Economics of Art and Culture (eBook)

Bruno S. Frey is a Permanent Visiting Professor at the University of Basel and Research Director at CREMA – Center for Research in Economics, Management and the Arts, Zurich. He was previously a Professor at the Universities of Constance, Zurich, Chicago, Warwick and Friedrichshafen, and he has been awarded five honorary doctorates in five countries. Frey has published 23 books and more than 600 articles in scholarly journals.

Preface 6
Contents 7
Introduction 12
1 What Is the Economics of Art and Culture? 13
1.1 A Challenging Discipline 13
1.2 The Scientific Approach 15
1.3 Fascinating Issues 15
1.3.1 Does the Market Produce Bad Art? 16
1.3.2 Can Arts Policy Be Left to Democracy? 17
1.4 Conclusion 19
Related Literature 19
Aspects 22
2 The Social Value of Art 23
2.1 Contrasting Views 23
2.1.1 Impact Studies 23
2.1.2 Capturing Non-market Benefits of Art 24
2.1.3 Different Views 25
2.1.4 Evaluation 26
2.2 Conclusion 27
Related Literature 28
3 Art Markets and Auctions 29
3.1 Producers and Consumers of Art 29
3.2 Equilibrium Between Supply and Demand 30
3.3 Auctions 30
3.4 Types of Art Market Risks 32
3.4.1 Risks Inherent in Works of Art 32
3.4.2 Unexpected Market Changes 33
3.4.3 Behavioural Anomalies 34
3.5 Why Do People Invest in Art? 35
3.5.1 Diversification 35
3.5.2 Biased Information 35
3.5.3 Taxation and Money Laundering 35
3.5.4 Conspicuous Consumption and Art Investment 36
3.5.5 Love of Art 36
3.6 Conclusion 36
Related Literature 36
4 The Artists’ Labour Market 38
4.1 Starving or Rich Artists? 38
4.2 Why Do People Become Artists? 39
4.3 Who Is an Artist? 40
4.4 Income 40
4.5 Awards 41
4.6 Superstars and Winner-Take-All Markets 41
4.7 Creativity 42
4.7.1 Personal Creativity 42
4.7.2 Institutional Creativity 43
4.8 Are Artists Really Unhappy? 44
4.9 Conclusion 44
Related Literature 45
5 Reproductions in Art 46
5.1 Contrasting Views on Copies and Fakes 46
5.1.1 The Moral View 46
5.1.2 The Legal View 47
5.1.3 The Art Historic View 47
5.2 Beneficial Aspects of Imitations 48
5.2.1 Copies Provide Utility 48
5.2.2 Artistic Capital Is Promoted 48
5.2.3 Supporting Creativity 48
5.3 Harmful Aspects of Imitations 49
5.3.1 Demand Side 49
5.3.2 Supply Side 50
5.4 What to Do? 50
5.5 Conclusion 51
Related Literature 51
Areas 53
6 Creative Cultural Economy 54
6.1 Creativity and Culture 54
6.2 Economic Properties 55
6.3 Conclusion 56
Related Literature 56
7 The Performing Arts 57
7.1 Characteristics of the Performing Art 57
7.2 Demand Side 58
7.3 Supply Side 58
7.3.1 Operas 58
7.3.2 Drama 60
7.3.3 Government Supported Organizations 61
7.3.4 Profit-Oriented Enterprises 62
7.3.5 Co-operative Organizations 63
7.3.6 The Cost Disease 64
7.4 Conclusion 65
Related Literature 65
8 Festivals 66
8.1 An Abundance of Festivals 66
8.2 A Paradox 67
8.3 Features 67
8.3.1 Demand Side 67
8.3.2 Supply Side 69
8.3.3 Possible Future Developments 71
8.4 Conclusion 72
Related Literature 72
9 Films 74
9.1 Characteristics 74
9.1.1 Supply Side 76
9.1.2 Demand Side 78
9.2 Conclusion 79
Related Literature 79
10 Museums 80
10.1 Types of Museums 80
10.2 Demand for Museums 81
10.2.1 Private Demand by Visitors 81
10.2.2 Social Demand 82
10.2.3 Effects on Markets 83
10.3 Supply 83
10.3.1 Cost Structure 83
10.3.2 Firm Structure 85
10.4 Museum Behaviour 85
10.5 Collection Management 88
10.6 Entrance Fees 89
10.7 Commercial Activities 89
10.8 Conclusion 90
Related Literature 90
11 Superstar Museums and Special Exhibitions 92
11.1 Characteristics of Superstar Museums 92
11.2 Special Exhibitions 95
11.2.1 Demand Side 96
11.2.2 Supply Side 96
11.3 Conclusion 98
Relevant Literature 98
12 Cultural Heritage 99
12.1 Many Types of Cultural Heritage 99
12.2 Values Generated 100
12.3 What and How to Preserve? 103
12.4 Conclusion 104
Related Literature 104
13 UNESCO World Heritage List 105
13.1 Content of the List 105
13.2 Positive Aspects of the World Heritage List 106
13.2.1 Attention 106
13.2.2 Protection 106
13.3 Negative Aspects of the World Heritage List 107
13.3.1 Questionable Selection 107
13.3.2 Overextension 107
13.3.3 Not Being on the List Means Being Less Valuable 108
13.3.4 Attracting Destruction 108
13.4 Alternatives to the UNESCO World Heritage List 109
13.4.1 No Intervention 109
13.4.2 Use of the Market 110
13.4.3 Competing Evaluations 110
13.4.4 Random Selection 111
13.5 Alternative Approaches 111
13.5.1 Beneficial World Heritage List 112
13.5.2 Beneficial Alternatives 113
13.6 Conclusion 114
Related Literature 114
14 Cultural Tourism 116
14.1 Types of Tourism 116
14.2 Economic Analysis 117
14.2.1 Impact Versus Willingness-to-Pay Studies 117
14.2.2 Attracting Cultural Tourists 118
14.2.3 Dealing with Overcrowding 119
14.3 Conclusion 121
Related Literature 121
Cultural Policy 122
15 Public Support of the Arts 123
15.1 Government Support of the Arts 123
15.1.1 Direct Government Expenditures 124
15.1.2 Indirect Public Support of the Arts 124
15.2 Arguments for the Public Support of the Arts 124
15.2.1 Market Failure on the Supply Side 124
15.2.2 Market Failures on the Demand Side 125
15.2.3 Comparative View 126
15.3 Constitutional Issues For and Against the Public Support of the Arts 127
15.4 Conclusion 128
Related Literature 129
16 Does Art Make Us Happy? 131
16.1 Happiness in the Arts 131
16.2 Measuring Happiness 131
16.3 Happy Artists 132
16.4 Participation in Cultural Activities 132
16.5 The Relationship Between Art and Happiness 132
16.6 Reverse Causality? 133
16.7 Conclusion 134
Related Literature 134