Introduction

The basic distinction made in this volume compares “economic value,” expressed in monetary terms, to “cultural value,” reflecting cultural, aesthetic, and artistic significance. This chapter makes a different distinction that is rarely made explicit but that is of central importance to the decision process in cultural policy. On the one hand, “value” is attached to the economic effects of cultural activities: When cultural values are created, economic activity is bolstered. The increase of commercial activities induced is measured by the so-called impact effect. On the other hand, the value of culture is reflected in the increased utility to consumers and nonconsumers of a particular cultural activity. This type of value is measured by “willingness-to-pay studies.” I argue that these two values dominate cultural policy, but they capture totally different aspects and are proffered by different kinds of communities.

People involved in the arts as administrators or entrepreneurs – they are referred to as arts people in this chapter – are fond of impact studies. These studies measure the economic effects of a particular artistic activity such as that of a museum or festival. In contrast, people trained in economics and applying it to the arts – they are referred to as arts economists in this chapter – are fond of willingness-to-pay studies measuring the external effects, that is, those welfare-increasing effects of artistic activities not captured by the market. These preferences are rather surprising. Arts people focus more on the economic effects of the arts than economists do.