Determining the Value of Cultural Goods: How Much (or How Little) Does Contingent Valuation Tell Us?

Contingent valuation methods (CVM) are now well established as a means of measuring the nonmarket demand for cultural goods and services. When combined with valuations provided through market processes (where relevant), an overall assessment of the economic value of cultural commodities can be obtained. Within a neoclassical framework, such assessments are thought to provide a complete picture of the value of cultural goods. But are there aspects of the value of cultural goods which are not fully captured, or not captured at all, within such a model? This paper argues that CVM provides an incomplete view of the nonmarket value of cultural goods, and that alternative measures need to be developed to provide a fuller account.     

The impact of cultural economics on economic theory

The paper asks what kind of impact cultural economics has had on the development of economic theory. Six research areas are discussed: productivity differentials between artistic and non-artistic labor, variations of the public good concept, particularly in relation to environmental goods, endogenous changes in preferences, long-term rates of return on paintings, impact of new media technologies and the autonomy of artistic valuation.It is shown that these topics have relevance beyond their applications in the cultural field, and that the theoretical issues involved challenge standard assumptions and standard modelling procedures in economic theory.Presidential address delivered at the 9th international conference of the Association for Cultural Economics, held in Boston, May 8–11, 1996.     

Contingent Valuation and Semiparametric Methods: A Case Study of the National Museum of Sculpture in Valladolid, Spain

Research on cultural economics is very interested in the economic valuation of non-market goods, particularly in the field ofcultural heritage where contingent valuation techniques are currently being used with both parametric and non-parametric statistical methods to estimate the willingness to pay for cultural goods. In the literature analysed, the number of studies using semiparametric methods, however, is very limited. Our analysis is intended to help fill this gap by offering a parametric, non-parametric and semiparametric economic valuation of the National Museum of Sculpture (Museo Nacional de Escultura), located in Valladolid,Spain. In addition, we also gain insight on a controversial issue affecting most European museums, particularly those located in Latin countries: the role voluntary donations might play in the funding of public museums.     

The Demand for Books Estimated by Means of Consumer Survey Data

In this analysis we present some results for book demand (schoolbooks are excluded) in Norway, obtained by means of a three-goods model (books, other cultural goods and non-cultural goods) and survey data for more than 18000 households from the period 1986–1999. Various methods of estimation are used, and they provide, surprisingly unambiguous results. Our hypotheses about the price and income sensitivity of book demand are confirmed. Books turn out to be “luxury” goods. Our calculations do also suggest that they are quite price sensitive and that they are close substitutes to other cultural goods. The results for socio-demographic variables indicate that access to outlets for books, sex and age matter for book demand. Moreover, we find that single persons and households with small children, especially those with children less than 7 years, are frequent book-buyers.     

Cultural goods creation, cultural capital formation, provision of cultural services and cultural atmosphere accumulation

The cultural atmosphere in a society is accumulated over time through the consumption of cultural services and is diminished through depreciation. Using cultural capital (e.g., cultural heritage, paintings, music scores), cultural services are provided by the cultural-services industry (e.g., museums, opera houses); cultural capital is enlarged by new cultural goods created by individuals. Individuals’ utilities are positively affected by the cultural services they consume, by the cultural goods they create and by the cultural atmosphere and the cultural capital accumulated in society. In a laissez-faire economy, individuals tend to ignore the positive external effects of their cultural-services consumption and creation of cultural goods on other individuals via accumulating cultural atmosphere and cultural capital. Consequently, suboptimally little cultural atmosphere and cultural capital will be accumulated. The efficient intertemporal allocation can be restored by introducing an appropriate subsidy that not only stimulates consumers’ demand for cultural services and the creation of new cultural goods but also enhances the accumulation of cultural atmosphere and cultural capital.

MARKET AS NARRATIVE AND CHARACTER

In this essay, the author analyzes social science thinking about the capitalist market from instrumentalism to institutionalism and the recent turn toward more cultural economics, and propose to enlarge the latter opening via the 'strong program' in cultural sociology. Nineteenth century' big thinkers' conceptualized the market as if it were entirely deracinated, based on alienation and pure calculation. The profession of economics subtracted the social critique from this dismal understanding and converted the dismal science into mathematical predictions and production functions. The new economic sociology exposed the institutional framework of market decisions, emphasizing social networks and status competition. Cultural economic sociology has challenged institutionalism, showing how social meanings, not just institutional position, determines economic value. The next step is to demonstrate that the market itself depends on cultural meanings. The strength of a market depends upon narrative projections of future economic conditions. An optimistic scenario creates confidence and sparks investment. A pessimistic narrative creates fear and leads investors keep their money tight. Confidence in the future depends on constructions of 'character': will economic actors constrain themselves by acting in a sober and moral way or will they be hedonistic, indulging in short-term satisfaction? This cultural-sociological theory is illustrated with reference to Keynes' General Theory about the 1930s Great Depression and U.S. Federal Reserve chairman Ben Bernanke's policy vis-à-vis the current Great Recession.     

Learning-by-Consuming and the Dynamics of the Demand and Prices of Cultural Goods

The major distinctive feature of cultural goods is that consumers must learn how to consume them, implying that preferences should be modelled as intertemporally dependent. The canonical model in the literature uses a habit formation analogy. In this paper, we discuss in detail, though in the simplest setup, a consistent preference structure for that model. Then, we derive the implications for the dynamics of two aggregate equilibrium models, a fixed price model and a flexible price model. The learning-by-consuming behaviour is characterised by a preference structure displaying bounded adjacent complementarity in the demand for the cultural good. This implies that there will be short run complementarity between the stocks of culture and financial wealth and that the adjustment of the demand for cultural goods, or of their relative price, will have some inertia. In the exogenous price model, we find that increases in income will raise the long run demand for cultural goods while increases in the relative price will decrease it. In the endogenous price model, an increase in the supply of cultural goods will imply an initial undershooting of the price of cultural goods followed by an upward transition process. Our results seem to be consistent with the empirical results on the demand for cultural goods and seem to offer an explanation for the Baumol and Bowen paradox.JEL Classification: Z1, E21Earlier versions of this paper have been presented at the 1st Conference of the Sociedade Portuguesa de Investigação em Economia (SPiE, 1997) and at the Xth Conference of the Association for Cultural Economics International, 1998, Barcelona.     

Comparing cultural heritage values in South East Asia – Possibilities and difficulties in cross-country transfers of economic values

Benefit transfer refers to the transfer of economic values from a primary valuation study (study site) to a site where we need to conduct policy analysis (policy site). Due to the considerable costs and time required to conduct primary valuation studies, using benefit transfers to estimate the values for sites not yet valued is likely to attract policy interest. While benefit transfer is being increasingly applied in studies on environmental goods, its application in the field of cultural heritage resources is rare. The unique nature of these public goods, and differences in the size and demographic characteristics of the affected populations lead to a significant risk of benefit transfer providing irrelevant estimates for cultural heritage. In this study, we compared the results of two contingent valuation (CV) studies involving historic temples in Thailand and Vietnam, tested the validity and reliability of benefit transfers between the two sites, and explored the possibilities and difficulties in such transfers. We found that the error in transferring unadjusted mean willingness-to-pay (WTP) ranged from 46% to 129%. Adjustments for differences in purchasing power parity (PPP), income level and income elasticity between the sites substantially increased rather than decreased transfer errors in many instances. Function transfers did not perform better than unadjusted unit transfers. These results suggest that there are other important factors – possibly physical, cultural and institutional variables – that need to be taken into account in explaining the differences in WTP for cultural heritage aside from the usual income and socio-economic variables captured in CV studies. Until we are able to identify these other factors and measure their impacts, the potential policy use of benefit transfer in the case of cultural heritage goods remains limited.     

Should Cultural Goods Be Treated Differently?

This article considers the specificity of cultural goods, services, and artifacts in the context of international trade theory. The analysis discusses possible justifications for import or export restrictions on cultural goods.     

Culture and Commerce

The cost aspects of supplying cultural goods and services have raised many basic questions concerning the economic activity of cultural institutions. There is more or less a consensus that the same criteria that apply to the cost aspects of any business also apply to cultural institutions. The nature of the products supplied and the stress on revenues earned are different. A key question to be asked by each society is how to balance the product mix offered by its cultural institutions taking into consideration both the societal valuation of the public goods provided and the earning potential of the institution. This essay examines some of the questions that occur at this intersection of culture and commerce.     

On the Symbolic Production of Digital Markets for Cultural Goods

This paper proposes and mobilizes a cultural economic framework to study the dynamic formation of digital markets for cultural goods. Adapting Hayek's theory of price to recent developments in the field of cultural sociology, it proposes the idea that an effective price system condenses information dispersed in society, and then enters into a performative process of symbolic communication that is perceived as ‘authentic’ by the consumers. After analyzing ‘artificial’ and ‘authentic’ current strategies aimed at producing digital markets for cultural goods, which are especially sensitive to the symbolic dimension of price, the article suggests the hypothesis that the digital market has been constructed as a zero- or quasi-zero-price economic space, and that it is the offline and material market of cultural products the one that collects the higher revenues derived from the ‘authentic’ generation of value taking place in the digital marketplace.     

Do cultural differences affect the trade of cultural goods? A study in trade of music

This study investigates the impact of cultural differences on trade decision and trade volume of cultural goods, using the data of traded music compact discs (CDs). According to ethnomusicological and civilization classifications, we classify countries into several groups and make novel variables that properly represent the cultural differences. We use the gravity model of trade proposed in Helpman et al. (The Quarterly Journal of Economics 123(2):441–487, 2008), which is utilized to avoid selection and endogeneity biases of estimation. In addition, we exploit an identifying assumption on the types of consumers, so that one of the cultural variables can satisfy the exclusion restriction in our two-stage estimation procedure. Our empirical hypothesis is that the trade volume of music is larger between two countries with greater cultural familiarity. The empirical results show that cultural differences have significant influences on the trading decision and volume of music traded in addition to the traditional determinants of trade. This finding supports our hypothesis that cultural familiarity promotes the cultural goods trade.     

Fiscal and economic aspects of book consumption in the European Union

One of the available and yet controversial tools in cultural policy at the national level is the reduction of VAT rates for cultural goods and services. We document the standard and reduced VAT rates in EU-28 countries in the period from 1993 to 2013 and explore the underlying determinants. We further introduce a simple theoretical framework to explain how reduced fiscal rates are expected to decrease prices and increase quantities of the consumed cultural goods and services. We then estimate quantitatively that a decrease in the VAT rate for books by one percentage point is associated with an economically significant drop in the price by 2.6%. Finally, we show the positive effect of a fiscal rate reduction on the book expenditure, where a one percentage point decrease in the VAT rate for books leads to an increase in expenditure by 2.7%.     

<Emphasis Type="Italic">Ex-ante</Emphasis> versus <Emphasis Type="Italic">ex-post</Emphasis>: comparison of the effects of the European Capital of Culture Maribor 2012 on tourism and employment

The estimation of the economic effects of cultural events is a topic that has stirred numerous debates in cultural economics. Although economic impact studies and contingent valuation have been the most frequently used methods, both suffer from numerous problems. In this article, we use ex-post econometric verification as a new and promising method in cultural economics in the estimation of the economic effects of cultural events and apply it to the estimation of the effects of the 2012 European Capital of Culture Maribor on tourism and employment. This enables us to compare results from economic impact and ex-post econometric verification studies to find significant differences in particular in terms of new employment. We determine the net effects on new tourism and find that they were mainly present in Maribor, the holder of the project, and not in the other five partner cities. We conclude by reflecting on the state of the art of the studies of economic effects of cultural events in cultural economics and their relevance for the study of cultural tourism.     

Commodifying Passion

This article explores the cultural framings that all too frequently pass un-noticed in standard cost-benefit accounts of development economics. Our purpose is not simply to add our voice to those who argue for the importance of ‘bringing culture back in’, for we assume that in contexts of modern development economics ‘the cultural’ cannot simply be added to the technical or the economic, as these perspectives are explicitly elaborated as an abstraction from the cultural. Rather, we are interested in how an exploration of the cultural dynamics of technical process leads us to a disjunctive (rather than an additive) mode of ‘inclusion’. Building on approaches from science studies and social anthropology, we draw on our ethnographic and historical investigations of road-building in Peru to explore divergent modes of connectivity through which a politics of cultural engagement is played out. Taking the example of a highway under construction in a frontier zone not generally considered of economic importance to the wider national economy, we discuss the historical desire for ‘connectivity’, highlighting the instability of the physical and social environments on the margins of a marginal state. In this context we find that the vital energies of the frontier – entrepreneurial, innovative, experimental and unruly – consistently disrupt the vision of smooth, orderly, technical integration. We argue that this tension between the cultural and the technical, so clearly manifest at the frontiers of capitalist expansion (but characteristic of technological expansion more generally) is a driver rather than an obstacle in the development process. Attempts to produce a political resolution to a perceived lack of integration on the margins of society too often proceed through further attempts at securing smooth continuity (via further technical modes of intervention) rather than building on the diverse (disjunctive) modes of engagement that already exist.     

THE MATERIAL PRACTICES OF GLAMOUR

So why are people attracted to goods? I want to open up a new dimension to this debate by understanding goods as surfaces which are both active and inert. I will do this by considering the history of the material practices of what I will call glamour. Through the manipulation of surfaces, glamour casts a secular spell – often only very briefly – but the moment of traction is, I argue, a real one which needs to be taken into accounts of cultural economy if we are to make sense of modern consumption.     

Determinants of cultural and popular celebration attendance: the case study of Seville Spring Fiestas

The Spring Fiestas in Seville (Spain) (SFS) are the most important cultural events in the city each year. The present paper pursues two aims. The first is to characterize the SFS as a new prototype of a complex cultural good that expresses the link between the people and the place in which they live based on material and immaterial cultural heritage represented through popular celebrations. The second goal is to conduct an empirical analysis of the determinants that shape attendance intensity by estimating a zero-truncated count data model using a unique dataset of attendees at the SFS in 2009. Findings indicate that attendance is strongly associated with variables reflecting knowledge, institutional links, past experiences, and the perceived external benefits generated by the existence of the SFS. The article contributes to the literature by exploring participation in popular celebrations, a field of inquiry that to date is extremely limited in cultural economics.     

Cultural goods, cultivation of taste, satisfaction and increasing marginal utility during vacations

This paper analyzes the link between cultivation of taste and tourist satisfaction during vacations. A simple model shows that, when cultural capital accumulation matters, customers are ready to sacrifice some of their current utility in order to get higher returns in future, and therefore, the relation between satisfaction and the demand for cultural goods may be convex. On the contrary, when cultivation of taste comes from learning by consuming behavior, the relation is concave. An analysis based on 1,749 interviews in Aosta Valley in Summer 2008 provides some evidence in favor of the cultural capital accumulation hypothesis.     

The demand for vinyl L.P.s. 1975–1988

The paper estimates the demand for vinyl L.P.s in the U.K. In so doing, it outlines a technique to account for the impact of product differentiation innovation when estimating the demand for a product group. This may be particularly important for cultural goods where consumers are attracted to buy a product because of its unique characteristics and where these characteristics differ across time. Thus, the methodology may be used to estimate the demand for other product groups, such as movies and literature. Over the sample period L.P.s are found to be normal goods which are close to being unit price elastic. The diffusion of the Compact Disc appears to reduce the price elasticity of vinyl L.P.s. Consumers also appear to treat L.P.s as perishable goods and the demand for vinyl albums is positively stimulated both by the range of albums available on the L.P. format and product differentiation innovation.