Putting a price on the value of art

Cash and culture: can investment in the arts stimulate economic growth? (Video by Matt Danzico)

Experts agree that arts and culture are an important part of the economy - but the precise relationship is complicated. As governments and organizations increasingly have to justify spending, the big question remains: does investment in the arts stimulate growth, or are the arts the product of economic development?

Few people think of the economic impact of visiting a gallery or buying a ticket to the theatre. But arts and culture in the US generated $135.2 billion (£87 billion) and supported 4.1 million jobs in 2010, according to the latest economic snapshot from the non-profit advocacy group, Americans for the Arts.

It would seem that the case for continued arts funding is clear cut - enjoying the arts boosts the economy. But experts say the link between arts investment and economic output is tenuous.

"We can't always say our investment is directly responsible for that larger growth," says Sunil Iyengar, director of research for the National Endowment for the Arts (NEA), a US government agency.

"We believe there is that correlation to be made, but it needs to be strengthened by research."

That's why some of the most prestigious think tanks and agencies are coming together to analyze existing data and find new ways to measure the economic impact of the arts.

Not only are they exploring the link between the arts and job creation, they're also trying to understand how the subjective value of the arts - the "happiness factor" - may translate into economic benefits.

"The arts give people something to do when they're not at work, and they attract people to want to live in those communities," says Michael Rushton, director of the master's programs in public affairs and arts administration at Indiana University.

"Often the people who are most attracted to the arts are highly educated and mobile. They will increase consumption. They will increase the local tax base and bring employers to the area."

America's top art places in 2013

A list of neighbourhoods that best combine art and business:

  • Brooklyn, New York The intersection of Downtown, Fort Greene, Gowanus, Park Slope and Prospect Heights
  • Dallas, Texas The Dallas Arts District, with parts of Deep Ellum and Exposition Park
  • Los Angeles, California Central Hollywood
  • Miami Beach, Florida South Beach
  • Milwaukee, Wisconsin East Town and a portion of the Lower East Side
  • New York, New York Manhattan Valley
  • Oakland, California Downtown, including Chinatown, Old Oakland and Jack London Square
  • Philadelphia, Pennsylvania Old City
  • Portland, Oregon The Pearl District and a portion of Downtown
  • San Francisco, California The Mission District
  • Seattle, Washington The Pike-Pine Corridor
  • Washington, DC The intersection of Adams Morgan, U Street, and Dupont Circle

He's also looking at whether the mere presence of art and artists contributes to increased productivity in other areas.

"Does it make non-arts companies more innovative? Are people smarter at work because they're in a more creative, vibrant cultural scene when they're not at work? Does it bring ideas to them? My hunch is that the arts do have these kinds of positive effects."

The recent recession showed the vulnerability of cities and communities which rely on one industry for survival. Detroit is still suffering from the collapse of the auto industry, and Washington DC is trying to shake off its reputation as a staid government town - especially with the looming threat of a federal shutdown caused by the ongoing US budget crisis.

"It's hard to know what the economy is going to be like in 20 years," says Harriet Tregoning, director of the Washington DC Office of Planning.

"There's a lot of creative destruction happening. The places that survive will be those that equip their citizens and their workforce with the creative skills necessary to adapt."

Engagement with the arts is essential to building a creative environment in Washington, she says, but not necessarily through the traditional venues of galleries and museums.

"I think the arts are very significant, but not just the arts as conventionally defined - like the fine arts or the performing arts - but the whole sweep of creative occupations. That might include media, digital media, architecture and design. Those things are incredibly important to our city."

Every year ArtPlace, a non-profit organization backed by banks and government agencies, publishes a list of vibrant communities that successfully combine the arts and businesses to promote growth in the US.

Neighbourhoods in Washington, Dallas, New York and Miami were among this year's top 12 locations. They were all identified by measuring the percentage of commercial and arts-based organizations, jobs in creative industries and lifestyle factors.

The research was carried out by Portland-based Impressa Economics which analysed data from 30,000 postal codes.

But although the research provides a valuable data base for future study, Impressa president Joe Cortright says it doesn't explain what caused the communities to evolve in the way they have.

"We know these things feed on each other, that when a place develops a critical mass of arts and vibrancy it tends to attract talented people, it tends to raise income," he says. "It has a centripetal pull that brings things together and then is self-amplifying.

An artist paints a mural Artist Tes One designs a mural at the Raleigh, a Miami hotel that also features an interactive art and design gallery. South Beach, Miami was named one of the 12 best art and business communities in 2013

"It may never be possible to disentangle the two effects. But what we see in each of these places is that the arts play a pretty important role in the process."

The exact nature of that role is something the US Bureau of Economic Analysis (BEA) is hoping to find. For the first time, the BEA will attempt to calculate how much the arts contribute to the nation's Gross Domestic Product - that's the value of all goods and services produced in the US.

The research will be similar to the type of data the BEA offers on other industries such as travel and tourism, research and development, and health care. Preliminary results will be released later this year and the full findings will be published in 2014.

"Having access to this quality data and being able to understand how specific arts industries are faring over time will give us a much better picture," says Iyengar, director of the NEA. "That will lead to smarter policy making about where to invest (in the arts) and where opportunities lie for economic growth."

He says the value of the arts should not only be measured in economic terms.

But understanding their financial impact is an important part of the bigger picture.

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