Economy Culture

The economy of culture is a branch of the economy concerned with economic aspects of the creation, distribution and consumption of works of art. Long relegated to the fine arts and performing arts in the Anglo-Saxon, its spectrum has widened since the early 1980s to study the specificities of cultural industries (film, book publishing and music) as well as 'the economics of cultural institutions (museums, libraries, historical monuments).


History and delimitation


History


The Luncheon on the Grass by Manet. The tables are the typical example of the unique work of art and not reproducible: there is only one original from the hand of Manet.

Economic analysis of art and cultural property in general has long remained outside the limits of economic analysis. Indeed, works of art are unique: there are no two lunch on the grass. This lack of equivalent or competitor and led David Ricardo to say it was impossible to assess, (Principles of Economics, Volume 1). Similarly, Alfred Marshall observed that the demand for a type of cultural property is a function of consumption of the said property (most known musical genre, the more we are able to enjoy it), making out this type of consumption framework marginalist dominated by the decay of the utility marginal.

If institutionalists Americans (Kenneth Boulding, John Kenneth Galbraith) highlight the growing economic importance of art the foundation of the economy of culture in own field is due mainly to the work of William Baumol and William Bowen on the live performance, those of Gary Becker on the addictive properties and those of Alan Peacock (school of public choice). Institutionally, the economics of culture to acquire a newspaper in 1977 (Journal of Cultural Economics and recognition of its existence by the community of economists is recognized in 1994 through the issuance of a literature review by David Throsby in the Journal of Economic Literature Two books reporting on the state of literature were then developed, first by Ruth Towse in 2003, then by Victor Ginsburgh and David Throsby in the reference collection of North-Holland.

The economy of culture corresponds to ratings Z1 (economy of culture) and Z11 (Economics of Arts) classification of Journal of Economic Literature.


Boundaries

The boundaries of the cultural economy are unclear. Where does the sculpture and begins the design? The economic logic of the two sectors have strong similarities.

The delineation of the cultural economy poses the same problem as the definition of culture itself. The heart of the cultural economy, and historically the first field is the study of fine arts and live performances (theater, opera). These themes are still an important part of research articles.

However, a highlight of the nineteenth and twentieth centuries are the emergence of mass culture through goods with cultural content, but produced using industrial methods: the mass-circulation books, recorded music, film, and the development of the media stream, radio and television, or content (internet). The question then arises as to what extent these properties are of Culture: Harry Potter is it as "cultural" than Father Goriot? Economists culture have argued the difficulty in making distinctions in this area, which are most often subjective value judgments. They also highlighted the specificities in the selection of products, their manufacture and application which allow to differentiate cultural goods. Thus, they have in common to incorporate a creative element in their essential characteristics. However, this characterization is too broad. The growing importance of design that for certain products can hardly be regarded as cultural (clothes, music players), the dimension of creativity is the key value.

This is why economists have immediately embraced the concept of content industries to describe the entire industry producing goods whose essential value lies in their symbolic content rather than their physical characteristics. Thus, a book is a cultural text that is related or not, the solid cover or not, while a digital music player out of service no longer in spite of its design.


Issues


The "Baumol's Disease" and the economics of performing arts

Noh Theater at Itsukushima Shrine, Miyajima, Hiroshima. Because of its extreme codification and an inventory virtually unchanged, Noh provides an almost perfect illustration of art touched by Baumol's disease. Its existence is now dependent on the system of living national treasure.

The seminal paper by Baumol and Bowen (see below shows a differential of productivity in art, especially the performing arts. Indeed, for the play Tartuffe, he had in 1664 two hours and twelve players. In 2006, it always takes two hours and twelve actors: no productivity gain in over three centuries. However, as was already noted by Adam Smith, being an artist requires a significant investment in human capital, and should therefore receive compensation at the height. The remuneration of artists should at least grow as that of the general population, according to the overall productivity in the economy. The cost of a piece therefore increases the rate of productivity, while productivity does not increase the players. Called disease costs by Baumol and Bowen, the inexorable growth of the relative cost of live performance explains the increasing dependence on them in respect of public subsidies without which this work would be doomed.

The literature on the economics of live performance carries much of this analysis, and is divided along two major axes: the challenge to the relevance of the cost disease, and study ways of subsidizing cultural activities

The first part is the existence of real productivity gains in this sector. Thus, a better design of concert halls, microphones, broadcast television or radio and recordings are a same representation may be seen by a number of spectators out of proportion with what was possible before the technology dissemination mass. Cultural industries and provide substantial funding for live performances which they receive on their products. Related to the economics of innovation, this current sees the economy growing a particular case foreshadowing of trade increasingly dematerialized.

The second part, which is more public choice and the industry organization, more interested in how are or should be used subsidies to culture. These subsidies are in fact subject to criticism on their regressive (spectators theater or opera are rather affluent households, thus promoting cultural grants already advantaged populations) or the possibility of forfeiture for certain players (such as a floor manager not being played as abstruse works, the very limited public, but providing an image developer of high culture). This literature therefore focuses on justifying the existence of subsidies by demonstrating that they allow access to culture to a wider audience and suggested courses of controls ensuring that subsidies are used in accordance with public interest .


The market works of art

The artworks are traded in markets with very different structures. In the simplest cases, the artist sells his production directly to its customers, but most often the work passes into the hands of multiple intermediaries The level of intermediation define as many markets, explicit, as in the case of the library, or implicit, as in the case of the production chain of a film Similarly, some markets are very narrow, with few assets and transactions, paintings by old masters such, while others are mass markets (books, recorded music).


Market and Quality

Bruno Frey stresses the common belief among intellectuals that good art can exist only by means of public support for artistic production, the market is deemed to lead to mass production and low quality . Frey notes that the market structure does not provide that type of goods meeting a demand. In the case of cultural property, and it provides both properties of high quality at high prices, and an assortment of goods in quantity and quality varied. In the absence of consensus standard on what is good or bad, says he, the market is a way of organizing relationships interesting in that it allows a wide variety of goods to be products


The case of paint

Vincent Van Gogh, Auvers-sur-Oise - Portrait of Dr. Gachet (1890, June). This table has been a spectacular sales in 1990 for $ 82.5 million francs. Indeed such amounts outstanding and the existence of old data on the transaction, the paint market has been the subject of special attention from economists culture.

The paint market is separated into two parts: the well-known works, classified, already judged by history and whose value is well known, and the contemporary works, more prone to sudden discoveries and fads. If the former has attracted much attention because of huge transactions, Portrait of Dr. Gachet with digital branch of Vincent Van Gogh, sold 82.5 million francs in 1990, the two markets share a common structure of oligopoly, with a limited number of buyers and galleries significant

Two questions drive the economic debate around this area: how to format the value, sometimes very important, a work, and what is the profitability of an art work in comparison with financial assets?


The formation of prices

Raw Materials of a work, canvas and paint or stone block, generally have a market value well below that of the finished product. Similarly, the time spent by the artist on his work does not seem to explain the large price differences between the works. Their value depends heavily on the perception of the potential audience and the experts to establish this value. It can be decomposed into three components. The first is a social value, corresponding to an "art capital" of the artist, reflecting the consideration that the purchaser receives the fact of possession of the work. The second is the artistic value of own work within the overall production of the artist and the material time, its importance for later artists, etc.. The third is based on the price which has already exchanged earlier work, reflecting a speculative value on which the purchaser may rely upon a resale potential

Each of these values is thus determined by specific players. The first is the behavior of a number of experts such as gallery owners, directors of major museums, auctioneers, whose behaviors serve as guides to determine the interest and reputation of a given artist. The second value is more a trial of art historians. As to the latter, it depends essentially on the market presence of actors who are interested in works that as a financial investment as possible. This aspect is the subject of the next section


art market and speculation

This aspect of the art market has received attention for two reasons. On the one hand, some financial actors (banks, insurance companies) were seen during the 1990s in the market for works of art can make gains out of proportion with those achievable in a depressed market values. Moreover, these transactions often take place through auctions. They therefore carry a very transparent, which allows to establish databases informing the prices at which sold the same property (same work) at different times, sometimes since 1652

Empirical studies on the issue show that while some collectors to scent could multiply tenfold their release in a few years, the average return of works of art is much lower than for shares, volatility at least as important. Before interpreting this difference as the artistic pleasure of possession of a work, these studies do not take into account the tax advantage enjoyed by the works of art are exempt from wealth tax and inheritance tax in many countries

In 1986, Baumol estimated the average yield on twenty years of investment in works of art to 0.55% per year. In comparison, that of financial stocks was 2.5%.

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