served. The public is only represented when the public interest clearly aligns with the individual interest of the artist" (p. 192). Also note that VARA applies only to deliberate destruction; "an owner of an artwork … has no affirmative duty to expend resources preserving a work in good condition" (Landes, 2001: p. 284).

The California and Massachusetts preservation laws have a higher threshold for works covered, since they must be "of recognized quality, and of substantial public interest." However, the principal difference between the state laws and VARA is the ability under state law for third parties to take action in the public interest. The third party organization must be public or non-profit, "in existence for at least three years at the time an action is filed … a major purpose of which is to stage, display, or otherwise present works of art to the public or to promote the interests of the arts or artists." The actions are to prevent either deliberate destruction or defacement or harm resulting from "gross negligence", so as with VARA the affirmative duties are slight. Much of the legislation is taken up with the question of works of art that are incorporated into a piece of real property; appropriately, since that is where many controversies actually arise. No action can be brought if the artwork cannot be removed from real property without some damage to the work occurring. An organization can obtain an injunction if there is some evidence to the contrary, but it will have thirty days to prove it, and will bear the burden of proof. If the work can be removed from the property without harm to the work, and the owner wishes to destroy the work, the owner must provide notice of his intentions, so that the artist or the third party arts organization can have a chance to remove the work, and keep it, at their expense. They will have ninety days following the first day of the thirty-day notice to do so. If the organization does not take action within that time frame, the owner is free to destroy the work.

Wilkes (2001) suggests that a national scheme should be adopted. In her plan the National Endowment for the Arts (NEA) would be a natural agency to coordinate the work of a committee of experts that would determine which works should be covered by preservation legislation. Underlying her analysis is the idea, also in Sax (1999), that important works of art should be seen as a "public trust", not held exclusively in private hands; owners would be seen as "guardians" rather than "masters" of the property. A strong-form legislation would list works on a National Art Register and have substantial fines for damage or destruction of works on the register, with the proceeds going to art agencies.

There are three kinds of problems with such a law. The first are all of the familiar problems that arise through a regulatory taking. Wilkes (2001) suggests that a national art preservation scheme would not constitute a taking since there is a legitimate public interest, and it would not deny the owner an economically viable use of the property. However, the problem remains that an agency of government would have the power to determine what it could take from owners of art works, in the name of the public interest, without paying compensation; if the agency (perhaps the NEA) feels the benefit of the regulation but bears none of the costs, it will take too much (see Richard Epstein, 1985: pp. 129-31; Richard Posner, 1992: pp. 57-59). Even a commentator who sees some merit in preservation laws and, in general terms, alienability restrictions, recommends compensation to the owners of works falling under the regulation, not only on efficiency grounds but also in terms of fairness: if there is a public benefit to preserving some works, it is surely unfair to impose all of the costs of the preservation on the owner of the work (Rose-Ackerman, 1985: p. 954). Note that the art preservation laws under discussion are not the same as zoning laws to protect historical districts, where the introduction of such a law could well increase the value of properties. Art preservation laws would generally function on a case by case basis, in which situation an owner of a work that falls under the national registry would not receive the compensating benefit of other works falling under the plan; there is no "average reciprocity of advantage".

Second, placing certain privately owned works of art under a national preservation scheme essentially creates a situation of divided ownership. There is a parallel with the case of artists’ moral rights, although in the case of art preservation laws the shared ownership is between the owner and the state rather than the owner and the creator. In their economic analysis of moral rights Hansmann and Santilli (1997) note that although the common law generally frowns upon negative servitudes, they can be justified where there are substantial external effects and where there is relatively low cost in keeping track of the situation for subsequent owners; with a national art registry these conditions are likely to be met.

Third, and a primary concern in this paper, is that it is very unclear about what exactly is meant by "the public interest": what would be covered by an art preservation law, and indeed its justification in the first place, hinge on clarity about what are the expected benefits of the law, and to whom they would accrue. What instructions would be given to any panel of experts examining works to see whether they should be included? Existing state laws do not provide any detail, but as we look more closely at the issue we find that experts on art may not be the best judges of the public interest.

There is a substantial literature in the field of cultural economics on the ways in which there is potentially a public interest in art and therefore a rationale for public funding of the creation and exhibition of art. The essential allocative problem is that there may be externalities associated with the production and consumption of artistic works. This is for a number of possible reasons:

• people may feel national or local pride from artistic activities even if as individuals they do not directly take part;
• they may benefit from the innovation in non-artistic fields that results from artistic creation – this may include changes in social life more generally that are partly spurred by art with political dimensions;
• individuals may feel an increased sense of well-being simply because a vibrant arts community provides them with the option of one day enjoying its output; and
• there may be a desire to leave an artistic heritage for future generations.

In addition, there may be public good aspects to artistic activities, such as public sculpture. Finally, there are important educational aspects in artistic production. Individuals lead better lives when they have cultivated an appreciation and understanding of art, and this requires exposure to art.

There are other rationales beyond the efficient allocation of resources. First, there are distributional aspects. In one respect this is simply about making art accessible (in the sense of being able to attend, rather than to increase its comprehensibility) to low-income individuals or those living far from cultural centers (this was a primary motive for the creation of the British Arts Council). In a different respect there is the educational aspect, and the notion that some exposure and learning in the arts is necessary for individuals to have a more equal chance at a fulfilling life of leisure and greater opportunities in the workforce: William Baumol, countering claims that public support of the arts benefits primarily the well-off, wrote that "individuals who are unable to use the language well and who are unfamiliar with society’s cultural heritage face marked handicaps in getting good jobs and advancing up the economic ladder. …[C]ultural illiteracy has much in common with linguistic illiteracy" (Baumol, 1997, p. 10). In Rawls’ (1971) liberal theory of justice this is the primary, indeed the sole, justification for public support of the arts.

In addition, there are communitarian rationales for public support of the arts. Moustakas (1989) invokes the notion of group rights to justify export prohibitions on works of art that are essential for a sense of "group identity". He would include works that have historic factors embodied in the quality of the art, that are important for a national or group sense of identity and continuity, and that exist in part because of the artist’s intention to dedicate the work as a public property. Charles Taylor (1995) provides a deeper analysis of "irreducibly social goods", which are not public goods in the usual economist’s sense of goods that are non-rival and perhaps non-excludable in consumption, but rather goods that form the background culture that shape all of our preferences over more instrumental goods. The concept is central to his critique of welfare economics as usually practiced. Through Taylor’s approach we come to a rationale for public support of culture, even though it is through a worldview completely at odds with the economic approach.

Even though there are very different ways that public support of the arts has been justified, there is a common thread: each relies to some degree on the impact on the ordinary citizen, rather than to an artworld elite. The economist’s concern with allocative efficiency has at its foundation the preferences of all citizens; externalities are measured according to the effects of a consumption or production decision by one actor on all members of society. This is true for each of the usual cultural externalities listed above. The distributional reasons for public support of the arts are especially concerned with those who have had little exposure to the arts. And the communitarian take on public support is about creating a culture that helps maintain and build a bond across all members of society. As for the public funding of the creation and exhibition of art, so for a public interest in the preservation of privately owned art. The justification is that there is a "public interest" in preserving art, and ultimately public interest has to be explained in terms of effects on the public.

When would it make sense to delegate decision making about art matters to expert panels? Compare art to the state support of scientific research. Few members of the public know much about biology. But at least some members of that same public support state funding, on the grounds that there are likely to be various benefits of the research that will ultimately accrue to ordinary people, or at least a subset of them (say people suffering a certain disease that is under study). Delegation of funding recommendations to an expert panel would be on the grounds that scientists are the best judges of what research proposals are most likely to bear fruit, based on the track record of the applicant and how the proposal fits with other work going on in the discipline. It is also a way of de-politicizing the funding, and ensuring that it is not being allocated on pork-barrel principles (although this certainly happens with some public funding sources). Note that the goals of members of the public supporting funding and the goals of the scientific peer review panels substantially coincide; the general public doesn’t know much about biology, but it knows at least to some extent what biologists are trying to accomplish.

In the world of art, there is much less agreement about what the public interest is, and why we are interested in using the state to fund art or to mandate the protection of art by private owners. An interesting illustration of the lack of clarity over the goals of public art policy is provided by the rise and decline of the National Endowment for the Arts. When it was founded in the mid 1960s, speeches by Members of Congress and by President Johnson at the time make frequent reference to America’s place in the world and in history: how would its civilization be judged if there were no great artistic legacy? The expectation was that the advisory National Council on the Arts would be able to recognize and make recommendations for those artists and projects that would create such an artistic legacy, and the sense of national pride that would accompany it. However, during the decades that followed it could be argued that the sense of national pride in the works of high art funded by the NEA never materialized. This is not altogether surprising, since as the NEA moved to the use of expert panels in the various genres of art it was unlikely that the panels, in their search for excellence, would be making judgments on the basis of how works would contribute to the general public’s sense of pride in the United States. As a result, the conservative forces in Congress were able to bring forth a sharp reduction in the budget of the NEA, and restrictions on what it could fund. In particular, grants to individual artists were ended, and the focus is now on education, preservation of heritage, and bringing art to regions that have traditionally been deprived. What is left is those areas of funding where the experts making recommendations are unlikely to make judgments at odds with the preferences one might find in the lay public.

Is the NEA result such a bad one? Throsby (2001) draws the distinction between what he calls "economic value" – what people are willing to pay for, and "cultural value" – all of the aspects of a work that cause us to say it is in some sense valuable: aesthetic, spiritual, social, historical, and so on. We could respond that economic value encompasses cultural value, simply by applying to it a particular metric. But Throsby suggests there are a number of reasons why this is not the case:

However, all the points raised as to why economic and cultural value might differ do not make expert panels any better judges of value, of either type, than the ordinary citizens. An interesting example is the case of the Group of Seven and Tom Thomson, Canadian painters from the early twentieth century. They met between 1911 and 1913, and proclaimed themselves a group in 1920 devoted to modernist painting, mostly but not exclusively landscapes, and the notion that Canada needed its own style of art that would be representative of its ruggedness. The Group is perhaps one of the rare cases where artists set out to create a national style and succeeded; their works are familiar to most reasonably educated Canadians, and any Canadian gallery shop will have a large collections of prints, calendars, and coffee-table books by these artists for sale. They do not hold a place in international texts on art history, but they clearly matter to Canadians. Yet one finds that even in Canada elite opinion of the Group of Seven is not high; they are considered by many critics boring, and marketed, by the government as well as by galleries, to the point of being official, bureaucratic art. Taking Throsby’s reasons for why "economic" and "cultural" value might differ, we note on his first point that it might well be the art experts, and not the ordinary Canadian, who does not know enough about the cultural object to form a reliable judgement about it – the expert is looking for one thing, the lay person another. Canadians’ feelings about the Group of Seven’s works may not be easily expressed in preferences, or in a money metric, and are almost certainly tied up with feeling a part of a national group when experiencing the art. But that does not imply that trying to gauge Canadians’ feelings about preserving the works is less accurate than we could obtain through an expert panel.

Panels of art historians, artists, curators and dealers can certainly provide useful information about individual works of art. But they are not in a position to judge the public interest in individual works, at least as the public interest has been identified in the wide variety of studies that have considered public support of the arts. State laws on art preservation rely on expert panels to determine whether there is a public interest, but clearly public opinion has an important role to play.

Recently the Journal of Cultural Economics has published a number of studies applying contingent valuation methods (CVM) to cultural goods: see Hansen (1997), Sanatagata and Signorello (2000) and Pollicino and Maddison (2001). In each study there was an effort to follow the guidelines set forth by the NOAA study (Arrow et al, 1993) regarding survey design, including reminding respondents of the budget constraints involved, and the possibilities of substitute goods. Hansen (1997) uses CVM to assess the public’s willingness to pay for Copenhagen’s Royal Theatre. In fact the goal is to find the value of the Theatre’s carrying on its present level of activities, and Hansen notes that what is really at issue is the minimum compensation required if the Theatre were to shut down; i.e. this is a case of willingness to accept rather than willingness to pay. Still, an open-ended willingness to pay question is at the heart of the survey. Hansen notes that the Theatre is very well known, as is the fact that it is supported by some public funds, and so there would not be substantial problems with the degree to which respondents were informed about the good or about the existence of substitutes. An "anchoring bias" was found, in that where respondents were told how much the average taxpayer contributes to the Theatre, those respondents claimed in large numbers that the current level of support was exactly their willingness to pay.

This paper does not attempt to review the debates surrounding the best means of designing CVM. Instead, our focus is on whether CVM can provide useful information about the "public interest" in preserving privately-owned works of art, beyond that, or perhaps even replacing that, given by a panel of "artists, art dealers, collectors of fine art, curators of art museums, and other persons involved with the creation or marketing of fine art."

Speaking to environmental concerns, Hanemann asks:

For works of art, Hanemann’s point is even stronger, since it is even more likely that the experts in question are valuing goods by a very different set of criteria than the public.

For the consideration of privately owned works of art and whether there should be action by the state to enforce preservation, Sax (1999) sees some value in public input. Ironically, many of the more famous disputes around the preservation of art have come not from a public interest in the works being preserved, but through an artist trying to preserve a work that the public actively wants destroyed, Richard Serra’s Tilted Arc being a prominent example (also see Tepper (2000)). Sax recommends polling the public, with full information provided on the tax consequences of any decision, on questions of altering or removing art. In the case of Split Pavilion in Carlsbad, there was an allowance for time to elapse so that the public could get a chance to become fully acquainted with the work, until there was a vote with a substantial majority in favour of paying the cost of dismantling and removal. As Frey (1997, 2000) has claimed, a referendum is a most effective way of gathering information, since the choice facing voters is clear, with real consequences, and the chance to become informed about the issue at hand. This should be feasible under an art preservation scheme, with CVM used to simulate referendum results. Transaction costs should not be excessive, since so few cases actually arise (Landes (2001) notes that there have been many more articles written about VARA in the decade it has been in place than there have been cases). And it should be possible to do them on a local basis; it is hard to imagine cases arising of national importance, where the public would all be aware of the work in question. With the costs being put forward to the public it should also solve the problem of excessive regulatory takings, it being made clear in the survey that compensation would be owing to the owner.

Over the past dozen years there has been a revolution in public administration in terms of public accountability. At the heart of these reforms is the idea that public agencies must clearly define their goals and objectives, so that the public can more effectively deliberate whether the agency is worth funding at a higher or lower level. For any agency to say it is working in the "public interest" and leave it at that is not adequate. Yet the art preservation laws of California and Massachusetts lead to costs being imposed on owners of works of art without there being any clarity as to why that is the case. There is deference to panels of experts without a clear direction to the panels as to the criteria they should be following. In some ways this is understandable; even those who have thought very deeply about art have great difficulty in expressing exactly how it is that they determine value in a work – they "know it when they see it." But that being the case, it surely makes sense to get some public input into how objects are valued. Experts can provide some useful information about works – their historic value, whether they are rare or common examples of a period or genre, for example – but they will not be able to evaluate whether it is worth undertaking the cost of preservation, especially if they will not be bearing the cost.

The question of using CVM in evaluating works that have arisen in art preservation disputes is not a matter of "is some number better than no number?" (Diamond and Hausman, 1994). Instead, it is about whether to use an evaluation from the public or from a panel of art experts. We do not wish to doubt the expertise of art historians, artists or curators in their fields. However, their expertise does not extend to evaluating the public interest in works of art; only the public itself can do that. When an expert panel judges that an owner of a work should be obliged to bear the cost of its preservation, it is implicitly coming up with a number, saying that the value of preserving the work exceeds the cost of doing so. This paper suggests that the public, especially a public that expects to bear the costs as well as enjoy the benefits of the preserved work, is the better judge of that number.

Epstein, Joseph (1995) "What To Do About the Arts," Commentary 99(4): 23-30.

Feldman, Franklin and Stephen E. Weil (1986) Art Law (Boston: Little, Brown).

Rawls, John (1971) A Theory of Justice (Cambridge MA: Harvard University Press).