Economic

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Economic social implications in international
cultural indicators
Elisabetta Lazzaro University of Padua
Department of Economics elisabetta.lazzaro_at_unipd.
it
OECD Workshop on the International Measurement of
Culture Château de la Muette, Paris December 4,
2006
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Issue

• Economic models for the demand for cultural goods
  services
• Hps about the origin and the evolution of
  preferences
• Theoretical empirical implications in
• international cultural indicators

• Reference

Traditional economic theory cultural research
in dynamic demand analysis Applications and
examples from the cultural sector

• Objective contribution

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

• Economics cultural indicators
• Preferences and the demand for the arts
• Habit formation
• The role of experience exposure in taste
  formation
• From rational addiction to learning by consuming
• Toward a more realistic process in the building
  of taste
• Economics the impact of social interactions on
  preferences
• Cultural diversity participation
• Implications in international cultural
  indicators/1
• Empirical testability
• An application Spouses effects in museum demand

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1. Economics cultural indicators

• From a traditional economic approach....
• production/supply consumption/demand
• of 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...)

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2. Preferences and the demand for the arts

• Neoclassical theory fixed and exogenous
  preferences

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
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3. Habit formation

• Pollak (1970) JPE

Individuals current preferences
All past consumption levels
Criticism deterministic, myopic
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4. The role of experience exposure in taste
formation

• Stigler Becker (1977), AER
• Becker Murphy (1988), JPE
• Rational addiction
• Model of household production of commodities
  perception of goods ? shadow prices ? effective
  prices

Accumulated specific consumption capital
Goods appreciation
Beneficial addiction (e.g. music) elastic
demand, ? sensitivity Harmful addiction (e.g.
drugs) inelastic demand, ? sensitivity Criticism
Stable homogeneous preferences among
individuals positive increment of capital
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5. From rational addiction to learning by
consuming

• McCain (1979), JCEC
• McCain (1981), AER
• McCain (1986), JCEC
• McCain (1995), JCEC
• McCain (2003)
• Cultivation of taste
• Application of catastrophe theory
• Bimodal distribution of cultivated and not
  cultivated consumers
• Criticism complicated framework
  short-sightness/bounded rationality (?market
  intervention) unknown proportion of cultivated
  vs. not cultivated

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

• Lévy-Garboua Montmarquette (1996), JCEC
• Lévy-Garboua Montmarquette (2002)
• Learning by consuming

Experience expectation surprise
Taste
? Shadow-price elasticity market-price
elasticity Contributions Non-deterministic/stoch
astic increase in taste /- increment in taste
heterogeneity of tastes quality individuals
attitude toward risk empirical testability
long-run equilibrium
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7. Economics the impact of social interactions
on preferences
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)

• Toward a formal incorporation of social
  interactions in modelling preferences formation

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7.1 What are social interactions?
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)
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 behaviour
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7.2 Social interactions some recent economic
models
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.

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7.3 Social interactions growing body of economic
empirical literature
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
• .

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)
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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

• 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)

--
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8. Cultural diversity participation

• OBJECT
• Cultural diversity expression, origin, creation
• MODALITY
• Cultural participation publics 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

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

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9. Implications in international cultural
indicators/2

• Modality of fruition
• building of perceptions, tastes and preference
• publics 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

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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, )

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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
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11. Application Spouses effects in museum
demand in Italy

• An individuals museum/temporary exhibitions
  attendance at least once (possibly) together in
  the last 12 months ( Upright, 2004)
• explained by
• among other factors, her/his spouses education

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
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11.1 Some results
Individuals museum social attendance explained
by (also) education

• Conclusions
• After having controlled for an individuals
  education,
• spouses education slightly stronger effect
• though, when both attended only (reinforcement of
  similar characteristics and attitudes)

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international cultural indicators