economic & social implications in international cultural indicators oecd workshop on the...

Economic & social implications in international cultural

indicators

OECD Workshop on the International Measurement of CultureChâteau de la Muette, Paris

December 4, 2006

Elisabetta Lazzaro

University of Padua Department of Economics

[email protected]

• IssueEconomic models for the demand for cultural goods & services:

Hps about the origin and the evolution of preferences

Theoretical & empirical implications in international cultural indicators

Inclusion of accumulated experience, social interactions and diversity in cultural participation and its indicators

• Reference

• Objective & contribution

Traditional economic theory + cultural research in dynamic demand analysisApplications and examples from the cultural sector

E. Lazzaro, Economic & social implications in international cultural indicators 2

Outline

1. Economics & cultural indicators

2.Preferences and the demand for the arts

3.Habit formation

4.The role of experience & exposure in taste formation

5.From rational addiction to learning by consuming

6.Toward a more realistic process in the building of taste

7.Economics & the impact of social interactions on preferences

8.Cultural diversity & participation

9.Implications in international cultural indicators/1

10.Empirical testability

11.An application: Spouses’ effects in museum demand 3E. Lazzaro, Economic & social implications in international cultural indicators

1. Economics & cultural indicators

From a “traditional” economic approach....

production/supply consumption/demandof products, services

Individuals’ maximisation of preferences which are given, stable and homogenous

... to an interdisciplinary one:

Broadening of the field of individuals’ choice process and behaviour

(psychology, sociology, behavioural sciences...)


2. Preferences and the demand for the arts

Neoclassical theory: fixed and exogenous preferences

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Utility maximisation

≠ Concrete evidence in consumption of artistic goods and services (e.g. concert attendance, museum visit, purchase of works of art): preferences are not given

Origin and transformation of preferences

E. Lazzaro, Economic & social implications in international cultural indicators

3. Habit formation

Pollak (1970) JPE

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Individual’s current preferences

All past consumption levels

Criticism: deterministic, myopic


4. The role of experience & exposure in taste formationStigler & Becker (1977), AERBecker & Murphy (1988), JPE

Rational addiction

Model of household production of commodities = perception of goods shadow prices ⇒ ≠ effective prices

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Accumulated specific consumption capital Goods’ appreciation

Beneficial addiction (e.g. music): elastic demand, ↑ sensitivityHarmful addiction (e.g. drugs): inelastic demand, ↓ sensitivity

Criticism: Stable & homogeneous preferences among individuals; positive increment of capital


5. From rational addiction to learning by consumingMcCain (1979), JCECMcCain (1981), AERMcCain (1986), JCECMcCain (1995), JCECMcCain (2003)

Cultivation of taste

Application of catastrophe theoryBimodal distribution of cultivated and not cultivated consumers

Criticism: complicated framework; short-sightness/bounded rationality (→market intervention); unknown proportion of cultivated vs. not cultivated

8E. Lazzaro, Economic & social implications in international cultural indicators

6. Toward a more realistic process in the building of taste

Lévy-Garboua & Montmarquette (1996), JCECLévy-Garboua & Montmarquette (2002)

Learning by consuming

Experience =

expectation + surprise

Taste

⇒ Shadow-price elasticity = market-price elasticity

Contributions: Non-deterministic/stochastic increase in taste; +/- increment in taste; heterogeneity of tastes; quality & individuals’ attitude toward risk; empirical testability; long-run equilibrium


7. Economics & the impact of social interactions on preferences

Toward a formal incorporation of social interactions in modelling preferences formation

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Social interdependence in taste formation has already been admitted in the previously considered contributions without being formalised

Social effects have long been central to sociology and social psychology

Overall, economists have been at best ambivalent as to whether social interactions constitute a proper domain in the discipline

Notable exceptions: Duesenberry (1949), Leibenstein (1950), Arrow (1974), Stigler and Becker (1977), Schelling (1978), Akerlof (1984), Frank (1985)


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“By social interactions, we refer to the idea that the utility or payoff that an individual receives from a given action depends directly on the choices of others in the individual's reference group, as opposed to the sort of dependence which occurs through the intermediation of markets.” (Brock and Durlauf 2001: 235)

7.1 What are social interactions?

Influence: others’ past & current consumption patterns in a shared environment of common tradition, information & social norms, reference group

Effects: social interactions, social pressure, peer and neighbourhood effects

Results: contagion, conformity, learning, imitation, bandwagons, herd behaviourE. Lazzaro, Economic & social implications in international cultural indicators

1) Individuals' choices and payoffs are influenced directly by other individuals' actions through:

imitation, learning, social pressure, information sharing, other forms of non-market externalities

2) These interactions are supposed to take place within some socially and/or spatially determined distances, that define the relevant reference group:

family, household, relatives, friends, school mates,co-workers, neighbours, etc.

7.2 Social interactions: some recent economic models


“Neighbourhoods effects”, “peer effects” or “household effects” are been increasingly applied to many different domains, such as:

•school choice and school achievement•working patterns•participation in welfare programs•smoking & drinking behaviour•crime rates•residential segregation•fertility rates•savings behaviour•computer ability•asset market volatility•….

7.3 Social interactions: growing body of economic empirical literature

Bauman et al. (1990); Case and Katz (1991); Evans et al. (1992); Brock (1993); Glaeser et al. (1996); Katz et al. (2001); Jackson et al. (1997); Farkas et al. (1999); Topa (2000); Gaviria and Raphael (2001); Sacerdote (2001); Cipollone and Rosolia (2003); Miniaci-Parisi (2004)


Nevertheless, the characteristics of most cultural goods and services provide strong justifications for taking into account social effects:

• they take place publicly (Becker and Murphy, 1988)

• they are experience goods (Nelson, 1970)

informational asymmetries and uncertainty on the expected utility screening behaviour, imitation or replication of the choices of

friends, peers, relatives or neighbours

• factors or “class reproduction” (Bourdieu & Di Maggio)

7.4 Social interactions & the consumption of cultural goods

So far, the existing theoretical and empirical economic literature focused on the effects of economic, educational, and other individual characteristics, paying scarce attention to the analysis the impact of social interactions

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8. Cultural diversity & participation

OBJECTCultural diversity: expression, origin, creation

MODALITYCultural participation: public’s access and fruition

Cultural diversity and the need to reach the broadest audiences

Necessity of a market?

Cultural diversity originates from a previous exposure of its creators, i.e. from their previous cultural fruition


9. Implications in international cultural indicators/1

Object of the fruition:

Broadening the field of cultural economic analysis:

• “high brow” vs. “low brow” culture

• inclusion of entertainment/divertissement (e.g. TV, cinema ...) in the public’s cultural practices

• consideration of cultural non-partecipation/consumption and of those factors which impede potential or latent demand to become effective


9. Implications in international cultural indicators/2

Modality of fruition:• building of perceptions, tastes and preference• public’s choices and behaviour

not only on

a rational, homogeneous, individual and indipendent basis

In particular, importance of the social dimension: interactions and social cohesion

Impact on cultural policies


10. Empirical testability

Strong need to test available consumer choice theories against empirical evidence in the cultural sector

Relatively long tradition of studies applied to the demand for the performing arts (e.g. theatre, music, cinema, etc.), much more than the demand for museums, cultural heritage, works of art.

Issues: available, regular and disaggregated data; selectivity bias; endogeneity; special gathering of qualitative data (interviews, focus groups, …)


10.1 Empirical analysis of social interactions

Main strategy: to infer their presence from observations of the outcomes experienced in a population of interest

Problem: presence of many different interaction processes or, perhaps, processes acting on individuals in isolation

In particular, outcome data do not generally allow us to separate between endogenous interactions, contextual interactions and correlated effects

“Reflection problem” (Manski, 1993): mean behavior in the group is itself determined by the behavior of group members


11. Application: Spouses’ effects in museum demand in Italy

An individual’s museum/temporary exhibitions attendance at least once (possibly)* together in the last 12 months (*: Upright, 2004)

explained by

among other factors, her/his spouse’s education

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Pre-Hp: Education has a positive effect on arts attendance(DiMaggio & Useem, 1978; Blau, 1988, DiMaggio & Ostrower, 1990; Peterson & Sherkat, 1992; Robinson, 1993)

Data: ISTAT 2000: 13,000+ married couples in Italy


11.1 Some results

Education ofHusband alone

Husband & wife

Wife aloneWife & husband

Respondent 0.277**** 0.261**** 0.283**** 0.226****

Spouse -0.443 0.273**** -0.009 0.282****

Individual’s museum “social” attendance explained by (also) education

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Conclusions:After having controlled for an individual’s education,• spouse’s education slightly stronger effect;• though, when both attended only (reinforcement of similar

characteristics and attitudes)


economic & social implications in international cultural indicators oecd workshop on the...

Documents

economic social implications

cultural participation

cultural sectore

cultural goods services

museum demand

inelastic demand

impact of social interactions

traditional economic