Lecture 14 The Arts and Economic Development Professor Julia Lowell - - PowerPoint PPT Presentation

Lecture 14

The Arts and Economic Development

Professor Julia Lowell lowell@econ.ucsb.edu Spring 2012

5/ 21/ 2012 1 Econ 191ac -- Lecture 14

Outline: Lecture 14

• Class project, Homeworks 10 and 13

discussion

• Support for the arts in the United

States and abroad

• The arts and economic development

5/ 21/ 2012 Econ 191ac -- Lecture 14 2

CLASS PROJECT CI TI ES & COORDI NATORS: ANY CHANGES?

5/ 21/ 2012 Econ 191ac -- Lecture 14 3

Class Project: Team Cities

City 1 City 2 Team 1 New Orleans Miami Team 2 Minneapolis Santa Barbara Team 3 Berkeley Anaheim Team 4 Boulder Thousand Oaks Team 5 Cincinnati Reno

5/ 21/ 2012 Econ 191ac -- Lecture 14 4

Class Project: Coordinators

City 1 Team 1 Megan Team 2 Holly Team 3 Patrick Team 4 Tina Team 5 Regina

5/ 21/ 2012 Econ 191ac -- Lecture 14 5

DI SCUSSI ON OF HOMEW ORKS 1 0 AND 1 3

5/ 21/ 2012 Econ 191ac -- Lecture 14 6

5/ 21/ 2012 Econ 191ac -- Lecture 14 7

Homework for Monday 5/ 21 (HW13a) International Comparisons of Arts Funding

The United States ranks well below Australia, Canada, and most European countries in international comparisons of central government grants and subsidies to artists and arts

• rganizations.

Can you therefore infer that the United States is less generous than these countries in terms of public support for the arts and culture? Why or why not? Explain.

HW13 – A Good Answer Thanks, David!

“We cannot infer that the United States is less generous than these countries in terms of public support for the arts and culture based on this information because our arts and cultures are supported differently. The United States

system differs than the European system because we primarily support the arts indirectly through our tax system. This indirect support is strong showing that

• ur government does promote the arts.

In addition, the arts in the United States are mainly funded by earned income, which reflects that many people in the country spend money on the arts, and reduces the need for direct government support.”

5/ 21/ 2012 Econ 191ac -- Lecture 14 8

Homework 13 – Other Considerations

In addition to including indirect support (“tax expenditures”), international comparisons of arts support should:

• Make sure that the definition of “artists and arts
• rganizations” is the same across countries
• Include all levels of government – not just the

central government

5/ 21/ 2012 Econ 191ac -- Lecture 14 9

Homework 10 for Wednesday 5/ 9

DROP ONE CI TY – YOU SHOULD NOW HAVE 3 Source: Bureau of Labor Statistics, Occupational Em ploym ent Statistics, http:/ / w w w .bls.gov/ oes/ data.htm # (1) For each of your 3 remaining cities, find

– 2010 population (you should have this already) – Number & mean hourly wage of architects; graphic designers; musicians and singers; authors; and photographers

– (3) Write down a brief definition of each occupation (2) For each city, calculate the number of artists in each category per 10,000 people

Check website for more instructions.

5/ 21/ 2012 Econ 191ac -- Lecture 14 10

• Go to Internet
• Example – St. Louis, MO

5/ 21/ 2012 Econ 191ac -- Lecture 14 11

Homework 10 for Wednesday 5/ 9

• Go to Internet
• Example – St. Louis, MO

5/ 21/ 2012 Econ 191ac -- Lecture 14 12

Homework 10 for Wednesday 5/ 9

Architects Graphic Designers Musicians / Singers Authors Photograph ers

Hourly Mean Wage

33.6 22.22 35.44 30.68 14.09

Employment:

1410 1920 340 300 630

Employment per 10,000

5.00 6.81 1.21 1.06 2.24

HW10 Artists in Your Cities: Hourly Mean Wage

5/ 21/ 2012 Econ 191ac -- Lecture 14 13

Architects Graphic Designers Musicians / Singers Authors Photograph ers

Anaheim 38.02 24.36 28.31 29.37 15.53 Berkeley 42.91 23.53 47.73 31.26 14.1 Boulder 27.63 22.14 47.65 23.48 13.25 Cincinnati Miami 40.24 23.41 30.31 22.04 14.96 Minneapolis New Orleans 34.14 18.89 na 25.97 12.61 Santa Barbara 31.01 22.41 50.19 27.15 13.23 Thousand Oaks 44.47 22.13 75.44 28.03 18.28 Reno 38.85 20.46 18.76 na na

Class Project - HW13b Homework for Monday 5/ 21

Let each of your team members be responsible for one of the following tasks for your 2 cities: 1. I dentify the relevant state and local art councils (may be more than one local council). What kinds of organizations/ activities do they fund? 2. I dentify private foundations that operate there. What do they fund? 3. Find as many artists’ membership organizations as you can 4. Find organizations that are focused on particular ethnicities, cultures and

• neighborhoods. What are the largest ethnic groups in town?

5. What are the primary industries/ biggest companies? 6. Key cultural events/ activities/ places? (What should a visitor do?)

5/ 21/ 2012 Econ 191ac -- Lecture 14 14

Class Project - HW13b State and Local Arts Councils

• Identify the relevant state and local art councils (may be more

than one local council).

– State arts council is easy to identify – “Local” art councils may include a regional arts council (for example, Denver Scientific and Cultural District includes 7 counties); a county arts council (so need to know what county each city is in) as well as one or more city arts council(s) – May be more than one city arts council—for example, may have one council that supports/ advises on public arts installments – Do * not* include councils for cities unrelated to yours—Glendale may be right next to Burbank, but Glendale Arts & Culture Commission will not fund arts orgs

• r activities in Burbank
• What kinds of organizations/ activities do they fund?

5/ 21/ 2012 Econ 191ac -- Lecture 14 15

Class Project - HW13b State and Local Art Councils: St. Louis

• Identify the relevant state and local art councils (may be

more than one local council).

– Missouri Arts Council –

• St. Louis Regional Arts Council

– Hispanic Arts Council of St. Louis – Arts and Education Council of St. Louis – Northern Arts Council (North St. Louis)

• What kinds of organizations/ activities do they fund?

– Grants listing available on websites

5/ 21/ 2012 Econ 191ac -- Lecture 14 16

Class Project - HW13b Foundation Funding (1)

• Identify private foundations that operate there

– Foundation Center data reveal where foundations are headquarted, not always the same as where they operate (fund). – For example, a foundation headquartered in Ft. Lauderdale that is listed as “primarily active in New Jersey” may not do any funding in Florida at all – Can’t claim them for Ft. Lauderdale, but won’t necessarily know about them for New Jersey

• What do they fund?

5/ 21/ 2012 Econ 191ac -- Lecture 14 17

Class Project (HW13b) Foundation Funding (2)

• What do they fund?

Look at Top 10 Funders (Foundation Center) Look at Top 50 recipients (Foundation Center) Google searches

5/ 21/ 2012 Econ 191ac -- Lecture 14 18

Class Project (HW13b) Foundation Funding: St Louis

• Identify private foundations that operate there

– Foundation Center’s “Foundation Finder” identifies most if not all St. Louis area foundations – too many! – Foundation Center’s “Find Funders” feature provides top funders for St. Louis

Foundation Nam e, State, Type1 , Total Dollars, Aw arded No. of Grants 1 . Gateway Foundation MO IN $ 18,343,187 10 2 . Emerson Charitable Trust MO CS 9,820,827 139 3 . Monsanto Fund MO CS 9,001,731 66 4 . Bill & Melinda Gates Foundation WA IN 8,377,350 3 5 . Anheuser-Busch Foundation MO CS 7,415,000 39 6 . Horncrest Foundation, Inc. NY IN 5,293,275 23 7 . Howard G. Buffett Foundation IL IN 5,172,451 3 8 . The JSM Charitable Trust MO IN 4,969,977 9 9 . The Susan Thompson Buffett Foundation NE IN 4,951,968 7 1 0 . The Edward D. Jones & Co. Foundation MO CS 3,822,273 38

5/ 21/ 2012 Econ 191ac -- Lecture 14 19

Class Project (HW13b) Artists Membership Groups (1)

Find as many artists’ membership organizations as you can

Artists’ Membership Organizations/ Community Arts Centers These can be tough to find—as far as I know, there is no centralized place where this information is collected. Your best bet will often be a simple google search on < your city> < artists’ groupname> , where possible artists’ group names are listed below. Often the organization will represent a larger geographic area than your city—for example, instead of Berkeley Quilters, it might be “East Bay Heritage Quilters”; or for Santa Barbara “Coastal Quilters Guild of Santa Barbara and Goleta.” I t could also be a slightly smaller geographic area—for example, the “Amherst Museum Quilters Guild” represents quilters in a suburb of Buffalo, NY . Don’t worry about this, as long as it’s the right general area.

5/ 21/ 2012 Econ 191ac -- Lecture 14 20

Class Project (HW13b) Artists Membership Groups (2)

5/ 21/ 2012 Econ 191ac -- Lecture 14 21

Remember that you want artists’ membership organizations, * not* individual studios/ companies. So if you look up < Santa Barbara> and < photographers> and get “Santa Barbara Photography,” notice that you’ve found a photography studio, not a membership association for photographers. On the other hand, “Professional Photographers of Santa Barbara County” is a membership association, which is what you want. I ’ve added artists’ centers to the mix, because for some kinds of art, the artists associate themselves with a particular place (arts or crafts center),

• ften because it has specialized equipment that they can use (kilns, glass

blowing equipment, dye labs, etc.) I f you can’t find anything for your cities, it may be because there isn’t anything to find. But check with me first if you are totally striking out. The purpose of this exercise is to get a sense of what kinds of cultural activities, amateur as well as professional, do and don’t take place in your cities.

Class Project (HW13b) Artists Membership Groups (3)

5/ 21/ 2012 Econ 191ac -- Lecture 14 22

• Possible Artist Group Names for Google Searches
• Achitecture: The American I nstitute of Architects has chapters all over the

U.S. (http: / / www.aia.org/ about/ structure/ components/ AI AS078541)

• Crafts (general): crafts association, craftworkers, craft guild, artisans

guild, etc.

• Fiber arts/ textile arts: textile arts guild, etc.
• Folk dance: check out the folk dance federation of California at

www.folkdance.com (look for Ncal, Socal, and outside Cal), also check out the listing at , http: / / www.dmoz.org/ Arts/ Performing_Arts/ Dance/ Folk/

• Glass blowers: glass blowers association, glass artists association, etc.
• Metal arts/ silversmiths/ goldsmiths/ enamelists: Metal arts guild/ society,

silversmiths association/ guild, goldsmiths association/ guild, etc.

• Mosaic: mosaic guild, mosaic artists
• Musicians (may be a labor union): musicians association,
• Photography: camera club, camera enthusiasts, photographic society,

photographers association, etc.

Class Project (HW13b) Artists Membership Groups (4)

• Pottery/ ceramics: ceramics league, ceramicists, potters guild, etc.
• Quilting: check out the quilt guild listing at

http: / / www.quiltguilds.com/ Default.htm; quilters association, quilting club, etc.

• Visual artists (painters, sculptors, mosaic artists, etc.): art association,

artists association, artists’ league, art studios, etc.

• Woodturners/ woodworkers: check out the chapter listings at

http: / / www.woodturner.org/ community/ chapters/ members.pl?submit= Cha pter+ List# FL, also woodworkers association, woodcarvers association, etc.

• Writers/ authors: writers group, screenwriters association, screenwriters

workshop, scriptwriters group, etc.

• 5/ 21/ 2012

Econ 191ac -- Lecture 14 23

Class Project (HW13b) Culturally-Specific Groups (1)

• What are the largest ethnic groups in town?

– Ideally, would want to answer this question first, since may help indicate where to look for culturally specific organizations – However, problem of ethnicity vs culture: “White,” “Asian,” “Hispanic” don’t tell us much about cultural affinity – www.city-data.com has information about ancestries, but not always helpful. For example, for Bakersfield, want “Basque” not “Spanish.” For Miami, where does Cuba fit on the list of ancestries? (And where does this data come from, anyway?)

• Find organizations that are focused on particular ethnicities,

cultures and neighborhoods, What are the key cultural events/ activities/ places? What should a visitor do?

• 5/ 21/ 2012

Econ 191ac -- Lecture 14 24

Class Project (HW13b) Culturally-Specific Groups (2)

5/ 21/ 2012 Econ 191ac -- Lecture 14 25

The Census Bureau’s Quick Facts (http: / / quickfacts.census.gov/ qfd/ index.html) provides information on the basic racial composition of U.S. cities—but no detail beyond that (so “white”

• r “Caucasian” as opposed to “Greek” or “Norwegian”; “Asian” as opposed to

“I ndian” or “Japanese”). We are interested in culture not race, so the Census Bureau information is of limited use for our purposes. A better bet might be to look at the Visitor’s Bureau/ Tourist Office for your city or a site run by the local paper (e.g., SantaBarbaraca.com, Bakersfield.com, Scottsdale.com, etc.), or other sources like www.city- data.com (on this one, make sure you keep scrolling down to see all the relevant information). These sites will also tell you about things to see and do in the city. Other possible sites for information about different neighborhoods, cultural

• rganizations, and cultural activities and events include TripAdvisor.com,

Wikitravel, frommers.com, and the Wikipedia entry for “Category: Neighborhoods in < City> .

Class Project (HW13b) Biggest Industries & Employers

• What are the primary industries/ biggest companies?

– Try Lexis-Nexis – Chamber of Commerce – www.city-data.com – Check to see how variables are calculated; for example, does employment number represent local employment? (ex: Miami employment in cruise ships?)

5/ 21/ 2012 Econ 191ac -- Lecture 14 26

THE ARTS AND ECONOMI C DEVELOPMENT

5/ 21/ 2012 Econ 191ac -- Lecture 14 27

Economic Externalities Are the Preferred Rationale for Art Subsidies

• Stimulate creativity and innovation
• Stim ulate econom ic grow th &

developm ent Economic externalities are a major focus of policy, perhaps because

– They are quantifiable in terms of jobs and growth – The benefits are very widespread (don’t target particular groups)

5/ 21/ 2012 Econ 191ac -- Lecture 14 28

How Might the Arts Stimulate Economic Growth and Development? (1)

• Attract new and productive residents

A prevalence of high quality arts organizations and events may make an area particularly attractive to high-income, high-skill people

5/ 21/ 2012 Econ 191ac -- Lecture 14 29

• Attract new and productive residents
• Attract new businesses

Businesses, especially those who employ highly skilled and highly mobile workers, may favor places with arts amenities when deciding where to relocate or to establish new offices

5/ 21/ 2012 Econ 191ac -- Lecture 14 30

How Might the Arts Stimulate Economic Growth and Development? (2)

• Attract new and productive residents
• Attract new businesses
• Attract investment

People may be more likely to buy property and banks may be more likely to lend in areas with a positive community image due to the arts

5/ 21/ 2012 Econ 191ac -- Lecture 14 31

How Might the Arts Stimulate Economic Growth and Development? (3)

• Attract new and productive residents
• Attract new businesses
• Attract investment
• Revitalize blighted urban areas

Artists may be willing to live and work in neighborhoods that

• ther people avoid (those who can), eventually gentrifying the

area and pushing up real estate values

5/ 21/ 2012 Econ 191ac -- Lecture 14 32

How Might the Arts Stimulate Economic Growth and Development? (4)

• Attract new and productive residents
• Attract new businesses
• Attract investment
• Revitalize blighted urban areas
• Generate external funding/ revenues

– Grants from outside the local area Artists and arts organizations may bring in funding from external sources such as non-local foundations, the state, or the NEA

5/ 21/ 2012 Econ 191ac -- Lecture 14 33

How Might the Arts Stimulate Economic Growth and Development? (5)

• Attract new residents
• Attract new businesses
• Attract investment
• Revitalize blighted urban areas
• Generate external funding/ revenues

– Grants from outside the local area – Tourism

Tourists may visit a community primarily to attend an arts event or enjoy its living culture and built heritage. They may also prolong a trip in order to consume cultural amenities.

5/ 21/ 2012 Econ 191ac -- Lecture 14 34

How Might the Arts Stimulate Economic Growth and Development? (6)

Studies Have Focused on Two of These Mechanisms

5/ 21/ 2012 Econ 191ac -- Lecture 14 35

• Attract new and productive residents
• Attract new businesses
• Attract investment
• Revitalize blighted urban areas
• Generate external funding/ revenues

– Grants from outside the local area – Tourism

The Arts Attract New and Productive Residents

Richard Florida (The Rise of the Creative Class, 2002) argues that

• Economic prosperity relies on cultural, entrepreneurial, civic, scientific, and

artistic creativity

• Creative workers with these talents need communities, organizations, and

peers that are open to new ideas and different people

• They also look to places that are authentic and unique
• The presence of artists helps a community create an identity that is

distinctive

• Places receptive to new forms of culture, alternative lifestyles and identities

and new views on social status and power structures will benefit significantly in the creative age

Florida created an index to measure the creativity—and thus the attractiveness—of cities, based on demographic and

• ccupational data

Do you believe his results?

5/ 21/ 2012 Econ 191ac -- Lecture 14 36

Components of Florida’s Creativity Index

• Creativity measure = Percentage of “creative

workers” (artists plus engineers) in population

• High tech measure = Milken Institute’s Tech Pole

Index (not sure what this is)

• Innovation measure = Patents per capita
• Diversity measure = Gay index (proxy for
• penness to different kinds of people) (no idea

how he measured this)

5/ 21/ 2012 Econ 191ac -- Lecture 14 37

Implications of Florida’s Work: Top Ten Large Cities

Large Cities Creativity Rankings Rankings of 49 metro areas reporting populations over 1 million in the 2000 Census Top Ten Cities City Creativity Index % Creative Workers Creative Rank High-Tech Rank Innovation Rank Diversity Rank

• 1. San Francisco 1057

34.8 5 1 2 1

• 2. Austin

1028 36.4 4 11 3 16

• 3. San Diego

1015 32.1 15 12 7 3

• 3. Boston

1015 38.0 3 2 6 22

• 5. Seattle

1008 32.7 9 3 12 8

• 6. Chapel Hill

996 38.2 2 14 4 28

• 7. Houston

980 32.5 10 16 16 10

• 8. Washington

964 38.4 1 5 30 12

• 9. New York

962 32.3 12 13 24 14

• 10. Dallas

960 30.2 23 6 17 9

• 10. Minneapolis

960 33.9 7 21 5 29

5/ 21/ 2012 Econ 191ac -- Lecture 14 38

Implications of Florida’s Work: Bottom Ten Large Cities

5/ 21/ 2012 Econ 191ac -- Lecture 14 39

Large Cities Creativity Rankings Rankings of 49 metro areas reporting populations over 1 million in the 2000 Census Bottom Ten Cities City Creativity Index % Creative Workers Creative Rank High-Tech Rank Innovation Rank Diversity Rank

• 49. Memphis

530 24.8 47 48 42 41

• 48. Norfolk, VA

555 28.4 36 35 49 47

• 47. Las Vegas

561 18.5 49 42 47 5

• 46. Buffalo

609 28.9 33 40 27 49

• 45. Louisville

622 26.5 46 46 39 36

• 44. Grand Rapids

639 24.3 48 43 23 38

• 43. Oklahoma City

668 29.4 29 41 43 39

• 42. New Orleans

668 27.5 42 45 48 13

• 41. Greensboro

697 27.3 44 33 35 35

• 40. Providence

698 27.6 41 44 34 33

Implications of Florida’s Work: Top Ten Medium Cities

5/ 21/ 2012 Econ 191ac -- Lecture 14 40

Medium City Creativity Rankings Rankings of 32 metro areas reporting populations 500,000 to 1 million in the 2000 Census Top Ten Cities City Creativity Index % Creative Workers Creative Rank High-Tech Rank Innovation Rank Diversity Rank

• 1. Albuquerque

965 32.2 2 1 7 1

• 2. Albany, NY

932 33.7 1 12 2 4

• 3. Tucson, AZ

853 28.4 17 2 6 5

• 4. Allentown, PA

801 28.7 16 13 3 14

• 5. Dayton, OH

766 30.1 8 8 5 24

• 6. Colorado Springs

756 29.9 10 5 1 30

• 7. Harrisburg, PA

751 29.8 11 6 13 20

• 8. Little Rock, AR

740 30.8 4 10 21 11

• 9. Birmingham, AL

722 30.7 6 7 26 10

• 10. Tulsa, OK

721 28.7 15 9 15 18

Implications of Florida’s Work: Bottom Ten Medium Cities

5/ 21/ 2012 Econ 191ac -- Lecture 14 41

Medium City Creativity Rankings Rankings of 32 metro areas reporting populations 500,000 to 1 million in the 2000 Census Bottom Ten Cities City Creativity Index % Creative Workers Creative Rank High-Tech Rank Innovation Rank Diversity Rank

• 32. Youngstown, OH

253 23.8 32 32 24 32

• 31. Scranton, PA

400 24.7 28 23 23 31

• 30. McAllen, TX

451 27.8 18 31 32 9

• 29. Stockton, CA

459 24.1 30 29 28 7

• 28. El Paso, TX

464 27.0 23 27 31 17

• 27. Fresno, CA

516 25.1 27 24 30 2

• 26. Bakersfield, CA

531 27.8 18 22 27 19

• 25. Fort Wayne, IN

569 25.4 26 17 8 26

• 24. Springfield, MA

577 29.7 13 30 20 22

• 23. Honolulu, HI

580 27.2 21 14 29 6

Implications of Florida’s Work: Top Ten Small Cities

5/ 21/ 2012 Econ 191ac -- Lecture 14 42

Sm all City Creativity Rankings Rankings of 63 metro areas reporting populations 250,000 to 500,000 in the 2000 Census Top Ten Cities City Creativity Index % Creative Workers Creative Rank High-Tech Rank Innovation Rank Diversity Rank

• 1. Madison, WI

925 32.8 6 16 4 9

• 2. Des Moines, IA

862 32.1 8 2 16 20

• 3. Santa Barbara, CA

856 28.3 19 8 8 7

• 4. Melbourne, FL

855 35.5 1 6 9 32

• 5. Boise, ID

854 35.2 3 1 1 46

• 6. Huntsville, AL

799 35.3 2 5 18 40

• 7. Lansing, MI

739 34.3 4 27 29 18

• 8. Binghamton, NY

731 30.8 12 7 3 60

• 9. Lexington, KY

717 27.0 28 24 10 12

• 10. New London, CT

715 28.1 23 11 13 33

Implications of Florida’s Work: Bottom Ten Small Cities

5/ 21/ 2012 Econ 191ac -- Lecture 14 43

Sm all City Creativity Rankings Rankings of 63 metro areas reporting populations 250,000 to 500,000 in the 2000 Census Bottom Ten Cities City Creativity Index % Creative Workers Creative Rank High-Tech Rank Innovation Rank Diversity Rank

• 63. Shreveport, LA

233 22.1 55 32 59 57

• 62. Ocala, FL

263 16.4 63 61 52 24

• 61. Visalia, CA

289 22.9 52 63 60 11

• 60. Killeen, TX

302 24.6 47 47 51 53

• 59. Fayetteville, NC 309

29.0 16 62 62 49

• 58. York, PA

360 22.3 54 54 26 52

• 57. Fayetteville, AR 366

21.1 57 57 42 17

• 56. Beaumont, TX

372 27.8 25 37 56 55

• 55. Lakeland, FL

385 20.9 59 56 53 5

• 54. Hickory, NC

393 19.4 61 48 32 30

Criticisms of Florida

• Who is a “creative worker”?

– Are results being driven by managers and engineers in data, rather than by artists?

• Will boosting creativity—as measured by

Florida—boost the local economy for everyone?

• Endogeneity problem: Does creativity

make cities wealthy, or do wealthy cities attract creative people?

5/ 21/ 2012 Econ 191ac -- Lecture 14 44

The Most Common Measures of the Economic Impact of the Arts

• Size analyses

– Calculate regional income and employment directly attributable to an arts organization or industry

• Multiplier and input-output analyses

– Measure spending that would not have occurred in the absence of an organization or event – Trace the direct and indirect effects of a change in external arts spending (such as a government grant or tourist spending) on the economy

Econ 191ac -- Lecture 14 45 5/ 21/ 2012

Measuring Economic Impact: Size Analyses

• Industry revenue approach

– Define arts “industries” (using descriptions in national data or creating own description) – Identify firms within those industries for region – Sum up sales/ revenue numbers to get gross industrial

• utput for regional arts industry
• Personal income approach

– Define arts occupations – Identify persons within those occupations for region – Sum up income numbers to get personal income for regional arts activity

• Consumer expenditure approach

– Use personal consumption data for arts industries

Econ 191ac -- Lecture 14 46 5/ 21/ 2012

What to Include in a Size Analysis? Defining A Cultural “Industry”

• Educators
• Suppliers
• Creators/ Performers
• Brokers (market makers)
• “Live” Presenters
• Reproducers
• Distributors
• Consumers/ Funders

5/ 21/ 2012 Econ 191ac -- Lecture 14 47

A Cultural Economy: Symphonic Music Industry Example

Performers and Performing Groups 2 Reproduc ers Audiences Presenters Distributors Composers and Arrangers 3 1 5/ 21/ 2012 Econ 191ac -- Lecture 14 48

Live performance Recorded performance 1-music publisher; 2-promoter; 3-management agency

Educators Arts Suppliers

Taking It One Step Further: Multiplier and Input-Output Analysis

• Size analyses can only measure the

economic size (revenues, employment) of a cultural sector

• Impact analyses such as multiplier and

input-output analyses measure the effects

• f external funding (grants, tourism) on

the entire local economy

5/ 21/ 2012 Econ 191ac -- Lecture 14 49

Multiplier Analysis: Measuring the Impact of an NEA Grant

Econ 191ac -- Lecture 14

• 1. The NEA gives a theatre company a $1000

grant to buy materials for sets from a hardware store

• 2. The hardware store spends $600 on fixing its

roof

• 3. The roofing company spends $360 on its

holiday office party, catered locally

• 4. The caterer pays a gardener $216 for

landscaping

• 5. Etc.

50 5/ 21/ 2012

Direct versus Indirect Spending: Multiplying an NEA Grant (1)

Econ 191ac -- Lecture 14

1. The theatre company buys $1000 worth of materials from a hardware store

– This is direct spending

2. $600 on roof repairs 3. $360 at the caterers 4. $216 to SoCal Edison 5. etc.

– This is indirect spending Total so far: $1000+ $600+ $360+ $216= $2176 In this example, what is the marginal propensity to spend?

51 5/ 21/ 2012

Direct versus Indirect Spending: Multiplying an NEA Grant (2)

Econ 191ac -- Lecture 14

1. The theatre company buys $1000 worth of materials from a hardware store – This is direct spending 2. $600 on roof repairs 3. $360 at the caterers 4. $216 to SoCal Edison 5. etc. – This is indirect spending

Total so far: $1000+ $600+ $360+ $216= $2176 In this example, what is the marginal propensity to spend?

Answ er: 0 .6

52 5/ 21/ 2012

Direct versus Indirect Spending: Multiplying an NEA Grant (3)

Econ 191ac -- Lecture 14

$1000 + $600 + $360 + $216 + … = $1000 + $1000* (0.6) + $1000* (0.6)(0.6) + $1000* (0.6)(0.6)(0.6) + $1000* (0.6) 4 + $1000* (0.6) 5 + $1000* (0.6) 6 + … = $1000* [ 1/ (1-0.6)] = $1000* [ 1/ (0.4)] = $1000* 2.5 = $2500 With a marginal propensity to spend of 0.6, the multiplier is 2.5. The total impact on the local community of a $1000 NEA grant is $2500.

53 5/ 21/ 2012

NEA Grant Example: Multiplier Analysis Isn’t Very Accurate

Econ 191ac -- Lecture 14

1. The theatre company buys $1000 worth of materials from a hardware store

– How do we know what the theatre spends its NEA money on?

2. $600 on roof repairs 3. $360 at the caterers 4. $216 to SoCal Edison 5. etc. – How do we know what the hardware store, caterers, and SoCal Edison spend their money on? – Where does the marginal propensity to spend of 60 percent come from? – Where do the $400, $240, $144, etc. go?

54 5/ 21/ 2012

A Better Measure of Economic Impact: Input-Output Analysis

Econ 191ac -- Lecture 14

To determine how the NEA’s money impacts the other sectors in the local economy, we need to know how different sectors interact:

• Sectors purchase from other local sectors
• Sectors sell to other local sectors
• Sectors sell outside the local economy
• Sectors buy outside the local economy
• Sectors pay their employees
• Sectors pay taxes

55 5/ 21/ 2012

Input-Output Models

5/ 21/ 2012 Econ 191ac -- Lecture 14 56

• Quantify the transactions between sectors

in an economy

• Provide “snap-shots” of the economy for a
• ne-year period
• Help predict how a change in one sector

will affect the other sectors

• Can be used to estimate multipliers

But are hugely data-intensive!

Constructing a Simple Input-Output Model for the Visual Arts Economy

Core Visual Arts Other Sectors Artist Consumers Suppliers of arts-related inputs Government Art museums Benefactors and patrons Commercial galleries Other domestic industries Other retail outlets (auction houses, arts fairs & festivals, etc.) External sector (exports and imports) Education & training institutions Infrastructure orgs (professional artists’ service organization, brokers, etc.)

5/ 21/ 2012 Econ 191ac -- Lecture 14 57 Source: D. Throsby, “Assessing the Impacts of the Cultural Industry,” May 2004

Category Principal Revenue Source Principal Expenditure Recipient I nput suppliers Artists (62% ) Other industries (98% ) Artists Other industries (49% ) Other industries (76% ) Art museums Government (62% ) Other industries (72% ) Commercial galleries Consumers (65% ) Other industries (50% ) Other retail Consumers (53% ) Other industries (83% ) Education Government (80% ) Other industries (55% ) I nfrastructure orgs Government (55% ) Other industries (84% )

5/ 21/ 2012 Econ 191ac -- Lecture 14 58

A Simplified Input-Output Model for the Visual Arts Economy

Source: D. Throsby, “Assessing the Impacts of the Cultural Industry,” May 2004. Calculations are for Australia.

HOMEW ORK FOR W EDNESDAY, MAY 2 3

5/ 21/ 2012 Econ 191ac -- Lecture 14 59

Homework 14 for Wednesday 5/ 23

• - Continued from HW13b

Let each of your team members be responsible for one of the following tasks for your 2 cities: 1. I dentify the relevant state and local art councils (may be more than one local council). What kinds of organizations/ activities do they fund? 2. I dentify private foundations that operate there. What do they fund? 3. Find as many artists’ membership organizations as you can 4. Find organizations that are focused on particular ethnicities, cultures and

• neighborhoods. What are the largest ethnic groups in town?

5. What are the primary industries/ biggest companies? 6. Key cultural events/ activities/ places? (What should a visitor do?)

5/ 21/ 2012 Econ 191ac -- Lecture 14 60