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January 23, 2009


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Apropos of I:

"Don't trust economic impact studies.
These studies usually give economics a bad name.

'We should be skeptical of “economic impact” studies that show the importance of the arts to a community. A study of this kind might show that an arts festival or new arts arena brings millions of dollars in economic value. But these studies typically treat arts expenditures as creating value out of nothing. Implicitly it is assumed that if the money had not been spent on the arts, no other economic or social values would have been produced. Again, the relevant comparison is whether an arts arena leads to more value than some alternative. When we look at economic impact studies for one industry at a time, they all appear to show high benefits. But this means that the net benefits of any single project are low, zero, or perhaps even negative on average. By investing in one good idea we are always forsaking another good idea. In essence those studies list gross benefits rather than net benefits. Furthermore, once an economic impact study is being done, the resources are likely no longer undervalued.'

That is from my Good and Plenty: The Creative Successes of American Arts Funding."

Posted by Tyler Cowen [George Mason University economist] at www.marginalrevolution.com, on April 29, 2006 at 01:51 AM, quoting from one of his books.

The same sorts of arguments are made to justify subsidizing sports stadiums, and are equally unconvincing. See, for example: http://www.sabernomics.com/sabernomics/index.php/2008/05/sports-stadiums-and-economic-development-a-summary-of-the-economics-literature/

Moreover, why make this argument anyway? It assumes that public money (tax dollars) should only be spent on things that can be shown to produce economic growth, which is not a very progressive argument.


OK, Isaac - When all is said and done, are you an artist because of the economic impact of your work on Brooklyn? Or does something else drive you? OK, no need to answer, I am just rattling your cage.

I am a big fan of Americans for the Arts, and the work they do is important and necessary, but the economic impact argument, useful in some increasingly limited circumstances, is a slippery slope. The arts are essential for their own sake, and we all need to get comfortable with owning and defending that argument, and not depend on secondary benefits to justify what we know to be valuable.


Tommer, Nitpicker,

This memo was written specifically for the purpose of talking about how arts subsidies could fit into HUDs expanded role under the *economic stimulus package*. Because of this, it is necessary to make the economic impact argument. If I were writing a memo for the Dept. of Education, it would be about how the arts enrich education. I believe the intrinsic benefit argument but it has yet to prove itself a viable argument for getting the government to support the arts. It is at best one of several arguments that must be made simultaneously.


Good point. I am just personally sick of hearing about the economic impact of the arts.

That said, one of the more interesting pieces i've read on the topic is Creativity and Neighborhood Development, by banker Jereny Nowak, which doesn't so much make the case for the economic value of arts and cultural activities and institutions, but assumes it and lays out the details for city planners and developers on how to integrate the arts into their plans as a means to succeed economically.

See: http://www.trfund.com/resource/downloads/creativity/creativity_neighborhood_dev.pdf

(Wait! Aren't we supposed to be talking about theater?)


CDBGs would only provide a benefit to non-profits with theater spaces, though. Or is that not the case? I'm assuming that the hundreds of nomadic non-profits in NYC would not be eligible for this type of funding.


Hey Asher,

First off, I love P73 and what you guys are about, so I'm flattered you're reading this blog and commenting, thanks!

Second, to answer your question.... while most current CDBG $$$ goes to arts organizations that have their own spaces, that is by no means a prerequiste either under the existing framework for eligibility nor under the guidelines I call for in the memo. Obviously the clause for helping nonprofits in the midst of brick-and-mortar capital campaigns will only affect those who have their own spaces. The other ideas (which are just examples of how the money could be used, it's not meant to limit how it will be spent) would benefit companies without their own spaces.


Isaac writes: "This memo was written specifically for the purpose of talking about how arts subsidies could fit into HUDs expanded role under the *economic stimulus package*. Because of this, it is necessary to make the economic impact argument."


But--what if it isn't true? What if the arts don't stimulate the economy? Is it then OK to say so anyway, to shove them into the stimulus package & get one's hands on some (much-needed, I agree) cash?



I would argue personally that the evidence points to that it does. I'm not claiming it does to get the money, I'm making an argument based on a particular facet of a larger argument about how the arts are positioned in our country that I sincerely believe. (Just to be clear: I knew you weren't accusing me of anything, I just want to make it clear to everyone that I do sincerely believe what I've written in the memo,it's just not the sum total of my thoughts on the issue).

There are good economic impact studies and bad. I looked at a lot of them while researching the memo. I left off the frequently mentioned but never-backed-up-by-citation claim that every dollar of arts funding produces $7.00 of economic activity. Similarly, I threw out some pretty obviously weak economic impact data. The Americans for the Arts study (And I read some critiques of it as well-- due dilligence!) seems on further investigation sound.

Tyler Cowen- an economist and writer whom I respect- is a self-identified libertarian and free market evangelist. I personally feel that his arguments against economic impact studies w/r/t the arts are more the result of his own biases economically, politically and culturally (he did write a book about how commercial culture is the best culture after all) than anything else.

To answer your question... If I didn't think the argument was true, I wouldn't think it's appropriate to make it. There are many reasons to support the arts, and other channels within government (State and Edu being two obvious ones beyond the NEA) to do it.

I also want to say that people's frustrations that the inherent benefit argument doesn't work (frustrations expressed here in comments by tommer and personally with me in many conversations with my peers) are understandable and that I share them. But we live in the society we live in, and as Alinsky would say, it's important to make arguments in a way that allows to be heard.


"What if the arts don't stimulate the economy?" Oh please. How many generations to we have to keep going back to and re-proving this. Sure, others things may have a bigger bang, faster bang, but to imply that it might not help at all is the worst straw-theory.

Clearly, DC thinks it has some bang....

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