Author: North, Jane

Publication Year: 1981

Media Type: Report

Summary:

Economic impact studies measure the results on the wider economy of money moving into, and out of, an organization(s). The impact is the generation of additional funds, or jobs, resulting from this increase in funds to the organization(s), or increased spending by it. Money moves into an organization in the form of earned income and subsidies, and moves out in the form of salaries and payments for goods and services. The recirculation through the community or region is measured with the aid of multipliers to calculate the total economic effect.

Abstract:

Economic impact studies measure the results on the wider economy of money moving into, and out of, an organization(s). The impact is the generation of additional funds, or jobs, resulting from this increase in funds to the organization(s), or increased spending by it. Money moves into an organization in the form of earned income and subsidies, and moves out in the form of salaries and payments for goods and services. The recirculation through the community or region is measured with the aid of multipliers to calculate the total economic effect.

There are three main ways of measuring the impact:

1.  Keynesian multiplier analysis.
     This estimates the propensity to consume when there is a change in income,
     as the additional income is respent, in ever decreasing amounts, through
     the community.

2.  The export base model.
     This method judges the growth of a region by the amount of goods,
     services or labor that it exports out of the region or sells to visitors to the
     region.

3.  Interindustry analysis.
     This method examines the linkages between enterprises, through technology
     and through spending by employee households. Can the overseas findings be
     translated to Australia? Given the homogeneity of the results in general it is
     likely that similar results would prevail in Australia but without appropriate
     multipliers we cannot exactly translate experience.

Economic studies can be a useful advocacy tool especially in urban and community development. They can also be useful aids in planning and budgeting to the participating organizations. The danger of heavy reliance on economic impact studies as advocacy for subsidy is that donors may wish to fund arts organizations which have the greatest economic impact and ignore artistic criteria.

Six economic impact studies were examined:

a)  Baltimore - eight arts institutions were studied in 1976 to show direct and
     secondary economic effects on the Baltimore business sector, local
     government and individuals. Effects were empirically studied after
     development of an arithmetic theoretical model detailed in the study.

b)  Six U.S. cities - expansion of the Baltimore study to cover 49 cultural
     institutions in six American cities in 1978-79 to assess the role and relative
     importance of cultural activities to the local economic development process.

c)  Three Canadian arts organizations - assessment of economic effects of three
     large performing companies upon their respective municipalities, provinces
     and Canada in 1972.

d)  The Edinburgh Festival - estimating income creation in Edinburgh from
     visitors to the four concurrent festivals in 1976.

e)  Cultural organizations in six New England states - economic impact on each
     state, on the New England region and on the U. S. of the region's non-profit
     cultural enterprises in 1978.

f)  The Mildura Arts Center - the regional economic impact of the Centre since
    its inception in 1965 projected to the year 2000.

These six studies are compared in their economic rigorousness and in their applicability to Australia. A review of the literature of cultural economics reveals definitive strands:

a)  The role of government funding and its effects on arts organizations and
     artists.

b)  Markets for the arts, the supply and demand for artists, art forms and arts
     institutions.

c)  The arts as a tool of economic development.

CONTENTS
  1. Economic Impact Studies of the Arts:

Keynesian multiplier.
Economic base model.
Interindustry analysis.
Relevance to Australia.

  2. Recommendations.

  3. Baltimore Study:

Methodology.
Results.
The model.
Evaluation.

  4. Six U.S. Cities Study:

Methodology.
Results.
Evaluation.

  5. Three Canadian Companies:

Terms of reference.
Definition.
Summary of principal conclusions.
Economic Evaluation.

  6. Edinburgh Festival:

Aim of the study.
Methodology.
Results.
Evaluation.

  7. Six New England States:

Methodology.
Results.
Economic impact of the arts.
Evaluation.

  8. Mildura Arts Centre:

Methodology.
Results.
Evaluation.

  9. Comparison of the Studies.

10. Literature Review:

Can the arts be studied by normal economic tools?
The role of government.
Market for the arts.
The arts and economic development.
Other issues.
Economic models.
Statistics of the arts.

11. Bibliography.

Arts & Intersections:

Categories: Economic Impact