The economics of art and culture

Half-title......Page 3
Title......Page 5
Copyright......Page 6
Contents......Page 7
FIGURES......Page 9
TABLES......Page 10
Preface......Page 13
PART ONE The arts sector: Size, growth, and audiences......Page 19
1 An overview of the arts sector......Page 21
COVERAGE OF THIS BOOK......Page 22
ART AND CULTURE AS A SUBJECT OF ECONOMIC INQUIRY......Page 23
ESTIMATING THE SIZE OF THE ARTS SECTOR......Page 25
2 Growth of the arts sector......Page 29
MEASURING GROWTH......Page 30
COMPETITION AMONG FORMS OF RECREATION......Page 31
The impact of television......Page 34
GROWTH OF THE ARTS SINCE 1970......Page 36
Slowdown begins in the late 1980s......Page 38
INFLUENCE OF CHANGES ON THE SUPPLY SIDE......Page 40
INTERNATIONAL DATA ON ARTS ACTIVITY......Page 42
Theater......Page 49
Dance......Page 51
Opera......Page 53
Symphony orchestras......Page 54
SUMMARY......Page 56
3 Audiences for the arts......Page 58
AUDIENCE SURVEYS VERSUS PARTICIPATION STUDIES......Page 59
PARTICIPATION RATES IN THE UNITED STATES......Page 60
SOME INTERNATIONAL COMPARISONS......Page 62
HOW DO PARTICIPATION RATES VARY IN THE POPULATION?......Page 64
Education versus income......Page 66
Arts participation and the mass media......Page 69
AUDIENCE CHARACTERISTICS......Page 71
Audience characteristics over time......Page 73
PART TWO The microeconomics of demand and supply......Page 77
MEASURING THE UTILITY OF CONSUMPTION......Page 79
CONSUMER BUDGET OPTIMIZATION......Page 81
DERIVING DEMAND CURVES......Page 83
The market demand curve......Page 84
DEMAND, SUPPLY, AND THE DETERMINATION OF PRICE......Page 85
Ticket pricing on Broadway......Page 87
The problem of inflexible ticket prices......Page 88
Taste......Page 92
Prices of related goods......Page 93
A hypothetical demand function......Page 94
Shifting of demand curves......Page 98
Supply and demand with shifting demand curves......Page 99
What if many variables change simultaneously?......Page 101
SUMMARY......Page 102
THE PRICE ELASTICITY OF DEMAND......Page 103
Price elasticity and total revenue......Page 106
Price, total revenue, and marginal revenue......Page 107
Deriving elasticity values from a demand equation......Page 110
THE INCOME ELASTICITY OF DEMAND......Page 111
Income elasticity, consumer budgets, and industry growth......Page 113
Deriving income elasticity from a demand equation......Page 114
CROSS-PRICE ELASTICITY OF DEMAND......Page 115
Deriving cross-price elasticities from a demand equation......Page 118
EXPECTED VALUES OF THE PRICE ELASTICITY OF DEMAND IN THE PERFORMING ARTS......Page 119
Empirical results and their implications: Price elasticity......Page 120
Empirical results: Income elasticity......Page 122
SUMMARY......Page 124
THE MEASUREMENT OF OUTPUT......Page 125
OUTPUT IN THE PERFORMING ARTS......Page 126
SOME BASIC COST CONCEPTS......Page 127
PRODUCTION COSTS......Page 128
Production costs for a theatrical enterprise......Page 129
How unit cost varies with output......Page 130
The arts as a special case......Page 132
SUMMARY......Page 133
TYPES OF MARKETS......Page 134
Pure monopoly......Page 135
Monopolistic competition......Page 136
ARTISTIC AND FINANCIAL OBJECTIVES......Page 137
A MODEL OF THE FIRM IN THE LIVE PERFORMANCE ARTS......Page 139
Price, output, and profit in the commercial theater......Page 141
Price and output in the nonprofit sector......Page 143
PRODUCTION COSTS IN THE LONG RUN......Page 144
Economies of scale in the live performing arts......Page 146
THE EFFECTS OF DONATIONS AND GRANTS......Page 148
INSTITUTIONAL SIZE, MARKET STRUCTURE, AND INNOVATION......Page 151
Competition encourages artistic innovation......Page 152
SUMMARY......Page 153
8 Productivity lag and the financial problem of the arts......Page 155
THE PRODUCTIVITY LAG ARGUMENT......Page 156
ALGEBRAIC EXPLANATION OF THE EFFECTS OF PRODUCTIVITY LAG......Page 158
A numerical example......Page 160
HISTORICAL EVIDENCE ON COSTS......Page 161
THE CONSEQUENCES OF PRODUCTIVITY LAG, OR, WHY WORRY ABOUT IT?......Page 163
The effect of rising living standards......Page 164
The effect of economies of scale......Page 165
Income from the mass media......Page 166
COMPETITION WITH THE MASS MEDIA FOR INPUTS......Page 168
PRODUCTIVITY LAG AND THE GROWTH OF MUSIC FESTIVALS......Page 169
COSTS AND REVENUES IN THE PERFORMING ARTS......Page 170
The role of presenting organizations......Page 172
EARNED VERSUS UNEARNED INCOME......Page 173
Is the earnings gap growing?......Page 174
Interpreting the earnings gap......Page 176
IS THERE AN “ARTISTIC DEFICIT”?......Page 177
CONCLUSION......Page 180
PART THREE The fine arts and museums......Page 181
9 The market in works of art......Page 183
SOME PRELIMINARY CONSIDERATIONS......Page 185
The primary market......Page 187
The secondary market......Page 189
THE SUPPLY OF ART......Page 192
THE DEMAND FOR ART......Page 195
Expected return......Page 196
Risk......Page 198
Liquidity......Page 199
ART AS INVESTMENT......Page 200
WHAT DO MUSEUMS DO?......Page 205
ATTENDANCE AT ART MUSEUMS......Page 208
A PROFILE OF MUSEUM VISITORS......Page 210
MUSEUMS AS A DECREASING COST INDUSTRY......Page 211
Full cost versus marginal cost pricing......Page 213
Entrance fees and equity considerations......Page 215
ENTRANCE FEES AND OVERALL FISCAL HEALTH......Page 216
ACQUISITION POLICIES OF ART MUSEUMS......Page 217
The problem of “deaccessioning”......Page 218
SOME QUESTIONS OF DISTRIBUTION......Page 220
Collection sharing and franchising on a large scale......Page 222
Special exhibitions, tours, blockbusters!......Page 224
MUSEUM REVENUES......Page 227
Contributed private support......Page 230
The Institute for Museum and Library Services......Page 231
STATE AND LOCAL GOVERNMENT SUPPORT......Page 233
CONCLUSION......Page 234
PART FOUR Public policy toward the arts......Page 235
11 Should the government subsidize the arts?......Page 237
OPTIMIZATION IN PERFECTLY COMPETITIVE MARKETS......Page 238
THE PROBLEM OF MARKET FAILURE......Page 240
Externalities or collective benefits......Page 241
Do the arts produce collective benefits?......Page 244
EXTERNAL BENEFITS AS PUBLIC GOODS......Page 248
Declining cost industries......Page 253
Lack of information......Page 254
Productivity lag and subsidies for the arts......Page 255
EQUITY AND THE DISTRIBUTION OF INCOME; MERIT GOODS......Page 256
Egalitarian arguments......Page 257
Arts subsidies and the distribution of income......Page 258
Merit goods......Page 259
SUMMARY......Page 261
No relevant external benefits......Page 262
Subsidies actually harm the arts......Page 264
Banfield’s argument......Page 265
A constitutional argument......Page 266
TRADITIONAL OPPOSITION TO PUBLIC SUPPORT IN THE UNITED STATES......Page 268
Birth of the New York State Council on the Arts and the National Endowment for the Arts......Page 270
AN INTERNATIONAL COMPARISON OF ARTS SUPPORT......Page 272
THE MATHEMATICS OF INDIRECT AID, OR TAX EXPENDITURES......Page 274
DONATING WORKS OF ART......Page 277
INDIVIDUAL, CORPORATE, AND FOUNDATION SUPPORT......Page 278
Motives for charitable giving......Page 282
WHY SO LITTLE PRIVATE SUPPORT FOR THE ARTS IN EUROPE?......Page 284
ADVANTAGES AND DISADVANTAGES OF PRIVATE AND/OR PUBLIC SUPPORT......Page 286
The question of stability......Page 289
Interference with artistic freedom......Page 290
POLITICAL CONTROVERSY OVER CONTROVERSIAL ART......Page 291
Report of the independent commission......Page 292
CONCLUSION......Page 295
THE COMPONENTS OF DIRECT PUBLIC SUPPORT IN THE UNITED STATES......Page 296
State government support......Page 299
Interstate variation in appropriations for the arts......Page 301
The division of functions between levels of government......Page 303
STRUCTURE AND GRANT-MAKING PROCEDURES OF THE NATIONAL ENDOWMENT FOR THE ARTS......Page 305
AN OUTLINE OF NATIONAL ENDOWMENT FOR THE ARTS PROGRAMS......Page 307
The NEA and the states......Page 308
Heritage and preservation......Page 310
What are matching grants?......Page 311
Should subsidies go to the buyer instead of the seller?......Page 312
PATTERNS OF STATE AID......Page 314
LOCAL ARTS AGENCIES......Page 316
What local arts agencies do......Page 317
Supporting major cultural institutions......Page 318
The politics of funding......Page 320
Elitism versus populism......Page 322
Decency tests......Page 324
PART FIVE Art, economy, and society......Page 327
14 The arts as a profession: Education, training, and employment......Page 329
DATA ON ARTISTS FROM THE SURVEY OF PUBLIC PARTICIPATION IN THE ARTS......Page 335
INFORMATION FROM AN ARTIST SURVEY......Page 337
LABOR MARKETS IN THE ARTS......Page 338
Labor market theory and the arts......Page 339
The demand for artists......Page 342
The supply of artists......Page 343
SOME REALITIES OF THE MARKET FOR ARTISTS......Page 344
Unions and the performing arts......Page 345
The superstar......Page 348
The visual arts......Page 349
BECOMING AN ARTIST: INVESTMENT IN HUMAN CAPITAL......Page 350
A SUMMATION......Page 352
15 The role of the arts in a local economy......Page 354
THE CONCENTRATION OF ART AND CULTURE IN URBAN CENTERS......Page 355
The role of economies of agglomeration......Page 356
Artists per 10,000 of population......Page 357
The special cases of New York and Los Angeles......Page 359
CONCENTRATION OR DECONCENTRATION OVER TIME?......Page 360
MEASURING THE RELATIVE SIZE OF THE LOCAL ARTS SECTOR......Page 361
ECONOMIC IMPACT STUDIES......Page 362
Direct spending......Page 363
MULTIPLIER EFFECTS......Page 364
THE ARTS INDUSTRY IN THE NEW YORK METROPOLITAN AREA......Page 365
The arts as an export industry......Page 368
The art industry in six smaller U.S. cities......Page 369
Arts audiences and arts exports......Page 371
HAVE ECONOMIC IMPACT STUDIES BEEN MISUSED?......Page 373
How to misinterpret an economic impact study......Page 374
THE ARTS AND THE LOCAL QUALITY OF LIFE......Page 376
16 The mass media, public broadcasting, and the cultivation of taste......Page 378
IMPACT OF THE MASS MEDIA......Page 379
Television......Page 380
FEDERAL REGULATION OF BROADCASTING......Page 382
The decentralization objective......Page 384
The effect of advertisers on programming......Page 385
Narrowcasting: The promise of culture on cable......Page 387
LESSONS OF THE CABLE EXPERIENCE......Page 388
PAYING FOR PUBLIC BROADCASTING......Page 390
How should public broadcasting be financed?......Page 392
Alternative systems compared......Page 394
Charging for the commercial use of the spectrum......Page 397
A closer look at spectrum fees or taxes......Page 400
Objections to spectrum fees......Page 401
17 Conclusion: Innovation, arts education, and the future of art and culture in the United States......Page 403
Symphony concerts......Page 404
Dance......Page 406
Theater......Page 407
Opera......Page 408
Art museums......Page 409
THE QUESTION OF AUDIENCE AGE......Page 411
MULTICULTURALISM AND THE FUTURE OF THE HIGH ARTS......Page 412
ARTS EDUCATION AND EDUCATIONAL REFORM......Page 413
Unresolved issues......Page 415
CAN ARTS EDUCATION STIMULATE THE DEMAND FOR ART?......Page 416
Findings from the survey of public participation in the arts......Page 418
Index......Page 421