studieson economicimpactof cultural tourismin cultural

Studies on economic impact of cultural tourism in cultural economics

Andrej Srakar, PhD, Asst. Prof.Institute for Economic Research, Ljubljana andFaculty of Economics, University of Ljubljana,

Slovenia

Structure of the course• About Cultural Economics• Topics in Culture and Development• Economic Impact of Culture and Tourism• Economic Impact Studies• Contingent Valuation• Alternatives: Ex‐post econometric verification• Other alternatives• Conclusion and Discussion

Precursors• Johann Winckelman (1764), Geschichte der Kunst des

Altertums• Adam Smith (1776), An Inquiry into the Nature and

Causes of the Wealth of Nations• Many other economists: Jean Bodin (1530‐1596),

Bernard Mandeville (1670‐1733), David Hume (1711‐1776), Adam Smith (1723‐1790), Anne Robert JacquesTurgot (1727‐1781), Ferdinand Galiani (1728‐1787),Jeremy Bentham (1748‐1832), David Ricardo (1772‐1823), John Stuart Mill (1806‐1873), Stanley Jevons(1835‐1882), Alfred Marshall (1842‐1924), LionelRobbins (1898‐1984), a would‐be artist

• and of course John Maynard Keynes (1883‐1946)

Starting Point and Followers• Baumol and Bowen (1966), Performing Arts. The Economic

Dilemma• Towse, ed. (1997), Baumol’s Cost Desease: The Art and

Other VictimsCollections of papers, books and handbooks• Benhamou (2000), L’ economie de la culture• Frey and Pommerehne (1989),Muses and Markets• Ginsburgh and Throsby, eds. (2006, 2013), Handbook of the

Economics of Arts and Culture, vol. I and II• Grampp (1989), Pricing the Priceless• Heilbrun and Gray (2001), The Economics of Art and Culture• Towse, ed. (2003, 2008), A Handbook of Cultural Economics• and many other

Crossroads

• The subject is not well defined. It is located atthe crossroads of

• art history• art philosophy• sociology• law• a pinch of economics• management

What We Should Be Interested In• why Van Gogh’s paintings are so expensive, and why copies are so cheap• why Pre‐Raphaelite painters were rediscovered in the 1960s, after having

been completely forgotten during almost a century• why European public or national museums are not allowed to sell• how the performance of museums should be evaluated• which (and given the budget constraint, how many) buildings should be

saved from demolition, and kept for future generations• why the arts should (or should not) be supported by the state• why there are superstars who make so much money• why contemporary classical music is so difficult to listen to• whether works that have been sold should be subject to copyright laws• why a photography of a work by Rembrandt should be subject to copyright• whether copyright in general is right or wrong• why internet pirates may not be so wrong• and why there is such a big need for competitions and awards

Nice extensions

• The extension of the Economics of the Arts toCulture now also includes

• anthropology• development economics• cultural conflicts• psychology• religion and customs• linguistics

Is the field inventive?• Mark Blaug (2001): “We have all been hoping that the field

might actually suggest and promote developments thatwould spill over with benefit to economics outside its owndomain. Has this happened? Not really but is that perhapsasking too much of a subject no older than 30 years?”

Some imports:• Stigler and Becker (1977): rationality of cultural

consumption• Montias (1978‐79): microdata used to analyze the Dutch

17th century Golden Age• Rosen (1981): superstars• Baumol (1986): returns due to aesthetic pleasure• Ashenfelter (1989): art and wine auctions• Peacock (1993): Paying the Piper

Public Support. Why?Because:• art is a public good and is therefore not priced correctly• it has spillover effects on hotels, restaurants, etc...• it is a merit good: uninformed consumers are unable to

evaluate all its benefits• it should be made available to low income consumers• culture is only imperfectly transmitted by parents to

their children• it is subject to the Baumol disease• For an extremely entertaining refutation of all these

arguments, read William Grampp (1989), Pricing thePriceless. Art, Artists and Economics, and have fun

Public Support. How?All sorts of means...• Direct (state‐owned museums, theater companies, etc...)• Indirect (subsidies), Lotteries• Reduced VAT rates• Tax relief and concessions, Tax exemptions for donors• Regulation, Copyright• John O’Hagan (1998), The State and the Arts. An Analysis of

Key Economic Policy Issues in Europe and the United States• There is one thing that we should really study: Why is there

so much private support in the US and the UK, and so littlein most other countries

• And one thing that we should really do: Educate children toenjoy the arts. This would certainly increase participation incultural activities and lead to less need for public support

Labor MarketsRich man, poor man, beggar...• Filer (1986), The starving artist–Myth or reality? Earning of artists in

the US• Wassal and Alper (1992), Toward a unified theory of the

determinants of the earnings of artists• Throsby (1994), The production and consumption of the arts: A

view of cultural economicsSuperstars• Rosen (1981), The economics of superstarsCareers of artists: Music composers• Scherer (2004), Quarter Notes and Bank Notes. The Economics of

Music Composition in the Eighteenth and Nineteenth CenturiesCareers of artists: Young and old• Galenson (2001), Painting Outside the Lines: Patterns of Creativity in

Modern Art• Ginsburgh and Weyers (2006), Creation and life cycles of artists

The Visual ArtsFinancial returns• Baumol (1986), Unnatural value: or art investment as floating crap

game• Buelens and Ginsburgh (1993), Revisiting Baumol’s “Art investment

as floating crap game”• Landes (2000), Winning the art lottery: The economic returns to the

Ganz collection• Frey and Eichenberger (1995), On the rate of return in the art

market: Survey and evaluation• Ashenfelter and Graddy (2006), Art auctions

Tastes• Haskell (1980), Rediscoveries in Art. Some Aspects of Taste, Fashion

and Collecting in England and in France• Grampp (1989), Pricing the Priceless. Art, Artists and Economics• Ginsburgh and Weyers (2011), De l’(in)efficacit ´e des concours et

des prix

The Visual ArtsThe great John Michael Montias• Montias (1989), Vermeer and His Milieu: A Web of Social History• Montias (1978‐1979), Painters in Delft, 1613‐1680• Montias (1982), Artists and Artisans in Delft. A Socio‐economic Study of

the Seventeenth Century• Montias (1996), Quantitative methods in the analysis of 17th century

Dutch inventories• Montias (2004), Art dealers in Holland

Other “economic” art historians• De Marchi and Van Miegroet (1996), Pricing invention: Originals, copies

and their relative value in seventeenth century art markets• De Marchi (2004), Auctioning paintings in late 17h century London• De Marchi and Van Miegroet (2006), The history of art markets• Nelson and Zeckhauser (2008), The Patron’s Payoff. Conspicuous

Commissions in Italian Renaissance Art

The Visual ArtsAuctions• Ashenfelter (1989), How auctions work for wine and art• Ashenfelter and Graddy (2006), Art auctions• Beggs and Graddy (1997), Declining value and the

afternoon effect: Evidence from art auctions• Ginsburgh (1998), Absentee bidders and the declining

price anomaly in wine auctions• Pesando and Shum (1996), Price anomalies at auction:

Evidence from the market for modern prints• Bauwens and Ginsburgh (2000), Art experts and auctions:

Are pre‐sale estimates unbiased and fully informative

The Performing ArtsOpera, concerts, ballet, theater and other live performances• Blaug, ed. (1976), The Economics of the Arts• Throsby and Withers (1979), The Economics of the Performing

Arts• Throsby (1983), Perception of quality in demand for the

theater• Towse (1993), Singers in the Marketplace: The Economics of

the Singing Profession• Throsby (1994), The production and consumption of the arts:

A view of cultural economics• Frey and Busenhart (1996), Special exhibitions and festivals• Courty and Pagliero (2013), The pricing of art and the art of

pricing: Pricing styles in the concert industry• Alan Peacock (1993), Paying the Piper. Culture, Music and

Money

HeritageHistorical buildings and museums• Benhamou (2003), Who owns cultural goods? The case

of built heritage• Feldstein, ed. (1991), The Economics of Art Museums• Frey and Mayer (2006), The economics of museums• Peacock and Rizzo (2008), The Heritage Game.

Economics, Policy and Practice• Schuster, ed. (1997), Preserving the Built Heritage.

Tools for Implementation• Towse, ed. (1997a), Cultural Economics: The Arts, the

Heritage and the Media Industries

Regular biannual conferences ACE(I)• 2018 RMIT Melbourne• 2016 Valladolid (abstracts via internet)• 2014 Montreal• 2012 Kyoto• 2010 Copenhagen• 2008 Boston (Young Researchers Workshop

http://www.aceiyoungresearchers.blogspot.com/)• 2006 Vienna (full articles: http://www.fokus.or.at/index.php?id=30)• 2004 Chicago• 2002 Rotterdam (plenary papers published in Ginsburgh, V. (ed) 2004. Economics

of the Arts and Culture, Elsevier. Conference papers available from TheresaOostvogels, [email protected]).

• 2000 Minneapolis• 1998 Barcelona• 1996 Boston• 1994 Witten/Herdecke, NemčijaFor 2020: likely a renewed candidature of Ljubljana, Zagreb and Belgrade.

Main authors• “old boys” – US: Baumol, Bowen, Hendon, Ashenfelter,

Caves, Scitovsky, Montias, Netzer, Schuster• “old boys” – British: Peacock, Robbins, Blaug, Towse• “emerging powers” (Towse 1997): Throsby, Withers, Frey,

Pommerehne• Five last honorary members of ACEI: Throsby, Frey,

Ginsburgh, Towse, Baumol• Younger – “econometric line”: Zanola, Scorcu, O’Hagan,

Prieto Rodriguez & Fernandez Blanco, Graddy, Hodgson,Noonan, Seaman, Ateca‐Amestoy, Plaza, Snowball,Benhamou, McKenzie, Herrero Prieto, Rizzo, Cuccia, Bille,a lot of other (mainly Italian and Spanish) reseachers

• Younger – “theoretical line”: Klamer, Rushton, De Marchi,Hutter, Greffe, Doyle, several researchers, connected withErasmus University Rotterdam

Main areas• By topics:1) Creativity and innovation in the arts2) The taste and its formation3) The value of culture4) Industrial organisation of culture and the arts5) Studies of supply and demand in the arts6) Public subsidies and Baumol's cost disease7) Financing of the Arts8) Tax incentives for private investments in the arts9) The copyright in the arts10) The labor market and incomes in the arts11) Studies of participation in artistic activities12) Management and marketing of culture and the arts13) Cultural tourism14) Cultural and creative industries15) Economic history of culture and the arts16) Economics of cultural policy

Main areas• By art / cultural fields:17) The economics of the performing arts18) Economics of music19) Economics of ballet and contemporary dance20) Economics of the visual arts21) Art markets and art auctions22) Economics of museums23) Economics of cultural heritage24) Economics of festivals25) Economics of books and publishing26) Economics of film industry27) Economics of the audiovisual media28) Economics of the internet and new media

Current state of the art• Some consider cultural economics isstagnating, even dying

• Without a unified theoretical framework,overtaking the concepts and methods formacro and (mainly) microeconomics andeconometrics

• Overfocus on microeconom(etr)ics, satisfyingitself with small methodological advances, noanswers and discussions on „big“ questions

Organization, journals, conferences• Main journals: Journal of Cultural Economics, Poetics, Cultural

Trends, International Journal of Arts Management,International Journal of Cultural Policy, Journal of ArtsManagement, Law and Society, Creative Industries Journal

• Main organizations: ACEI, Japanese ACEI, Korean ACEI, FOKUS,Associazione per l’Economia della Cultura, AsociaciónEspañola de Gestores del Patrimonio Cultural

• Main universities: Erasmus University Rotterdam; Oviedo,Valladolid, Bilbao; Catania, Bologna, Venezia; Warwick;Universitet Libre de Bruxelles; Zürich; Copenhagen; GeorgiaState, Northeastern, Indiana Bloomington; Doshisha;Macquarie

• Main conferences: ACEI, Japanese ACEI, European WACE,Academia Vitae workshops, North American WACE, AsianWACE

Dimensions of development• Development definition: “Improvement in human welfare, quality of life,

social well‐being. Satisfying the population needs and wants (measuredusing a range of socio‐economic indicators)” (Brundtland Report 1987)

• Not to be confused: development vs. growth• Also (another debate, see e.g. Frey 2002; 2008): utility vs. happiness in

economics

• Sustainable development definition: Sustainable development isdevelopment that meets the needs of the present without compromisingthe ability of future generations to meet their own needs. It containswithin it two key concepts: 1) the concept of needs, in particular theessential needs of the world's poor, to which overriding priority should begiven; and 2) the idea of limitations imposed by the state of technologyand social organization on the environment's ability to meet present andfuture needs (Brundtland Report 1987)

Three dimensions of sustainabledevelopment

Culture and development• Two views on relationships culture/development (Streeten 2006): 1)

economic growth is the objective and culture a means to promoting it;2) growth as the means to our freedom to live the way we value

• Important reports: Our Creative Diversity (UNESCO, 1995), In From theMargins (European Commision, 1997); The Economy of Culture inEurope (KEA European Affairs, 2006)

• Culture and economic development: direct vs indirect impacts• Culture and social development: direct vs indirect impacts• Culture and environmental development• Culture and its ideological impacts; Culture and politics

Culture and urban regeneration• Roberts (2000): 5 phases of the urban regeneration concept: 1)

1950’s: reconstruction; 2) 1960’s: rehabilitation; 3) 1970’s: in‐siturenewal; 4) 1980’s: redevelopment; 5) 1990’s: regeneration

• Short history of urban‐regeneration‐through‐culture projects:Old ages: Santiago, Chartres, Canterbury, Ravenna, French cities,

Edinburgh, GlasgowModern times: USA (Baltimore, Pittsburgh, Boston); Europe

(Stockholm, Copenhagen, Freiburg, Stuttgart, Lyon, Grenoble,Bologna, Rome)

Especially known modern cases: Bilbao (the “Guggenheim effect”),Vienna (Museum Quartier), Gateshead (Angel of the North),Edinburgh, Glasgow (ECC 1990), Liverpool (ECC 2008)

Bilbao Guggenheim

Vienna Museumquartier

Newcastle ‐ Gateshead

Ljubljana, Hostel Celica

Maribor, European Capital of Culture 2012

Main gains from urban regeneration throughculture (Landry et al. 1996)

• Culture as enhancement of quality urbanismand sustainable development of the city

• Culture as a way of overcoming of socialdivisions and preventing of criminal

• Culture as a way of attracting private capital• Culture as identity, meaning and vitalityenhancement mechanism

The Creative Class debate

The Creative Class debate• Richard Florida: The Rise of the Creative Class (2002); Cities and the Creative Class

(2004); The Flight of the Creative Class (2007)

• Creative Class: a class of workers whose job is to create meaningful new forms. It iscomposed of scientists and engineers, university professors, poets and architects,and also includes "people in design, education, arts, music and entertainment,whose economic function is to create new ideas, new technology and/or creativecontent” (Florida, 2002, p. 8)

• For a city to attract the Creative Class, it must possess "the three 'T's": Talent (ahighly talented/educated/skilled population), Tolerance (a diverse community,which has a 'live and let live' ethos), and Technology (the technologicalinfrastructure necessary to fuel an entrepreneurial culture)

• Creativity Index – 4 dimensions: Creative Class share of the workforce; innovation,measured as patents per capita; high tech industry (Tech Pole Index); diversity (GayIndex)

The Creative Class debate – critiques• Florida (2002): strong correlation between those cities and states that provide a more

tolerant atmosphere toward culturally unconventional people, such as gays, artists,and musicians (exemplified by Gay Index and Bohemian Index scores), and thenumbers of Creative Class workers that live and move there

• Economy is transforming, and creativity is to the 21st century what the ability to push aplow was to the 18th century. Creative occupations are growing and firms now orientthemselves to attract the creative.

• But econometric testing doesn’t often confirm Florida’s thesis:• Glaeser (2004): Bohemianism effect is driven entirely by two metropolitan areas;

there is no evidence to suggest that there is anything to the diversity or Bohemianism,once you control for human capital

• Peck (2005): Creative Class theory offers no causal mechanism and suffers fromcircular logic

• Markusen (2006): Florida’s indices become insignificant after controlling for education• Hoyman and Faricy (2009): using Florida’s own indices finds no statistical evidence

that cities with higher proportions of Creative Class workers correlated with any typeof economic growth from 1990–2004

Value(s) of culture

Value(s) of culture• General definition of value: ‘The value that a person gets from being able to enjoy

a cultural good is defined as the largest amount of money that person wouldwillingly pay to have that opportunity.’ (Navrud & Ready 2002)

• Problem: encompassing only “use” values

• Total Economic Value (Peterson & Sorg, 1987): use + non‐use values• Non‐use values (Snowball, 2008): “values to people who, for whatever reason,

might be non‐users, but who are still willing to pay to preserve or support thepublic good”

• Typology of values of culture:• Use (market) values (price + part of buyer’s consumer surplus)• Non‐use values: option, bequest, existence, prestige, educational (Frey &

Pommerehne, 1989) + altruistic value, vicarious consumption (Bille Hansen 1997;Throsby 2001)

• Cultural collective values: symbolic, historical, aesthetic, authenticity, spiritual,social (Throsby, 2001)

• + Cultural inherent values (Hutter & Shusterman, 2006)

Use and non‐use values

Non‐use values• “Values that cover situations in which individuals who do not make

use, or intend to make use, of any given environmental asset orattribute would nevertheless feel a “loss” if such things were todisappear” (Turner 1999)

• Frey and Pommerehne (1989):• 1) Option value ‐ a value that a good possesses for having an

option to use it in future, despite perhaps not using it ever before• 2) Existence value – a value that a good has just because it exists,

though perhaps one will never use it• 3) Bequest value – the value that a good has for our children and

other generations to come• 4) Prestige value – the value that a good has for our identity and

feeling of pride and belonging to a certain value or system of values• 5) Educational value – the value for the system of transferring

knowledge and values to future generations

Non‐use values and cultural values• Important: non‐use values are economic values and can therefore be

expressed in money

• Even more important: non‐use values can be quite consistently named“public values” as they denote the externality i.e. market failureargument for public good provision in economics: whenever one showsthe existence of non‐use values this is a sufficient reason to considerabout public support to a certain good in question (no matter if youconsider market provision or voluntary provision of this good, asshowed in the economic / mathematical model of non‐use values ofSrakar, 2012)

• Problem: no existing economic modeling of non‐use values, onlyeconometric evidence in contingent valuation studies – modelingpreliminary/firstly done in mentioned article by Srakar 2012 separatingutility funtion of individuals into utility from consumption and utilityfrom satisfaction with public good

Non‐use values and cultural values• But: there are also values which cannot be expressed in the same manner – cannot

be easily transfered into monetary terms: cultural values

• Definitions: “While economic value finds expression in units of currencies which aregenerated and maintained by banking systems, cultural value finds expressionthrough mutual, collective judgment procedures.” (Hutter & Frey 2010)

• Throsby (2001): “a set of attitudes, beliefs, mores, customs, values, and practiceswhich are common to or shared by any group”

• Pioneers: Arjo Klamer (1995); David Throsby (2001); Hutter and Throsby (2008);Hutter and Frey (2010); Hutter and Shusterman (2006)

• Main division: collective values (Throsby) vs. individual, intrinsic values (Hutter andShusterman)

• Throsby’s classification: symbolic, historical, aesthetic, authenticity, spiritual, social(Throsby, 2001)

• Main problem: still no consensus on the method to give cultural values someempirical/practical economic substance (attempts: cultural capital, cultural return,…)

Total economic value

43

The advantages of using market valuation methods

Source: Eurostat Pocketbooks: Cultural Statistics 2011: 67

“Although many citieshave claimed that culturalmotives remain at the foreof the event, success isoften measured in termsof the visitors it attracts”(Richards & Wilson,2004:1397)

The dangers of using market impacts

• “Mozart is Mozart because of his musicand not because he created a touristindustry in Salzburg or gave his name todecadent chocolate and marzipanSalzburg kugel. Picasso is importantbecause he taught a century new waysof looking at objects and not becausehis paintings in the GuggenheimMuseum are regenerating an otherwisederelict northern Spanishport…Absolute quality is paramount inattempting a valuation of the arts; allother factors are interesting, useful butsecondary” (Tusa 1999).

Into the future: Quality of life studies?

• Eurobarometer (1970 – 2002): “Would you sayyou are very satisfied, fairly satisfied, not verysatisfied, or not at all satisfied with your life ingeneral” ?

Cultural and creative industries in a regional perspective ‐ I

• The remarkable growth and success of cultural and creativeindustries in the last decade has brought considerableattention upon the direct economic impact of culturalproduction

• In order to maintain a proper and effective developmentalapproach, however, we need a conceptual scheme thatallows us to understand (and capitalize) the indirect socio‐economic effects of cultural production

• Also, we have to keep into account that the new paradigmsof cultural production do not necessarily use the market asthe value‐generating platform (communities of practice)

Cultural and creative industries in a regional perspective ‐ II

• At the regional level, each region will have its own proper mixof direct and indirect culture‐based value generatingprocesses, defining a specific local model (clustering pattern)

• Culture‐led development does not concern urban areas only,but also rural and low‐density ones

• The developmental potential of cultural and creative industriesrequires that they are seen not as an isolated sector, howeverpromising, but as the backbone of a new information,knowledge and content‐based economy that infiltrates allaspects of everyday life

• In this context, cultural policies may become a major lever ofregional policy

Regions with the largest CCIs size (employment clusters)

Ile de France (Paris)Inner LondonLombardia (Milan)West‐Nederland (Amsterdam)MadridCatalunya (Barcelona)DenmarkLazio (Roma)Oberbayern (Muenchen)Stockholm

BudapestOuter LondonBerks, Buck and Oxon (Oxford)Atthiki (Athens)Oost‐Nederland (Nijmegen)Andalucia (Sevilla)IrelandZuid‐Nederland (Maastricht)Darmstadt (Frankfurt aM)Piemonte (Torino)

Regions with the best CCIs focus

Inner LondonStockolmPrahaBratislavsky kray (Bratislava)

Berks, Bucks and Oxon (Oxford)

HamburgBudapest

OsloOberbayern (Muenchen)KarlsruheMadridWest‐Nederland (Amsterdam)

BerlinIle de France (Paris)Lazio (Roma)

Regions with the best growth dynamics in CCIs

Niederoesterreich (St Polten)SalzburgOberoesterreich (Linz)Asturias (Oviedo)Zapadne Slovensko (Nitra)Cumbria (Carlisle)La Rioja (Logrono)Andalucia (Sevilla)Hants/Isle of Wight

(Southampton)

Castilla‐La Mancha (Toledo)Jihovychod (Brno)Pais Vasco (Bilbao)MurciaValenciaKaernten (Klagenfurt)LietuvaGalicia (A Coruna)Picardie (Amiens)Nyugat‐Danantul (Gyor)

An 8‐tiers approach to the indirect effects of cultural production (and participation)

• Innovation• Welfare• Sustainability• Social cohesion• New entrepreneurship• Soft power• Local identity• Knowledge economy

InnovationRanking Innovation Scoreboard 2008 (UE15)1 Sweden2 Finland3 Denmark4 Germany5 Netherlands6 France7 Austria8 UK9 Belgium10 Luxemburg11 Ireland12 Spain13 Italy14 Portugal15 Greece

Ranking Active cultural participation Eurobarometer 2007 (UE15)1 Sweden2 Luxemburg3 Finland4 France5 Denmark6 Netherlands7 Belgium8 Germany9 UK10 Austria11 Ireland12 Italy13 Spain14 Greece15 Portugal

Speaking of impact…• In terms of macroeconomic impact, the indirectimpact of active cultural participation in terms ofinnovation could be as relevant as the direct one ofthe cultural and creative industries’ turnover;

• Moreover, it may have effects on all sectors;• It is likely to be even more important in terms ofsecuring the long‐term competitiveness of theeconomy

• We may look at regional systems of innovation froma new perspective

Welfare

• There is a strong statistical associationbetween life expectancy and culturalparticipation (Konlaan et al, 2000)

• There is an equally strong associationbetween cultural participation andpsychological well‐being (The Italian cultureand well‐being study, IULM/Bracco)

Hierarchy of factors affecting psychological well‐being

Hierarchy of factors affecting psychological well‐being

1 Diseases2 Cultural participation3 Income4 Age5 Education6 Gender7 Job8 Geography

747678808284868890

0 years 1_2 year 3_5 year 6_10year

>10 year

well being index

Classical music concerts

747678808284868890

0 years 1_2 year 3_5 year 6_10year

>10 year

well being index

Theatre

0

5

10

15

20

25

30

35

40

Which single variables have the strongest impact on SWB?

Sustainability• There is a strong relationship between performance ofdifferentiated waste recycling systems and culturalparticipation (Crociata, Lilla and Sacco, 2011): thecognitive development from cultural participation spillsover to motivation and ability to classify differentwaste items

• An indirect systemic effect similar to the innovationone in fostering awareness toward the consequencesof individual behaviors for the environmental commongood (Agenda 21): from innovation systems tosustainability systems?

Cultural access and waste recycling

Social cohesion• certain types of cultural projects may produce strong and

significant effects in terms of juvenile crime prevention, pro‐social vocational orientation, or conflict resolution (Abreuprogram, projeto Axé, etc.)

• these projects are generally focused on active culturalparticipation, as it is made possible for instance by programs ofmusic education

• the indirect effect of cultural participation on social cohesion isthe overcoming of self‐ and others‐stereotyping as provoked byincumbent social prejudices, often linked to ethnicity factors

• the Maisons Folie system of cultural facilities realized by theRégion Nord‐Pas de Calais in the context of Lille 2004 EuropeanCulture Capital

New entrepreneurship• the cultural and creative field may be a powerful incubator of new

forms of entrepreneurship• the rapid growth of the online content industries, just to make a

particularly evident example, is creating the stage for a newentrepreneurial cultural with a strong generational basis

• the development of creative entrepreneurship still lags behindsubstantially if compared to the attention and resources devoted todevelopment and support of entrepreneurship in other sectors of theeconomy

• these new forms of entrepreneurship could improve significantly theemployability of graduates from the humanities sectors, which arecommonly considered to have a weaker employability potential thanthe graduates from quantitative and technology areas

Soft power• cultural and creative production may contribute to a

great extent to increase the visibility, reputation andauthoritativeness of a country/region at all levels ofinternational relationships, from the political to theeconomic

• high level of soft power may open up new markets tonational/regional products through the identification andemulation dynamics which are typical of post‐industrialconsumption, may attract more visitors, talents andinvestments, may stimulate new, sophisticated strategiesof value creation through branding and marketing tools

The IfG/Monocle ranking of soft power

1 UK1 France3USA4 Germany5 Switzerland6 Sweden7 Denmark8 Australia9 Finland10 Netherlands

11 Spain12 Canada13 Singapore14 Norway15 Japan16 Italy17 China18 Israel19 Korea20 South Africa20 Brazil22 Mexico23 India24 UAE25 Turkey26 Russia

Knowledge society• the association between active cultural participation and

lifelong learning is a pretty natural one, and unlike othersis not particularly surprising

• one might even think of active cultural participation as aspecific form of lifelong learning

• as lifelong learning is well targeted by structural fundsprogramming and takes a central place in EU long‐termstrategies, it could be of interest to launch and pursueinnovative programs and actions that exploit the strategiccomplementarities between the former and culturally andcreatively based communities of practice as instances ofadvanced platforms of cultural and creative production

Local identity• considerable emphasis has been put on the role of theinstallment of new, spectacular cultural facilities in thecatering for global visibility of one specific urban orregional milieu

• but the developmental potential of a culturally‐rebuiltlocal identity lies in the capacity to stimulate newdynamics of production of cultural content and newmodes of cultural access by the local community, as aconsequences of the new opportunities created by theattraction of outside resources

• example: the Newcastle/Gateshead urban renewalstrategy

The usual objection…• Yes but…doesn’t all this eventually depend on income

after all?• Not likely: countries with relatively high per capita

income perform poorly in innovation (Ireland)• Moreover: cultural access is more important than income

in determining well‐being• Also: Madrid and Rome have a higher per capita income

than Berlin but fare much worse in terms of wasterecycling…

• …whereas cultural participation reflects the performancein the above dimensions much more accurately

In a nutshell…• Culture is not simply a large and important sector of the

economy, it is a ‘social software’ that is badly needed tomanage the complexity of contemporary regional societiesand economies in all of its manifold implications

• The total indirect macroeconomic impact of culturalparticipation is likely to be much bigger than the (alreadyremarkable) direct one

• Once we become able to measure the indirect effects ofculture on the various dimensions (to ‘capitalize’ culture), itwill be possible to bring cultural policy at the top ranks ofthe policy agenda

• These effects are further strengthened by the growth of thecultural and creative industries, but only insofar as suchgrowth is as inclusive and participative as possible

Economic Impact of Tourism• The tourism industry generates substantialeconomic benefits to both host countries andtourists' home countries.

• Especially in developing countries, one of theprimary motivations for a region to promoteitself as a tourism destination is the expectedeconomic improvement.

• As with other impacts, this massive economicdevelopment brings along both positive andnegative consequences.

Economic Impact of Tourism• According to the World Tourism Organization:• 698 million people traveled to a foreign countryin 2000, spending more US$ 478 billion.

• International tourism receipts combined withpassenger transport currently total more thanUS$ 575 billion – making tourism the world'snumber one export earner, ahead ofautomotive products, chemicals, petroleum andfood.

POSITIVE ECONOMIC IMPACTS OF TOURISM:Foreign exchange earnings

• Tourism expenditures generate income to the hosteconomy and can stimulate the investment necessary tofinance growth in other economic sectors.

• Some countries seek to accelerate this growth byrequiring visitors to bring in a certain amount of foreigncurrency for each day of their stay.

• An important indicator of the role of international tourismis its generation of foreign exchange earnings.

• Tourism is one of the top five export categories for asmany as 83% of countries and is a main source of foreignexchange earnings for at least 38% of countries.

POSITIVE ECONOMIC IMPACTS OF TOURISM:Contribution to government revenues

• Direct contributions are generated by taxes onincomes from tourism employment and tourismbusinesses, and by direct levies on tourists such asdeparture taxes.

• Indirect contributions come from taxes and dutieslevied on goods and services supplied to tourists.

• The WTO estimates that travel and tourism'sdirect, indirect, and personal tax contributionworldwide was over US$ 800 billion in 1998 (todaymore than doubled).

POSITIVE ECONOMIC IMPACTS OF TOURISM:Employment generation

• The rapid expansion of international tourism hasled to significant employment creation.

• For example, the hotel accommodation sectoralone provided around 11.3 million jobsworldwide in 1995.

• Tourism can generate jobs directly through hotels,restaurants, nightclubs, taxis, and souvenir sales,and indirectly through the supply of goods andservices needed by tourism‐related businesses.

• Tourism supports some 7% of the world's workers.

POSITIVE ECONOMIC IMPACTS OF TOURISM:

Stimulation of infrastructure investment

• Tourism can induce the local government tomake infrastructure improvements such asbetter water and sewage systems, roads,electricity, telephone and public transportnetworks

• This can improve the quality of life forresidents as well as facilitate tourism.

POSITIVE ECONOMIC IMPACTS OF TOURISM:Contribution to local economies

• As the environment is a basic component of the tourism industry'sassets, tourism revenues are often used to measure the economicvalue of protected areas.

• Other local revenues that are not easily quantified, as not all touristexpenditures are formally registered.

• Money is earned from tourism through informal employment (e.g.street vendors, informal guides, rickshaw drivers)

• The positive side of informal employment is that the money isreturned to the local economy, and has a great multiplier effect asit is spent over and over again.

• The WTO estimates that tourism generates an indirect contributionequal to 100% of direct tourism expenditures.

POSITIVE ECONOMIC IMPACTS OF TOURISM:

1. Foreign exchange earnings2. Contributions to government revenues3. Employment generation4. Infrastructure investment5. Contribution to local economies

NEGATIVE ECONOMIC IMPACTS OF TOURISM

• There are many hidden costs to tourism, which can haveunfavourable economic effects on the host community.

• Often rich countries are better able to profit fromtourism than poor ones.

• Whereas the least developed countries have the mosturgent need for income, employment and general rise ofthe standard of living by means of tourism, they are leastable to realize these benefits.

• Among the reasons for this are large‐scale transfer oftourism revenues out of the host country and exclusionof local businesses and products.

NEGATIVE ECONOMIC IMPACTS OF TOURISM:

Leakage

• The direct income for an area is the amount of touristexpenditure that remains locally after taxes, profits, andwages are paid outside the area and after imports arepurchased; these subtracted amounts are called leakage.

• In most all‐inclusive package tours, about 80% oftravellers' expenditures go to the airlines, hotels and otherinternational companies, and not to local businesses orworkers.

• In addition, significant amounts of income actuallyretained at destination level can leave again throughleakage.


Leakage

• A study of tourism 'leakage' in Thailand estimatedthat 70% of all money spent by tourists ended upleaving Thailand

• Estimates for other Third World countries rangefrom 80% in the Caribbean to 40% in India.

NEGATIVE ECONOMIC IMPACTS OF TOURISM: Leakage


Enclave tourism• Local businesses often see their chances to earn incomefrom tourists severely reduced by the creation of "all‐inclusive" vacation packages.

• When tourists remain for their entire stay at the samecruise ship or resort, which provides everything theyneed and where they will make all their expenditures, notmuch opportunity is left for local people to profit fromtourism.

• All‐inclusive hotels generate the largest amount ofrevenue but their impact on the economy is smaller perdollar of revenue than other accommodation types.

• All‐inclusives also import more and employed fewerpeople per dollar of revenue than other hotels.

• Smaller trickle‐down effect on local economies.


Infrastructure cost

• Tourism development can cost the local government andlocal taxpayers a great deal of money.

• Developers may want the government to improve theairport, roads and other infrastructure, and possibly toprovide tax breaks and other financial advantages, whichare costly activities for the government.

• Public resources spent on subsidized infrastructure or taxbreaks may reduce government investment in othercritical areas such as education and health.


Increase in prices

• Increasing demand for basic services and goodsfrom tourists will often cause price hikes thatnegatively affect local residents whose incomedoes not increase proportionately.

• Tourism development and the related rise in realestate demand may dramatically increase buildingcosts and land values.

• This makes it more difficult for local people tomeet their basic daily needs.

NEGATIVE ECONOMIC IMPACTS OF TOURISM: Economic dependence of the local community

on tourism• Diversification in an economy is a sign of health, however if a

country or region becomes dependent for its economic survivalupon one industry, it can put major stress upon this industry as wellas the people involved to perform well.

• Many countries, especially developing countries with little ability toexplore other resources, have embraced tourism as a way to boostthe economy.

• In The Gambia, for instance, 30% of the workforce depends directlyor indirectly on tourism. In small island developing states,percentages can range from 83% in the Maldives to 21% in theSeychelles and 34% in Jamaica

• Over‐reliance on tourism carries risks to tourism‐dependenteconomies. Economic recession, the impacts of natural disasterssuch as tropical storms and changing tourism patterns can all havea devastating effect.


Seasonal character of jobsProblems that seasonal workers face include:• job (and therefore income) insecurity• no guarantee of employment from one season to thenext

• difficulties in getting training, employment‐relatedmedical benefits, and recognition of their experience

• unsatisfactory housing and working conditions.


1. Leakage2. Enclave tourism3. Infrastructure cost4. Increase in prices5. Economic dependence6. Seasonal character of jobs

ESTIMATING ECONOMIC IMPACT OF CULTURAL EVENTS ‐ METHODS

Economic effects of cultural events• Seaman (2003):

Total impact = Short‐run spending impact (SRS) + Long‐run growthimpact (LRG) + Consumption impact (C)

• SRS: short‐run net increases in economic activity, related to the netinjections of new spending into the region as a direct consequenceof the cultural asset → Economic Impact Studies (EIM)

• LRG: long‐run increases in productivity and economic developmentlinked to the cultural asset → Travel‐cost method; Hedonic pricing

• C: consumer attributed value of the event → Contingent valuation(CVM); Conjoint analysis & Choice experiments

• (Big) problem (Seaman 2006): can these effects just be added up?Aren’t they overlapping to some extent – especially C and SRS?

Economic impact studies• Key question: 'How much would short‐

run economic activity decline in aspecific region if X were no longer toexist?' (Seaman, 2003)

• Economic impact studies of art useeconomic indicators such as output,income, employment, revenue to localand state government, to assess theamount of direct, indirect and inducedimpacts of an art activity

• 4 main methods (Reeves 2002): 1)descriptive methods; 2) financialquestionnaires; 3) input‐outputanalysis; 4) production chain method

• Mainly used (and probably bestmethod still used): input‐output andKeynesian multiplier approach

Economic impact studies• EIM gained influence in 1970’s as an answer to different after‐WW2

problems (Radich 1993): 1) art as new domain of state support(especially in the US); 2) growth of non‐profit art sector; 3) publicsector problems; 4) growing influence of private business sector

• Most influential studies ‐ USA: 1977 report, Economic Impacts ofArts and Cultural Institutions: A Model for Assessment and a CaseStudy in Baltimore (Cwi and Lyall); 1983 study, The Arts as anIndustry: Their Economic Importance to the New York–New JerseyMetropolitan Region (Port Authority of New York and New Jersey);Arts and Economic Prosperity I, II, III, IV… (2002‐2011, Americans forthe Arts)

• EIM in Europe: Economy of Culture in Europe (KEA European Affairs2006), regional studies (e.g. Denmark, Netherlands, UK, Finland,Latvia, Sweden, Lithuania, Poland, Slovenia); regular studies stillbeing made (e.g. WIPO national studies)

Economic impact studies – number of problems and critiques

• Seaman 2003:1) Spending diversion error: failure to subtract local sources and non‐local uses of funds2) Induced (ancillary spending) base error: attribution of all spending to cultural event3) Multiplier (indirect impact) error: adapting multipliers to specific regions4) Supply constraint (crowding‐out) error5) Ex post verification error6) Policy interpretation (partial vs. general equilibrium) error

• Snowball & Antrobus 2006:7) Defining the area of study8) Including time switchers and casuals9) Determining the size of the multiplier10) Non ‐ including non‐market costs and benefits

• + 2 common problems of any input‐output study:11) Homogeneity of products12) Linear structure of input‐output coefficients

The Most Comprehensive Study of Its Kind

Economic impact of nonprofit arts organizations and their audiences in 2005.

Study provides both local and national data 156 Study Regions

Data collected from 6,080 nonprofit arts organizations and 94,486 attendees

Econometric input/output models built by project economists for each community

156 Study Regions

Population Group No. Study Regions

Less than 50,000 1550,000 to 99,999 18

100,000 to 249,999 29250,000 to 499,999 19500,000 to 999,999 19

1 million + 16Total Cities and Counties 116

Multi-County Regions 35Statewide Regions 5

Total 156

All 50 States + D.C.

Hawaii

Alaska

Nonprofit Arts & CultureA Growth Industry

ORGANIZATIONS$53.2

ORGANIZATIONS$63.1ORGANIZATIONS

$36.8

AUDIENCES $103.1AUDIENCES

$80.8

$0

$25

$50

$75

$100

$125

$150

$175

$200

1992 2000 2005

$134.0 billion

$166.2 billion

How a Dollar is “Respent”

Round 6

Round 3Initial Expenditure

$0

$1,500,000

$3,000,000

$4,500,000

$6,000,000

$7,500,000

$9,000,000

$10,500,000

Economic Impact ofNonprofit Arts & Culture Industry

$166.2 Billion Annual Expenditures

Government and the Arts7:1 Return on Investment

$4.0 billion

$29.6 billion

$0

$5

$10

$15

$20

$25

$30

$35

Government FUNDING

Government REVENUE

Economic Impact ofNonprofit Arts & Culture Organizations


Percentage of U.S. WorkforceHow Nonprofit Arts & Culture Stacks Up . . .

Economic Impact ofNonprofit Arts & Culture Attendees


Nonprofit Arts & Culture Attendees Spend $27.79 Per Person, Per Event

Nonprofit Arts & Culture AttendeesLocal vs. Nonlocal

Event-Related SpendingLocal vs. Nonlocal Audiences

Nonprofit Arts & Culture Industry in U.S.

A Formidable Growth Industry Attracts Audiences

Spurs Business Development

Supports Jobs

Generates Government Revenue

The Arts Mean Business!

www.AmericansForTheArts.org/EconomicImpact

• What is the current role of EIM and is the marginalvalue of one more study really zero?

• If EIM was adopted to inject some economicreasoning and measurement into the abstract debateabout the value of the arts, was it really instead a“parody of economic analysis?”

• Are Contingent Valuation, Willingness to Pay, and/orChoice Experiments really the better alternative(s)?

• Isn’t the ongoing criticism of EIM without offeringconcrete solutions really just “grumpy bitching?”

Specific “Big” Questions to Address About Economic Impact Methodology (EIM)

Can This Approach Be Saved?

• Indeed progress has been made inmaking EIM much less of a parody,and many studies have comereasonably close to generating thebest that can be expected of this “exante” projection approach.

• The major challenges are: (1) Somespecific ongoing “technical” issueswithin EIM; (2) The export basedtheory itself; (3) The “horror” ofIMPLAN and other “canned”models; (4) the high cost of doingexcellent EIM, and (5) The“existential” threat from ex postverification econometric analysis.

Is Contingent Valuation Necessarily Better? Competing Biases and Errors

No perfect method Pick your Poison• EIM Errors:• Direct Base Spending Diversion,

including Capture Rate• Ancillary Spending Attribution • Multiplier (size of region) • Crowding Out/Supply Constraints• Ex Post Verification • General vs. Partial Equilibrium

• CVM Errors:• Sample Selection/Question

Design• Anchoring• Lack of Perceived Budget

Constraints• Various embedding effects

(violation of more > less; excess weighting of irrelevant alternatives)

• Aggregation Perversities• General vs. Partial Equilibrium

• Stanley et al. (2000, JCE) study of Renoir andBarnes Art Exhibit in Ottawa/Hull (Ontarioand Quebec) used a questionnaire approach(scale of 0 to 10) to determine how importantthe exhibit was in decisions to visit the region.

• This attempt to avoid the ancillary spendingattribution error reduced the measure of “newmoney brought into the Province that wouldnot otherwise have been spent there” from $67million CDN to $8 million, an “attribution”adjustment of 88.1%.

Some Technical EIM Issue “Successes”

• Via a “flow chart” type further set of questions tovisitors to the museum to determine if theirregional spending was dependent on the Beamish,they found an “attribution” factor of about 8.5%,even a bit lower than the later Canada studywhich found 11.94%.

• Further probing of visitors (divided into “stayers,”local day trippers, non-local day trippers, or otherday trippers) yielded spending diversion of 71.1%to 80.9% (avg. 76%), a dramatic furtheradjustment.

A Combined Adjustment for Attribution AND Spending Diversion: Peter Johnson and Barry Thomas, outstanding

1992 book on Open Air Museum at Beamish

• One important change over time has been thesensitivity of “clients” to criticism of the results oftheir EI studies.

• The MOMA embarrassment in generating a studythat concluded that their reopening in NYC in 2006would generate a $2 billion spending impact, $650million in personal wage income, $50 in local taxrevenues, and >4,000 new jobs, was roundlycriticized even by arts supporting economists as“creative accounting.”

Sensitized Clients Alert to Bad Press

• Some people who would have visited city Aanyway, simply shift their visit to correspond to aparticular event, meaning that any spending impactsare not really incremental to that event, just shiftedin time.

• But, critics who love that time shift argument oftenfail to concede that their “crowding out” complaint,linked to regular visitors being prevented fromadding their impact to accommodate a major event,can often also easily time shift, especially whenmajor events are announced well in advance.

Time Switching: An Ambiguous Adjustment

• Part of the extended argument is the empirical validity of anattractive syllogism:

• A healthy urban core is essential to balanced growth and thelong run vitality of that region.

• Artists and artistic institutions typically play vital roles inrejuvenating and strengthening core urban neighborhoods.

• Therefore, the arts are vital to long run economic developmentin a region.

The empirical evidence, is alas, very mixed and the case hard toprove, much like Richard Florida’s hypotheses.

Does a Central City Theory of Development Really Work?

• The biggest critics of EIM today are sports economists.Some of this is not new, but the econometric explosionin ex post studies is new. Fashionable Excessaddressed misconceptions in arts studies in1987; JohnCrompton (1995) identified “eleven sources ofmisapplication” to the analysis of the economic impactof sports events, teams and facilities In the same spirit.

• Some ex post analysis merely challenges whethervisitor projections, hotel vacancy rate reductions, andother potentially identifiable predictions in ex antestudies came to fruition.

The “existential” threat from ex post studies: The sports literature

• However, there is a virtual explosion of efforts toidentify empirical “tracks in the sand” in localemployment and tax revenue data following anevent.

• Seaman, 2012: „A similar task might be tried inMaribor after the year ends to see if econometricequations that attempt to isolate the unique effectof being a Cultural Capital reveal botheconomically and statistically significant uniqueeffects of this honor. In the sports literature, theyalmost NEVER find such effects.“

The unique challenge, and weakness, of econometric ex post studies

• It is unclear what time period should be examined.• Should it be just the period of 4 days when a US

Super Bowl is being hosted, or the multiple weeks ofWorld Cup cities.

• The same issue applies to the many very criticalstudies of the economic impact of hosting theOlympics.

• Even if some capacity constraints and spendingdisplacements occur over that period, can timeshifting still generate positive incremental valueadded over a longer period?

Self-admitted methodological challenges in those sports studies.

• And to their credit, sports economists recognizethat even when the absolute dollar claims madein some ex ante impact studies are not trivial,those impacts are still very small portions of theoverall size of the local economy, no matterhow measured.

• Hence, perhaps those studies are biased towardNOT finding such “needles in a haystack.”

Can econometrics REALLY find those tracks in the sand?

• IMPLAN, RIMS II, REMI, REDYN, and otheressentially input-output modes are valuable forgenerating extremely useful information about bothaggregate multipliers and more micro-tuned inter-industry multipliers.

• BUT they do not generate the essential and criticallyimportant direct base impacts, nor the immediateleakages that are part of that adjusted direct baseimpact (i.e. info on spendingdiversions/displacement and capture rates). Hencewhat is multiplied by those multipliers can easily bemeaningless.

The “Horror “ of IMPLAN and other “Magic” Models

• But IMPLAN and those other input-outputmodels (which do cost something to purchase,and depending on scope that might not betrivial) give the false impression that all onemust do is focus on those multipliers. And ifyou have a total spending figure in mind, eitherthe organization budget or projected attendanceand spending figures, you are on your way to asimple result.

• This is also the lure of on-line economic impactcalculators.

The problem of high cost studies to get it right

• In the arts, the dominant incumbent is theAmerican for the Arts “Arts and EconomicProsperity Calculator (AEPC).

• Another is the Greater Philadelphia CulturalAlliance economic impact calculator

• And then the Bruce Seaman creations: (1)GAARTS (Georgia Arts) calculator for Georgiaarts organizations, created for the GeorgiaCouncil for the Arts, and (2) GEMODE(Georgia Economic Model of DevelopmentalEvents), for arts festivals etc. created for theGA Dept. of Economic Dev.

On-Line Economic Impact Calculators: A Growth Industry?

• While seemingly a largely North Americanfascination, such calculators exist for:– Airports– Boating– Animal Agriculture– Public Libraries– General Tourism

Not Just An Arts Industry Phenomenon: Other On-Line Econ Impact Calculators

Why “Calculators?”

Advantages Disadvantages

Fully developed, technically sophisticated EI studies are expensive and not all organizations can afford one

Individually done studies might use dissimilar methods and parameters and generate non-comparable results.

Political strategies

If even well designed ex ante EI studies are inherently flawed, how can simplified versions avoid being fatally flawed?

Inherent conflict between ease of use and accuracy

If designed to limit modeling errors for local areas, use for larger areas generates aggregation error.

• Consumption Impact (C)• Long Run Growth Impact (LRG)• Short Run Spending Impact (SRS), where EIM

is applied.• So SRS/EIM is only part of the broader picture,

and even if SRS is overstated, it might give amore accurate total result even if for the“wrong reason.”

Where does EIM Fit into Broader Picture?

• The Whole May be Less than the Sum of the Parts:The EIM of the Arts on Georgia may be lower thanthe EIM of the Arts on Atlanta.

• The Whole may be >$0, but the parts appear to beclose to $0 when adjusting for diversion andcrowding out errors. But if we stress the“fungibility” of all things, we might conclude thatno organization and no event and no industry has>$0 incremental impact, but this suggests that GDP= $0, when we know it is not.

Aggregation Paradoxes

• The soundest version of the EIM questionrelevant to policy debates is: If the ASO were todisappear, or have its season cut by 50% etc.,how much would employment, personal income,regional output, and tax revenues be affected?

• But sometimes the most relevant concern is todocument the current level of economic activitywithout reference to the “incremental question.”

• Example: Agriculture in 1905

Incremental Question vs. “Census” Description Question

Frey 2005

• Finally – distinction between arts people(EIM) and arts academics (CVM / WTPstudies)

• Avoidance of the real questions and elitism?

Contingent valuation methodology• CVM: A method of estimating the value that individuals attribute to non-

tradable goods or to some characteristics of tradable goods not revealed bythe market mechanism

• Consists of asking directly selected samples of population in survey orexperimental settings, what is their willingness-to-pay (WTP) / willingness-to-accept (WTA) for qualitative and quantitative increments / decreases in non-marketed goods

• CVA (compensating variation): V (p, y – CVA, z1) = V (p, y, z0)• EVA (equivalent variation): V (p, y + EVA, z0) = V (p, y, z1)

• Turning points for CVM: Exxon Valdez 1989 oil spill, NOAA panel• NOAA’s conclusion: ‘that CV studies can produce estimates reliable enough to

be the starting point of a judicial process of damage assessment, including lostpassive-use values. To be acceptable for this purpose, such studies shouldfollow the proposed guidelines.’ (Arrow et al., 1993)

Why value environmental/cultural goods?

• Cost-benefit analysis (CBA) of projects/programs

• Environmental costing (environmental taxes etc.)

• Environmental accounting (at firm level and ”green national accounts)

• Natural Resource Damage Asssessmennt (NRDA)

How to value environmental/cultural goods?

• Welfare theory: Compensating Variation (CV) for a change inenvironmental quality Q0 Q1

V (Q0,Y) = V (Q1,Y - CV) = U0

- WTP vs. WTA; CV vs. Equivalent Variation (EV)• Total Economic Value (TEV)

1) Direct Use Value- Consumptive and non-consumptive use values- Option value

2) Passive Use Value (Non-use Value)- Existence and Bequest values

• Quasi – option value (Correction factor to TEV, when irreversible loss (of e.g. Species):= Value of increased information if irreversible action not implemented

• Damage Function Approach• Environmental Valuation Techniques• - Stated Preferences (SP) and Revealed Preferences (RP)

Classification of Environmental Valuation Techniques___________________________________________________________________________

I) Methods based on individual preferences

Indirect Direct

Revealed Preferences

(RP)

Household Production Function (HPF) Approach:- Travel Cost (TC)- Averting Costs (AC)

Hedonic Price (HP) method

Simulated markets

Market prices

Replacement Costs (RC)

Stated Preferences

(SP)

Contingent Ranking (CR)

Choice Modelling (CM) Contingent Valuation (CV)

Classification of Environmental Valuation Techniques___________________________________________________________________________

II) Methods based on decision makers’/experts’/interest groups’ preferences

Indirect Direct

Revealed Preferences

(RP)

Implicit valuation (IV)

Stated Preferences(SP)

Multi Criteria Analysis (MCA) Delphi Method

Contingent Valuation (CV) method

• Describe environmental impact (EI) /environmental improvement with and without the Program

- scientifically correct description of EI, but alsounderstandable to the public; approved by all parties

• Describe the program that will avoid the EI • Realistic and fair way of paying for the program,

and fair distribution of costs • Willingness-to-pay (WTP) question:

The program will reduce eutrophication and improve water quality. What is the most your household is willing to pay in increased water and sewage tax per year? Open-ended (with payment card)or The program will reduce eutrophication and improve water quality at a cost of X US$ per year in increased water and sewage tax. Will your household support the program or not ? Referendum-format/ Dichotomous choice

Value Transfer / Benefit Transfer

Often lack of time and resources transfer economicvalues instead of new valuation study added uncertainty

Methods• Unit transfer (WTP/household as one-time amount)

- without corrections - with corrections (e.g. Income, Purchase Power Parity)

• Function transfer(WTP = f(Sosioeconomics, env. Quality) from similar type site

- value function - meta analysis of previous studies

Validity• 5 country CV study of Respiratory Illnesses (caused by air pollution) transfer error = 40 %

Validity1) Content Validity

(e.g assessment of CV questionnaire)

2) Construct validity- Theoretical (e.g. WTP = f (Q, Y, S, O) )

- Convergent (e.g. comparison of SP and RP)

3) Criterion (Predictive) validity- hypothetical versus actual willingness-to-pay (WTP)Case: Preserving biodiversity in coniferous forests in theOslomarka Forest.

Challenges• Increase the number of valuation studies outside

USA and Europe to reduce the uncertainty invalue transfers for all policy uses

• Defining the ”affected population” (N)Total WTP = N x WTPi

Global / national / regional / local good• Complex environmental goods - ecosystems• Validity of non-use values• Applying environmental (and cultural) valuation

techniques to value health impacts and otherpublic goods

Overview of so-far done studies in CVM in culture

TWO CASES FOR VALUATION OFCULTURAL GOODS

Publications• Bille Hansen, Trine (1997): The Willingness-to-Pay

for the Royal Theatre in Copenhagen as a PublicGood, Journal of Cultural Economics, vol. 21, no.1,pp 1-28

• Bille Hansen, Trine (2002): A Contingent ValuationStudy of the Royal Theatre in Copenhagen, In: StåleNavrud and Richard Ready (ed.): Valuing CulturalHeritage. Applying Environmental ValuationTechniques to Historical Buildings, Monuments andArtifacts, Edward Elgar Publishing, pp 200 - 237

Application: The Royal Danish Theatre

Purpose:• To investigate if CVM can be used in order to

estimate the total value of the Royal Theatre tothe Danish population

• To study whether the value of the RoyalTheatre’s non-market benefits can justify thepublic grants given to the theatre

• Activity at its present level

The Royal Theatre• Received about 266 mio. DKK in support from

the state every year (at the time of the study)• Equal to more than 80 percent of the total budget

of the theatre• Well defined cultural good. All Danes are

familiar with it and know they are already payingfor it through taxes

• Very elitist cultural institution: 7% of thepopulation has been to the Royal Theatre with thelast year, and 68 percent has never been there

Design of the study

• A random sample of the Danish population over 16years old

• 1,843 people had been interviewed by telephone(responserate 77)

• WTP: what is the maximum amount the citizens arewilling to pay (WTP) for the Royal Theatre to continueits activities at the present level?

Design of the study• Question: ”How much are you willing to pay at the most

to the Royal Theatre through taxes?”• Non-market value: ”Do you think that the Royal Theatre

has value for people other than those who go there,because it of significance for the country’s cultural level,attracts tourists or for other reasons?”

• Budget restriction: “would you still pay more, if it isnecessary to raise taxes?”

• Experiment: split-sample, with and without informationabout all Danes over the age of 18 pay on average aboutDKK 60 a year to the Royal Theatre through taxes.

AverageWtp

(DKK)

Don’tknow(%)

Zero bids(%)

MedianWtp

(DKK)

WithInfo.

79 8 16 60

WithoutInfo.

259 37 21 60

All 154 23 18 60

Taxpayer(1.000)

Aggreg.average

Aggreg.median

Public subsidy

WithInfo.

350 mio.DKK

270 mio.DKK

WithoutInfo.

1,165 mio. DKK

270 mio.DKK

Believed payment

1,797Mio. DKK

450 mio.DKK

All4,498

Mio. DKK690 mio.

DKK270 mio.

DKK266 mio.

DKK

Validity of the study• A number of socio-economic factors are able to explain

WTP in a way that is consistent with theory• The probability of having a high WTP and to consider the

Royal Theatre to have non-use value, is increased:• if they attend many other cultural activities,• have a high income,• a high education,• are women and• live close to the capital

• Being unemployed means that the probability of having ahigh WTP is reduced.

UsersAverage WTP

Non-usersAverage WTP

With info. (DKK) 205 68

Without info. (DKK) 693 232

All (DKK) 368 137

AggregatedWTP

(mio. DKK)121 561

Economic Valuation of Protectionof Archaeological Artefacts in Great Aamose, Denmark

Publications• Lundhede, Thomas; Berit Hasler og Trine Bille

(2005): Værdisætning af naturgenopretning ogbevarelse af fortidsminder i Store Åmose iVestsjælland, Skov- og Naturstyrelsen, www.sns.dk,107 sider

• Lundhede, Thomas, Trine Bille and Berit Hasler(2013): Exploring Preferences and Non-use Values forHidden Archaeological Artefacts – a case fromDenmark, International Journal of Cultural Policy,vol. 19., no. 4, pp 501-530

Purpose of the study: Economic valuation of a proposed nature and wetland restoration project in a river basin area, Greate Aamose, in West Zealand.

3 scenarios1 2

3

• Differs with respect to:• Protection of archeological artifacts• Improvement of biodiversity• Recreational opportunities

(establishment of paths)• Size of the area

Valuation method

• Valuation by the Choice Experiment Method

• Internet questionnaire – tested in 3 focus groups

• Answer from 1.636 respondents ( 51%)

Preservation of artefacts

• Continued devastation:Important artefacts, including internationally unique sacrificial and settlement sites will be destroyed within a number of years.

• Reduced devastation :The tempo of the devastation is reduced significantly for some of the most important artefacts, but the devastation is not brought to an end.

• Protection now and in the future: The artefacts will be protected within the soil, now and in the future, so that they can be excavated and exhibited in future.

Biodiversity: effects for flora and fauna

• Low Diversity: A large number of animals, but distributed largely within a limited number of common species. Vulnerable and rare species are threatened by distinction due to dry conditions and cultivation.

• Some Diversity: Many animals distributed within a greater number of common species, including small birds. Vulnerable and rare plants are threatened by distinction only in few places.

• High Diversity: Many common and rare animal species, especially bird species. Rare species are protected against dry conditions and cultivation.

• Restricted access via a few tracks and paths Extended access to a larger part of the area

via a wider network of paths and tracks

Recreational opportunities (accessto the area)

The price-attribute

– It is assumed that the Danes should cover the costs of implementing the alternative in the form a fixed annual sum per individual claimed once a year via the income tax.

–6 levels from 0 to 200 EUR/year.

–A “Cheap talk” and budget constraint reminder is added

Choice set

Aggregation for scenario 3(WTP per individual per year/EUR)

Aggregate results and sensitivityanalysis

But: severe problems of contingent valuation methodology

• Number of biases and critiques (some of them from Venkatachalam2004):

- Disparity between WTP and WTA (willingness to accept)- Embedding or scope effect- Sequencing- Information effect- Elicitation effects- Hypothetical bias- Strategic bias- Benefit transfer- Microeconomic nature, not addressing the “macro” economic effects- Extremely expensive and difficult to perform (they are mostly infeasible

in practice for any cultural organization)

Contingent valuation –some critical considerations

• Dilemma:Epstein (2003): “The RegrettableNecessity of Contingent Valuation”,Journal of Cultural Economicsvs.Diamond & Hausman (1994): “Is SomeNumber better than No Number?”, TheJournal of Economic Perspectives

A simple solution – “ex-post econometric analysis”

• A somewhat different question: “How much did the “macro”-economic indicators change because of the event?”

• It is done ex-post, after the event• It uses methodology which suffers from no “additional”

economic problems (overblown results, hypothetical bias,micro vs. macro focus)

• It uses statistical data, measured under common methodology• Results can be compared across events, regions, states• It is not expensive and methodologically over-complex• It can be used to study the characteristics that influence the

economic effects of cultural events the most (in positive andnegative manner)

Methods to estimate value of culture and their critiques - ex-post econometric analysis

• A flourishing method in sports’ economics• Starts: Baade & Dye (1988): “Sports Stadiums and Area Development: A

Critical View “

• Some findings – Baade & Matheson (2004): “Bidding for the Olympics: Fool’sGold?”

• “The increase in economic activity attributable to the 1984 Los AngelesOlympic games, as represented by job growth, an estimated 5,043 full-time andpart-time jobs using our model, appears to have been entirely transitory,however. There is no economic residue that can be identified once the Gamesleft town”

• “The job implications for the Los Angeles and Atlanta Summer OlympicGames were fundamentally different”

• “Atlanta Olympics created between 3.467 and 21.767 full and part time jobs”• “Humphreys and Plummer (1995) projected that the Olympics would create

approximately 77,000 new jobs in the State of Georgia with 37,000 of thosematerializing in Atlanta.”

Methods to estimate value of culture and their critiques - ex-post econometric analysis

• Main methods used (and possible to use): Panel data analysis;Treatment/Response analysis (Difference-in-differences;Instrumental variables); Dynamic Panel, GMM and Time Seriesanalysis

• Seaman (2012): “There is a virtual explosion of efforts to identifyempirical “tracks in the sand” in local employment and taxrevenue data following an event. A similar task might be triedin Maribor after the year ends to see if econometric equationsthat attempt to isolate the unique effect of being a Cultural Capitalreveal both economically and statistically significant uniqueeffects of this honor. In the sports literature, they almostNEVER find such effects.”

Estimating the economic effects of Venice Carnivals: An ex-post

econometric verification approachAndrej Srakar

Institute for Economic Research, Ljubljana and Faculty of Economics, University of Ljubljana, Slovenia

Marilena VeccoErasmus School of History, Culture and Communication,

Erasmus University Rotterdam, The NetherlandsRenata Slabe-Erker

Institute for Economic Research, Ljubljana, Slovenia

Short literature review and history of the carnival


• Carnival in Venice dates back to ancient times.• The first notice: 11th century.• Roots: in the pagan rites of pre-Roman and Roman times, in Lupercalia

and Saturnalia which in the latter, was a time of unrestrained revelryand licence.

• The concept of carnival: associated and integrated in the Christianfestive calendar. From the Latin carnem levare (to put away the flesh asfood) or in Italian carne vale (flesh farewell), carnival preceded Lentand represented the last chance to eat meat before the abstinence andproscription.


• From the 1500s: economic development of the Serenissima and the use ofculture as an instrument to show the power of the ruling class.

• During the 17th and 18th centuries: increased in magnificence andspectacularity (hidden place in the collective imaginary where every licencewas allowed during the carnival).

• The carnival decline lasted almost two centuries, but little by little it became amarginal and peripheral event whose main audience were represented bychildren and teenager

• Initiative of the major of Venice, Mario Rigo, in 1979-1980 decision wasmade to qualify the carnival activities giving new life to this centurytraditional based event.

Data and method• We construct models with the following independent variables: tourist

arrivals, tourist overnight stays, and passenger traffic (sell of tickets forvaporetto, and water bus, and passengers in the airport of Venice andTreviso).

• Also: (un)employment rate as a measure of economic growth, but it isreferred to province of Venice due to unavailability of time-series data forthe city of Venice.

• Our data set is compiled from monthly data of the City of Venice Statisticsand Research Service (Città di Venezia – Servizio Statistica e Ricerca) andYearbook of Tourism for the City of Venice. Regional data come fromSezione sitema statico regionale – Movimento statistico nel Veneto andnational data from ISTAT.

• The covered period for tourist arrivals and overnight stays ranges fromJanuary 2004 to December 2013 (i.e. 120 months). The missing data fortourist arrivals in period 2011-2013 are assessed by using annual data andthe structure of tourist overnight stays. The covered period for passengerwater traffic ranges from January 2007 to December 2013 (i.e. 84 months).

Data and method

Data and method• Four main steps:1) Cleaning the data from seasonal and cyclical

effects2) Box-Jenkins procedure:a) Identification of the processb) Estimating the parameters of the processc) Using diagnostic checks to determine if the

residuals are in fact white noise3) Intervention analysis4) Calculation of the final consumption effects

Results

Results – final effects

Discussion and conclusion• In our article we estimated the economic effects of Venice

Carnivals in years 2004-2014 using time-series’ econometricmethodology

• We estimated significant effects of the carnivals on tourismand short-term employment.

• We estimate approximately 50.000 additional tourists and170.000 additional overnight stays take place due to the event

• We also estimate a drop in short-term unemployment for theVeneto region in 2011 (the year of the peak of the event) while forother years there was no significant effect

• The estimates of the direct effect range in the level of more than10 million EUR in 2004 to more than 32 million EUR in 2011.The total effects (considering also the multiplier effects in othersectors of the economy) range in the level of slightly lower than20 million EUR in 2004 to more than 58 million EUR in 2011.

Discussion and conclusion• Results from our models confirmed that time series

methodology is a valid method in this case where manyvariables were unavailable, confirming the observations ofSkinner (2006)

• Ex-post econometric verification as a method that resolvesmany open disputes over the economic effects of culturalevents

• Is the effect (and the value) of the carnival visible only inadditional tourism, employment and spending?

• Are the effects of the carnivals necessarily positive?(negative externalities: different types of pollution,delinquency (pickpockets), higher prices for housing andliving, congestion, higher costs of maintenance for the citybecause the population is decreasing in the historic centre)

EX‐ANTE VS. EX‐POST: EFFECTS OF EUROPEAN CAPITAL OF CULTURE

MARIBOR 2012 ON TOURISM AND EMPLOYMENT

DR. ANDREJ SRAKAR& DR. MARILENA VECCO

ABOUT ECOCMARIBOR 2012 The project European Capital of Culture is a pan‐EuropeanUnion project, which designates two or three cities each yearto host a whole year festival of cultural events.

The project takes place since 1985 and was initiated by MelinaMercouri and Jacques Lang.

In 2012 the title was given to Portuguese city of Guimaraesand for the first time to a Slovenian city, in this case Maribor.

As Maribor is a small city compared to other cities onEuropean level, the city chose for its candidature to make apartnership to city municipalities in the whole EasternSlovenian region which finally made the project take place insix Slovenian cities: Maribor, Murska Sobota, Novo mesto,Ptuj, Slovenj Gradec and Velenje.

ABOUT ECOCMARIBOR 2012 The ECoC Maribor 2012 involved 319 producers of all sectors, and

over 5,900 events took place throughout the year in all six cities(see Public Institute Maribor 2012 2013).

The sum of visitors to the events, visitors to an internet applicationLifeTouch, spectators and visitors of a variety of programs in thespatial interventions was estimated to be more than 4.45 million.

The managing institution of the project, called Public instituteMaribor 2012, also carried out extensive activities in the field ofmarketing and communication, and promoted the development ofcultural tourism and connection with all tourist organizations in theregion.

A great increase in tourist visits in Maribor and its partner cities hasbeen reported by local tourist organisation, yet their results differand are much larger that the official statistics of the SORS.

MARIBOR 2012 RESULTS – ECONOMIC IMPACT STUDY

Estimating the factors which influence spending of visitors: OLS and Tobit (see article)

Multipliers, using Slovenian I‐O tables 2005 (Zakotnik): production 1,51; added‐value 1,50; employment 1,47 Multipliers, using Slovenian I‐O tables 2009 (own calculation): production 1,66; added‐value 1,67;

employment 1,50

IMPACTOF VISITORS SPENDING Impact on production – between 45.109.173,75 EUR (2005) and 58.567.302,18 EUR (2009) Impact on added value ‐ between 21.688.251,75 EUR (2005) and 28.517.336,75 EUR (2009) Impact on employment ‐ between 521 (2005) and 627 (2009) new jobs

IMPACTOF ECoC SPENDING Impact on production ‐ between 42.881.692,72 EUR (2005) and 47.141.463,52 EUR (2009) Impact on added value ‐ between 20.617.290,67 EUR (2005) and 22.953.916,95 EUR (2009) Impact on employment ‐ between 495 (2005) and 505 (2009) new jobs

TOTAL IMPACTThe aggregate cumulative effect of the two inputs:

Impact on production ‐ between 87.990.866,47 EUR and 105.708.765,70 EUR Impact of added value ‐ between 42.305.542,42 EUR and 51.471.253,70 EUR Impact on employment ‐ between 1007 and 1132 new jobs

MARIBOR 2012 RESULTS – EX‐POST VERIFICATION

2 types of verified effects:1)Effects on employment2)Effects on tourism

Data: SORS + Slovenian Ministry of Culture Methods: Difference‐in‐differences, Dynamic models,

System GMM

EFFECTS ON TOURISM

EFFECTS ON EMPLOYMENT

ROBUSTNESS TESTS

MARIBOR 2012 RESULTS – CONTINGENT VALUATION Sample: 655 telephone interviews, stratified sampling (50%Maribor and partner cities; 50% rest of Slovenia)

Four parts of questionnaire: 1) attitudinal questions; 2)socio‐demographic questions; 3) scenario and valuationquestions; 4) interviewer part

Elicitation method: double bounded dichotomous choicequestions with follow up open‐ended question (followingHadker et al. (1997), Verbič & Slabe Erker (2005), Srakar(2010))

Payment mechanism: raised taxes

CALCULATION OF “TRUE” WTP

Haab‐McConnell formula:

1

0

WTP

Determination of "true" willingness to pay

Coefficient Std. Error z p-value

Const -0,470312 0,202234 -2,3256 0,02004 **amountprim 0,034087 0,0167858 2,0307 0,04228 **

Const -0,685532 0,0992786 -6,9051 <0,00001 ***amountsec 0,0106039 0,00545108 1,9453 0,05174 *

Log-likelihood -771,1293Akaike criterion 1574,375Schwarz criterion 1552,259Hannan-Quinn 1560,858rho 0,440294 ***

Bivariate Probit

bidprim

bidsec

CALCULATION OF AGGREGATE EFFECTS

“True” average WTP is estimated at 13,80 EUR while“observed” average WTP from results of questionnaire wasestimated at 14,04 EUR

Aggregate WTP is therefore estimated at 23.489.697,60EUR per year and 68.376.160,74 EUR for three years withdiscount factor of 3%

Accounting for anchoring bias (anchoring‐free WTP = 10,89EUR) brings the aggregate yearly WTP to 18.356.435,28EUR

CONCLUSIONS AND DISCUSSION

The results clearly show that there exist significant differencesin ex‐ante multiplier analysis and ex‐post econometricverification results, in particular as related to employment.

Whereas the economic impact study predicted large positiveeffects, the ex‐post analysis pointed to an even negative andsignificant effect for the city of Maribor, which we attributedmainly to the problems of the financial crisis but noted also onother possible explanations for the observation.

We also presented the estimates of new tourism due to theproject which were mainly present in the city of Maribor, theproject holder, which is in line with some previous literature.

Finally, we were able to corroborate the results of the analysisusing several robustness checks.

CONCLUSIONS AND DISCUSSION Hopefully a start to significantly changed field of study ofeconomic effects of cultural events

Many new and open questions for research in the future: 1)Do cultural events really have the proclaimed economiceffects?; 2) How large are they?; 3) On what do theydepend on?

Wide space for comparative studies, for studies of economiceffects of different ECoC, and for studies of economiceffects of other cultural events (e.g. festivals, largeperformances, cultural heritage objects, etc.)

Blue Notes: Slovenian jazz festivals and their contribution to the economic and social

resilience of the host cities Andrej Srakar* & Marilena Vecco+

* Institute for Economic Research and University of Ljubljana, Ljubljana, Slovenia

+ Erasmus School of History, Culture and Communication, Erasmus University Rotterdam, The Netherlands

Introduction

Stronger relationship between festivals and tourism• Music festivals represent a core topic of tourismmarketing:“The arts create attractions for tourism and tourism suppliesextra audiences for the arts” (Myerscough, 1998, p. 80)

• Festivals are tourist attractions and generate touristflows (i.e. Quinn, 2006; Getz, 2010)

>> Butvery few studies on theec. impact of small events 205

Introduction Main research questions:1) Do the festivals support local economic development

and (to what extent) do they provide any notable effecton local tourism and employment?

2) To what extent do the festivals enhance the resilience ofthe two cities and in which aspects?

3) Are there any notable difference in the effects betweenthe two cities (depending e.g. on size, geographiclocation, economic development, etc.)?

4) Can ex‐post econometric verification as a developingmethod serve as a valid and appropriate tool toestimate the economic and social effects of events onthe host environment and its resilience?

206

Literature review 3Jazz festivals’ impacts literature>> well documentedButadopted predominantly the economic impact approach(Bracalente et al., 2011; Saayman & Rossouw, 2010,2011; Riley and Laing, 2006; Jones and Munday, 2004;Brown et al., 2002; Thrane, 2002)>> an estimate of an aggregate measure of income andemployment change attributable to the festival is used(regional economic models to explain the growtheffects of increased spending upon a region’s exports(e.g. Krikelas, 1992; Hunter, 1989)>> Constantly, the results are positive 207

Literature review 4Limitations of this approach

. it misinterprets the benefits of arts and culturalorganisations (Seaman, 1987; Sterngold, 2004). the analysis finishes “prematurely with theestimation of local multiplier effects but withoutprogressing one stage further and illustrating howthese translate into local economic growth” (Okech,2011, p. 187).. some key factors responsible for the inaccuracy ofdirect expenditure forecasts have been identified(Ramchandani and Coleman, 2012).

208

Literature review 5Resilience

“Resilience is not only the capacity to absorb shocks and maintain function, but it also includes a second aspect concerning the capacity for renewal, re‐organization and

development, to be taken into consideration for redesigning a sustainable future” (Holling, 1973, p. 17, see also, 1986,

2001)‐ Resilience derives from a return to a stable state after aperturbation(Horne and Orr, 1998; Sutcliffe and Vogus, 2003)‐ Douglas and Wildavsky (1982, p. 196): “the capacity to use

change to better cope with the unknown: it is learning tobounce back”.

‐ Davies (2011) identified three types of reactions: theability of a regional economy to withstand externalpressures, its capacity to respond positively to externalchange, and its long‐term adaptability or learning capacity

209

Literature review 6Role of festivals in local ec. development

Good examples of the relocalization movement:

“Relocalization is a strategy to build societies based on the localproduction of food, energy and goods, and the local developmentof currency, governance and culture. The main goals ofrelocalization are to increase community energy security, tostrengthen local economies, and to improve environmentalconditions and social equity. Relocalization strategy developed inresponse to the environmental, social, political and economicimpacts of global over‐reliance on cheap energy.”

http://www.postcarbon.org/relocalize

210

Typology of festivals

211

About Slovenian jazz festivals

1 – Jazz Etno Funky Festival, Koper (established: 2003); 2 – Jazz Cerkno (1996); 3 – LjubljanaJazz Festival (1960); 4 – Veronica’s Tales, Kamnik (2013); 5 – Jazzinty Novo Mesto (2000); 6 –Džjezz Celje (2003); 7 – Slovenian Jazz Festival, Ravne na Koroškem (2003); 8 – Festival Lent,Maribor (1993). 212

Descriptive statistics of key variablesVariable N Mean SD Min Max

Tourist arrivals, Cerkno 100 901.58 671.02 56 2497

Tourist arrivals, foreign, Cerkno 100 359.51 224.87 30 1035

Tourist overnight stays, Cerkno 99 3054.99 2670.54 89 9481

Tourist overnight stays, foreign, Cerkno 100 1280.43 1029.68 43 4866

Tourist arrivals, Novo Mesto 100 2378.72 779.17 1157 4619

Tourist arrivals, foreign, Novo Mesto 100 1743.53 741.75 714 3897

Tourist overnight stays, Novo Mesto 100 5117.16 2019.37 2402 10417

Tourist overnight stays, foreign, Novo Mesto 100 3911.06 1832.70 1497 8615

Tourist arrivals, Slovenia 100 269083.40 107510.70 153320 630579

Tourist arrivals, foreign, Slovenia 100 174879.40 87980.97 78675 472625

Tourist overnight stays, Slovenia 100 767270.60 352661.30 419652 1789727

Tourist overnight stays, foreign, Slovenia 100 456940.70 255247.80 204831 1258217

Number of employed, Cerkno 100 1395.47 114.98 1234 1654

Number of employed, Novo Mesto 100 21018.47 582.51 19979 22076

Number of employed, Slovenia 100 732598.90 30568.06 691511 798533213

Data and Method

215

• First step: eliminating the effects of the seasonand cycles, OLS

• Second step: interrupted time series

• Third step (robustness check) – panel datadifference‐in‐differences model

Results: Tourism, Jazz CerknoTourist arrivals, total Tourist arrivals, foreign Tourist overnight stays, total

Tourist overnight stays, foreign

Coef. t P>t Coef. t P>t Coef. t P>t Coef. t P>t

May 2008 998.29 7.00 *** 615.63 14.71 *** 4779.39 8.41 *** 3129.65 9.80 ***

May 08 × time 192.28 4.35 *** 114.13 9.31 *** 1229.90 6.96 *** 858.94 8.16 ***

May 2009 529.50 4.67 *** 325.08 7.80 *** 1774.64 4.55 *** 1192.78 6.63 ***

May 09 × time 16.22 0.88 13.84 2.27 ** 117.87 1.80 * 76.21 2.38 **

May 2010 297.21 2.79 *** 193.75 3.69 *** 879.13 2.33 ** 650.38 3.54 ***

May 10 × time 20.22 1.01 17.79 1.85 * 42.81 0.60 50.20 1.24

May 2011 41.57 0.32 ‐42.45 ‐0.65 100.65 0.23 ‐178.37 ‐0.66

May 11 × time 20.37 1.01 11.68 0.88 85.23 1.23 59.02 1.11

May 2012 73.86 0.48 0.91 0.01 183.01 0.30 ‐107.21 ‐0.32

May 12 × time 1.56 0.05 ‐8.02 ‐0.52 26.82 0.22 ‐12.93 ‐0.18

May 2013 ‐114.94 ‐0.49 63.87 0.68 ‐870.32 ‐0.89 ‐152.77 ‐0.33

May 13 × time ‐41.03 ‐1.69 * ‐23.92 ‐2.19 ** ‐160.13 ‐1.64 ‐84.23 ‐1.65

May 2014 399.97 3.74 *** 210.66 5.14 *** 1485.24 3.54 *** 730.59 4.70 ***

May 14 × time 42.45 3.75 *** 23.32 4.32 *** 118.01 2.71 *** 44.33 2.08 **

May 2015 83.2661 0.69 68.35 1.27 209.75 0.56 255.66 1.63

May 15 × time 3.49 0.20 0.97 0.10 62.15 1.07 29.07 1.09

Constant 554.01 5.76 *** 408.19 12.81 *** 4166.59 10.76 *** 3243.42 11.73 ***

Observations 100 100 99 100

F statistic 13.70*** 24.64*** 22.26*** 27.39***

Maximum lag 12 12 12 12Note: Statistical significance: *** - 1%; ** - 5%; * - 10%.216

Results: Tourism, Jazzinty Novo mesto

Note: Statistical significance: *** - 1%; ** - 5%; * - 10%.217

Tourist arrivals, total Tourist arrivals, foreign Tourist overnight stays, total Tourist overnight stays, foreign

Coef. t P>t Coef. t P>t Coef. T P>t Coef. t P>t

May 2008 134.89 1.26 245.25 4.23 *** 903.66 2.76 *** 844.48 4.10 ***

May 08 × time ‐50.55 ‐2.72 *** ‐7.54 ‐0.56 ‐98.24 ‐1.64 ** ‐107.69 ‐2.97 ***

May 2009 196.33 1.82 * 253.03 3.07 *** 592.21 1.61 905.82 2.61 **

May 09 × time 29.48 1.40 16.84 1.48 30.78 0.41 1.67 0.03

May 2010 ‐11.87 ‐0.09 108.45 1.87 * 366.79 0.63 404.24 1.10

May 10 × time 37.75 2.71 *** 39.25 4.44 *** 94.79 1.62 121.35 2.87 ***

May 2011 ‐247.04 ‐2.23 ** ‐252.97 ‐5.01 *** ‐483.36 ‐0.95 ‐584.51 ‐2.56 **

May 11 × time ‐61.29 ‐5.64 *** ‐14.87 ‐2.18 ** ‐51.00 ‐1.02 20.71 0.85

May 2012 187.86 2.16 ** 61.04 0.79 689.61 2.27 ** 253.72 1.18

May 12 × time 7.72 0.40 ‐12.09 ‐0.83 ‐32.37 ‐0.62 ‐39.10 ‐1.24

May 2013 176.25 1.36 149.29 1.28 795.62 3.00 *** 468.98 2.31 **

May 13 × time ‐20.38 ‐1.49 ‐28.38 ‐2.33 ** ‐106.00 ‐3.29 *** ‐138.70 ‐5.39 ***

May 2014 152.63 1.63 24.18 0.38 152.92 0.54 ‐113.03 ‐0.50

May 14 × time 56.16 3.37 *** 45.40 4.17 *** 158.01 2.92 *** 143.52 3.41 ***

May 2015 402.299 6.49 *** 212.57 4.44 *** 1100.21 4.44 *** 602.82 2.75 ***

May 15 × time ‐76.61 ‐8.84 *** ‐51.19 ‐6.32 *** ‐156.02 ‐4.18 *** ‐108.49 ‐2.99 ***

Constant 77.07 1.29 257.60 6.53 *** ‐128.01 ‐0.60 ‐52.17 ‐0.90

Observations 100 100 100 100

Nr of employed, Cerkno Nr of employed, Novo MestoCoef. t P>t Coef. t P>t

May 2008 ‐17.41 ‐2.31 ** ‐194.71 ‐4.37 ***May 08 × time ‐1.27 ‐0.92 ‐57.82 ‐8.51 ***May 2009 40.70 3.35 *** 219.32 4.21 ***May 09 × time 9.48 7.29 *** 36.04 4.93 ***May 2010 23.55 3.10 *** ‐40.03 ‐1.36May 10 × time 7.35 4.00 *** 6.13 1.09May 2011 ‐37.74 ‐4.81 *** ‐70.78 ‐1.69 *May 11 × time ‐10.97 ‐7.83 *** ‐84.13 ‐20.20 ***May 2012 ‐5.60 ‐1.02 90.71 2.63 ***May 12 × time 5.24 5.21 *** 53.61 13.81 ***May 2013 ‐31.25 ‐4.55 *** ‐21.91 ‐0.53May 13 × time ‐4.05 ‐4.51 *** 19.57 4.60 ***May 2014 15.89 3.14 *** 1.35 0.04May 14 × time ‐0.54 ‐0.67 35.23 8.15 ***May 2015 ‐39.59 ‐4.84 *** ‐104.86 ‐8.09 ***May 15 × time ‐1.77 ‐1.86 * ‐14.95 ‐9.13 ***Constant 87.74 179.63 *** ‐234.36 ‐20.96 ***

Observations 100 100F statistic 1161.12*** 1294.82***Maximum lag 12 12

Results of interrupted time series analysis, employment, both festivals

218

Results of panel data analysis, random effects’ modelsTourism arrivals Tourism overnight stays Nr of employed

Coef. t P>t Coef. t P>t Coef. T P>t

Jazz Cerkno ‐62.63 ‐0.06 ‐613.36 ‐0.19 13.14 0.07

Jazzinty NM 1821.07 1.67 * 5374.38 1.63 ‐10.30 ‐0.05

LogIncomes 319.75 2.87 *** 1170.65 3.50 *** 131.55 11.38 ***

GrossWages ‐2.35 ‐4.63 *** ‐5.81 ‐3.79 *** ‐0.37 ‐7.60 ***

TimeTrend 14.76 6.39 *** 36.85 5.27 *** ‐4.97 ‐21.24 ***

Weather 0.02 1.17 0.06 1.27 0.00 0.11

GDP 0.11 1.38 0.39 1.62 0.07 7.77 ***

Mortality 1.92 0.36 6.99 0.44 ‐0.02 ‐0.03

Infrastructure ‐0.01 ‐0.53 ‐0.03 ‐0.56 0.02 1.47Constant 2223.33 0.95 3187.07 0.48 4879.23 0.90

Regional effects Yes Yes Yes

Observations 6617 6617 14997

Groups 124 124 211

Wald chi2 63.14*** 52.43*** 1674.87

R square overall 0.0620 0.0717 0.0332 219

Discussion and conclusion• Evidence for the effect on both tourism and employment in both

cities, they contribute to the sustainability of the local economy but >> a wide variety of results over the studied years

• However, this can be attributed to numerous reasons – the economic crisis had its effect even beyond the mere cyclical effects on

the level of Slovenia – we could claim it had an influence on both cities in a stronger manner than for the general country.

– the competition of different new festivals (jazz – see Table 1; and of other musical genres) has surely contributed to the dissipation of the usual visitors and their decay in interest.

– Both “home‐grown” festivals, being more attractive to home than to foreign visitors – the latter forming a large part of the impact of the Jazz Cerkno festival in the earlier years while decaying latter.

– Jazzinty Novo Mesto consists of several events (composition award and workshops) >> the effects of the Novo Mesto festival are even less visible in the number of new tourists and employment spaces.

220

Limitations and future researches

. Potential limitations of results attained from the application of economic models alone (Burgan and Mules, 2000; Carlsen et al., 2007; Small et al., 2005)

. Combine the analysis of social and economic effects to understand the contribution festivals make to social cohesion, civic participation and ultimately sustainable cultural capital in resilient regional communities

221

Some brief conclusions• The studies on economic impact of cultural events (and

as related to cultural tourism) are at a significantcrossroad

• As pointed out by Seaman, so far the decision on the bestmethod to use was reduced to „pick your poison“ trap.

• Now, new methodologies are starting to arise, inparticular ex‐post econometric verification

• Wewill see in the future where the path will lead• But: wide areas are open in this field as many important

questions have not been answered so far• So: do your own research and provide more evidence and

knowledge in this field!222

THANK YOU FOR LISTENING!

[email protected]

• Reference to slides by: Prof. Victor Ginsburgh,Prof. Jeanette Snowball, Prof. Pier Luigi Sacco,Prof. Bruce A. Seaman, Prof. Ståle Navrud,Prof. Trine Bille, Americans for the Arts

studieson economicimpactof cultural tourismin cultural

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