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Economic value
There are several different ways in which arts and culture produce economic
benefits. On the most basic level, arts and cultural organisations contribute to
the economy by selling tickets, artworks, books, etc. Often, they also induce additional
spending that is associated with the cultural experience. For example,
consumers may spend money travelling to and from a cultural site, pay for
parking, or have dinner at a restaurant before going to a concert. Further, cultural
organisations and other businesses that derive revenue from arts patrons pay
their employees and suppliers, who in turn spend some portion of their income
locally. All of these economic benefits are captured in economic impact studies
(see Snowball 2008, ch. 2 and 3 and BOP Consulting 2012 for an introduction;
Arts Council England 2014, 20 and Americans for the Arts 2012 provide recent
examples); however, economic impact studies have also been criticised for failing
to take costs into account (Reeves 2002, 41-44; McCarthy et al 2004, 90; Throsby
2001, 38, 134 n3)Arts and culture can also play a role in the economic redevelopment
of neglected neighbourhoods (Markusen and Gadwa 2010).
All of these economic impacts are relatively easy to trace since they are reflected
in observable transactions in the marketplace, which can be counted and
summed. There are, however, also instances in which economic value bypasses
the market (Throsby 2001, 23-26, 36-38). This is the case whenever people who
do not participate in arts and culture directly are nonetheless able to reap some
benefit from their existence. For instance, even Parisians who have never visited
the Louvre might take pride in knowing (and might even boast to others) that the
Mona Lisa is housed in their city. Economists argue that such a sense of pride is of
value to the people, whether or not they actually participate in cultural activities.
This is but one example of a range of economic values that are generated as ‘public
goods’, ‘non-user benefits’ or ‘externalities’ (Throsby and Withers 1979, ch. 10;
Frey 2003, 2; Heilbrun and Gray 2001, 223-30).
Since no money exchanges hands in these cases, the value of the goods cannot be
inferred from the price. Researchers must therefore resort to alternative methods
of assessing the goods’ value. One option is to survey people about their preferences
or ask them how much they would be willing to pay for particular benefits.
While such ‘stated preference’ techniques have been used in several contexts and
have been endorsed by notable economics (Bakhshi et al 2009, 11), they have also
been criticised, as it is unclear whether respondents are well enough informed
to answer the questions appropriately (Noonan 2004, 206-07; Diamond and
Hausman 1994). Other techniques calculate the value of a particular amenity
based on the effects it has on housing prices in the area or the amount of time
people are willing to spend travelling to attain a particular benefit. Overviews
Introduction 31
UNDERSTANDING the value and impacts of cultural experiences