La donna e mobile -- or Is She? Voter Preferences and Public Support for the Performing
Arts
Author(s): Günther G. Schulze and Heinrich W. Ursprung
Source: Public Choice, Vol. 102, No. 1/2 (2000), pp. 131-149
Published by: Springer
Stable URL: http://www.jstor.org/stable/30026140 .
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Public Choice 102: 131-149, 2000.
© 2000KluwerAcademicPublishers.Printedin theNetherlands.
131
La donna e mobile - or is she? Voter preferences and public
support for the performing arts *
GUNTHERG. SCHULZE& HEINRICHW. URSPRUNG1
Departmentof Economicsand Statistics, Universityof Konstanz,Fach 0138, 78457
1
Konstanz,Germany; Correspondingauthor.E-mail: [email protected].
Accepted 26 May 1998
Abstract. This paper investigates a referendumheld in 1994 on the public supportof the
Ziirich Opera House. The estimates demonstratethat well over 85% of the variancein the
approvalrates across ballot districts can be explained with a few variables characterizing
the socio-economic composition of the electorate.Since these variableshave been shown to
influence the level of public supportfor the arts in representativedemocracies as well, our
result lends supportto the view that in democracies public supportfor the arts is coupled
to the stable preferences of the electorate. This insight may, to some extent, mitigate and
qualify existing fears that culturalpolicy is completely at the mercy of changing government
ideologies and interestgroup influences.
1. Introduction
Since the publicationof the seminalbook by Baumol and Bowen thirtyyears
ago, contemporaryculturaleconomics has developedinto a field of research
that is recognized and acknowledgedby professionaleconomists as well as
scholars primarilyinterestedin cultural affairs.' Even though in many respects still in its infancy, the emerging field has already achieved one importantobjective- namely to show thatcertainaspects of the culturalsphere
lend themselvesto being portrayed,analyzed,and explainedwith the help of
standardeconomic theory.In this endeavor,the arguablymost fundamental
economic relationship,the law of demand,has received a greatdeal of attention. A large and distinguishedbody of literatureexists which identifies the
determinantsof individualdemandin particularfor performingartsservices.2
Takentogether,these studies show thatdemandfor artisticlive performances
is indeed governed by the law of demand, whereby most of the estimated
* This paperwas writtenwhile the firstauthorwas visiting the Departmentof Economics,
StanfordUniversity.The department'sand in particularProfessor McKinnon's outstanding
hospitalityis greatly appreciated.We are indebtedto TakeshiAmemiya, David Throsby,and
an anonymousreferee for helpful remarks.Valuableresearchassistanceby Oliver Schneider
and financialsupportby the Deutsche Forschungsgemeinschaftare gratefullyacknowledged.
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132
short-runpriceelasticitiesrangesignificantlybelow unity.Otherdeterminants
which have been found to be significantare consumerincome (the estimated
income elasticitiesusually vary aroundunity,indicatingthatcultureis a noninferiorgood), the prices of close substitutes,and performancequality.
In the market for the performingarts, however, consumer behavior in
many instances does not really representthe driving force on the demand
side. In many countries,notably in continentalEurope,the performingarts
are heavily subsidized.3In Germany,for example, public funds amount to
over 80% of the budget of public theatersand orchestras.4Under such circumstancesdemandfor the performingartsis to a large extentexpressedvia
the political process and the focus of positive analysis shifts from consumer
behaviorto the determinantsof public support.5In representativedemocracies the principal-agentrelationshipbetween the voters and the respective
governing bodies is impairedby transactioncosts; control over incumbent
representativesis thus limited, and the government,as a result, is relatively
free to exercise policy discretion.Given this political discretion,the essential
question for the political-economyapproachto culturalpolicy is this: what
determinesthe level of public supportfor the artsand to what extent do these
policy decisions reflect the voters' preferences,paternalisticattitudeson the
part of benevolentgovernments,the policy-makers'ideological or personal
preferences,or the influenceof special interestswhich are accommodatedin
returnfor political supportof some sort or other?
Up to now, only a few empirical studies on public supportfor the performing arts have adopted the political-economyviewpoint. A straightforwardapproachis to regress a set of variableswhich are supposedto capture
the median voter's preferences,i.e. some summarystatistics characterizing
the electorate,and a set of variablesportrayingthe interestsof the political
decision-makers,the bureaucrats,and the pressuregroups on some measure
of public supportfor the arts.If the estimatedcoefficientshave the expected
sign and are significantlydifferentfrom zero, one can concludethatthe result
is compatible with the median voter and/or the interest group approachto
policy determination.6The shortcomingof this procedureis that the postulated relationshipbetween the variablesdescribing the electorate'scharacteristics and the voters' preferencescannot be taken for grantedsince voter
preferencesareusuallynot observable.Positiveeconometricresultstherefore
need not reflect the reelection motives of selfish politicians; they are just
as well consistent with the view that cultural policies are not necessarily
coupled to the preferences of the electorate but ratherreflect "a sense of
appropriatenessof a governmentrole in supportingthe culturallife of the
community."7
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133
Which of these two possible interpretationsis correct can only be uncovered by directly investigatingthe voters' preferences.This can be done
either with the help of the contingentvaluationmethod (CVM), which uses
sample surveys, i.e. questionnaires,to elicit the respondents'willingness to
pay for publiclyprovidedgoods, or, in the rareinstanceswherepublicsupport
for the artsis subjectedto referenda- as occasionallyhappensin Switzerland
- by observingthe electorate'svoting behavior.Both routeshave been taken:
Throsby(1984) andThrosbyandWithers(1986) make use of a surveyon the
willingnessto pay for artssupportout of taxes in Sydney,Bille Hansen(1997)
uses CVM to estimatethe willingness to pay for the Royal Theatrein Copenhagen;SchneiderandPommerehne(1983) andFrey and Pommerehne(1989,
pp. 169-172), on the otherhand,analyze referendaon public supportfor the
local theaterand artmuseumin the canton(state)of Basel-City,Switzerland.
Analyzing referendaclearly has distinct advantagesover CVM. Firstly,the
sample size in referendais largerthan in CVM studies. Due to the greater
sample size in referenda,precision problems are far less serious. Secondly,
CVM is subject to a severe bias if the study subjects do not want to reveal
their true preferences,e.g. because they behave strategicallyor they attempt
to presentthemselves in a favorablelight vis-h-vis the interviewer- or some
other person for that matter.This kind of bias does, of course, not occur in
anonymousreferenda.Thereis, thirdly,the well-establishedpresumptionthat
CMV is also biased because the study subjects' indicatedwillingness to pay
in a hypotheticalsituationneed not reflect their actual demand behavior.8
Since referendabetter resemble well-functioningmarketsthan the simulations underlyingCVM studies do, the results obtained from referendaare
liable to be more accuratethanCVM valuations.9
In this paperwe make explicit the actualpreferencesof the voters as expressed and made observableat the ballot box; therebywe shed some light
on the missing link betweenobservablesocio-economiccharacteristicsof the
voters and their preferences.This allows us to speculateabout the influence
of voterpreferenceson similardecisions in representativedemocracieswhere
preferences are not directly observable. We analyze the 1994 referendum
taken in the canton of Ziirich on the transferof financialresponsibilityfor
the distinguishedZiirich OperaHouse from the municipalityto the canton.
We did this with the intentionof confirmingthe basic results of the earlier
studiesby Frey,Pommerehne,and Schneideron the referendatakenin Basel
by using a better suited data set. Referendain the canton of Basel-City are
not well suited for this kind of analysis mainly for three reasons. Firstly,
the sample size is rathersmall; there exist only 21 districts in this canton
which consists of the city and only two additionalmunicipalities.Secondly,
the assignmentof the voters to the districtsis ratherproblematicsince the
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134
votersin the city of Basel are not restrictedto vote in the districtthey live in,
and finally,because of the canton'ssmall size, it is hardlypossible to analyze
voting behaviorwith respectto geographicalstratification.
Ouranalysisindeedshows thatvoterbehaviorandthusvoters'preferences
are closely tied to the variablesusually employed in studies attemptingto
explain the voters' influence via the re-electionconstrainton public support
for the artsin representativedemocracies.Thereis thus reasonto believe that
culturalpolicy is not completely at the mercy of politicians making use of
theirpolicy discretion;culturalpolicy ratherreflects, at least to some extent,
also the electorate'spreferences.
2. The institutional setting
The ZiirichOperaHouse is operatedprivatelyby a stock corporation.However, as is the case with so many other culturalinstitutionsin continental
Europe, it is heavily subsidized.The profit-and-lossaccount for the season
1993/94 shows that 61% of the revenues consisted of funds provided by
the canton, the intra-cantonaltax-revenuesharing scheme, and the municipality. The cantonalfunds amountedto almost one half of total subsidies
received, which correspondsto the legal maximum according to the cantonal law pertainingto the canton'spatronageof culture.Despite these heavy
outsidecontributions,the municipalityfelt unableto continueprovidingsubsidizationat a level requisitefor an operationat the artisticstandardswhich
made Ztirichthe home of one of Europe'sleading operahouses. Considering
that a large majorityof the patronsdo not live and pay taxes in the city of
Zuirich(this, for example, was the case for 69% of the season-ticketholders
in 1993/94), the cantonal authoritiesmet the municipal government'sattitude with understanding.Since a furtherincrease of cantonal subsidies to
the municipalculturalinstitutionwas not possible, transferof full financial
responsibilityto the cantonwas initiated.10
A new law regulatingthe detailsof governmentinvolvementwas required.
Althoughthe law passed the cantonalparliamentuncontested,it also had to
The referendumwas carriedout on
be approvedby the populationat large."11
25 September1994. Even though no majorpolitical party or interestgroup
recommendedthe law to be voted down, it was by no means obvious that it
would survivethe referendum.The consequencesof an adoptionwere quite
would
evident:partof the tax burdenof the votersliving in the city of ZUirich
be shifted to the voters living outside, the quality of the provided services
remainingconstant. The consequences of a defeat of the proposal, on the
other hand, were less clear-cut.Nevertheless,it was generallybelieved that
in the case of a defeat of the proposedlaw the city would have had to scale
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135
down its financialsupportwhich eventuallywould have resultedin the Opera
House becoming an establishmentof only local attraction.The questionthus
was whetherthe medianvoter,who lives outside the city andwill hardlyever
go to the opera, would vote primarilyhis or her pocket-book,or would also
consider the alleged indirectgains that were emphasizedby the committee
supportingthe proposal.The voters in the city, on the other hand, could be
expectedto be in favorof the proposedlaw since, in the case of a defeat, the
tax-payersin the city would probablyhave hadto pay morefor a qualitatively
worse productthanunderthe proposedregime.
The referendumresultedin a substantialmajorityof the electoratemeeting
the proposedtake-overwith approval;73.24% agreed with the new law and
voter turnoutwas 50.4%. Not surprisingly,the highest percentageof agreement, namely almost 90%, was observedin the city of Ziurich.Only in one
districtwas the outcomeclose with 52%of the votersapproving.The number
of municipalitiesin which the law did not meet with the approvalof the voters
was ratherlimited. The law was thus enacted.The cantonalparliamentin the
meantimealso approvedof an outlineplanfor subsidizingthe OperaHouse to
the amountof 316 million Swiss francsfor the seasons 1994/95 up to 2000/01
which marksthe end of the take-over.12
3. Empirical investigation
Our objective is to inquireinto the determinantsof voting behavioron culturalpolicy issues by looking at the specific case of the ZiirichOperaHouse
referendum.We assume thatindividualsvote in theirself-interest(in a broad
sense);13thatis, they supportthe bill if and only if the net benefitthey derive
frommaintaininghigh qualitythroughCantonfundingexceeds the net benefit
of the alternative(a scaled-downopera financedby the City). Our empirical
analysis is confined to the ballot districtsoutside the City of Ziirichfor two
reasons.First,the financialconsequencesof the bill for the inhabitantsof the
city are opposite to those in the rest of the canton. If the city was included,
this could result in biased estimates:citizens of the city opposing opera subsidizationmay still supportthe bill because it reducestheircontributionto it.
Second, while we have socio-economic data for each ballot districtoutside
the city, we have only averagevalues for the entire city, i.e. only one observation.This rendersthe analysisof voting behaviorfor this entity impossible.
Ourapproachproceedsin threesteps: (i) we derivetestablehypotheseson individualvoting behavior,(ii) we presentour empiricalmodel, (iii) we discuss
our empiricalfindings.
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136
3.1. Hypotheseson voting behavior
The literatureon culturaleconomics has identifiedfour reasons why people
value the arts:consumptionvalue, option value, existence (or prestige)value
andthe bequestmotive.The higheran individuals'valuations,the morelikely
he or she is to vote in favorof the bill.
The consumptionand option values are determinedby the same parameters that determine actual demand.14We already mentioned in the Introductionthe considerablebody of literatureexamining demand for live
To be sure,the income elasticitiesestimatedin these studies
performances.1"
need not carry over to the Ziirich audience, yet the considerableempirical
evidence suffices to studythe relationshipbetween income and approvalrate.
It also makes good intuitivesense to assume that cultureis a superiorgood;
as basic needs are increasingly satisfied, their marginalutility diminishes,
and additionalfunds are allocated to "luxurygoods" such as opera tickets.
In addition,the conspicuouscharacterof artsconsumptionmay play a more
importantrole for high-incomegroups.Thus we have
Hypothesis1: The approvalratevariespositivelywith the averageincome
of the voters.As income dataare not available,we approximate(average)
per capitaincome by (average)taxableincome per capita.
Consumptionof culturalgoods has been characterizedas being "positively
addictive"- the more culturalgoods are consumedover time, the higherthe
marginalutility (Throsby 1994: 3).16 Consumptioncapital is built up over
time which contributesto the understandingof, and the pleasure derived
from opera performances.This accumulationprocess will be more rewarding for highly educatedpeople, partlybecause they will acquireand process
informationmore easily. This gives us
Hypothesis2: The approvalrate increaseswith the voters' averagelevel
of education as measured by the share of individuals with college or
universitydegrees.17
A formal degree, however, may not entirely capturethe relevanteducation level, since it relates to the individual'spast. Humancapitalcould have
depreciatedor conversely been built up over time. In addition,the kind of
educationthatcolleges impartmay not be precisely the educationthatmakes
a person treasureopera performances.It is, therefore,appropriateto include
some measurefor the interestan individualcurrentlytakes in politics, in general, and in culturalaffairs,in particular.This interestpresumablynot only
reflects a higher consumptionvalue, but also a higher prestige value, since
individualswho want to be informedaboutpublic affairsprobablyalso care
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137
more abouttheirpolitical and social environment.We have chosen two proxy
variables.First,the subscriptionrateto the two leadingnewspapersserves as
an indicatorfor the level of informationon currentlocal activities (whether
culturalor not) and as a measure of the responsivenessto political issues.
Second, the approvalrate for a proposed constitutionalamendmentwhich
would have allowed the federalgovernmentto pursueits own culturalpolicy
measuresthe genuine interestin public involvementin the culturalsphere.18
We summarizethis in the following two hypotheses:
Hypothesis3: The greaterthe awarenessand responsivenessconcerning
politicalissues as measuredby the newspapersubscriptionrate,the higher
the approvalrate.
Hypothesis 4: The approvalrate varies positively with the general support of culturalpolicy as measuredby the approvalrate for the proposed
constitutionalamendmenton culturalpolicy.
The ticketpriceis not the only cost of enjoyingan operaperformance.The
most importantancillarycosts are travelcosts, which are typically a function
of the distancetraveled,both for public and privatetransportation.This also
applies to the opportunitycosts of traveling,since travel time varies positively with the distancetraveled.Opportunitycosts per unit of time, however,
may vary across differentprofessions.Typically,self-employedpersonshave
higheropportunitycosts of leisure thanindividualswith fixed workinghours.
Retireesshouldhave very low opportunitycosts. Highercosts of operavisits
reduce the net benefit derivedfrom opera visits, implying a lower approval
rate.Thus we can formulatethe following two hypotheses:
Hypothesis5: The approvalrate declines with increasingdistance to the
OperaHouse.
Hypothesis6: The approvalratevariespositively with the shareof people
aged 65-79 and negativelywith the shareof self-employedpersons.
When valuing the utility derivedfrom an object of art,people might also
take the bequest motive into account.19They want to maintainthe cultural
heritagefor futuregenerations.Most likely this motivationwill be stronger
for individualswith children.Since we do not have dataon the percentageof
minors in the total population,we will approximatethe numberof children
by the birthrate.Thus we have our final
Hypothesis7: The approvalrate variespositively with the birthrate.
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138
Before presentingourresults,we will brieflydiscuss ourtest methodology
and the employeddata.
3.2. Testmethodologyand employeddata
The applicationof binary choice models to analyzing voting behavior has
become standardeconometricpractice. Therefore,we will only sketch the
basic idea behindthis approach.20
Binarychoice models relatethe probability
that an individualwill vote "yes" in a referendumto a vector of observable
socio-economic variables. The reason for randomizingis that we observe
attributesof the individualssuch as income, age, etc., but do not know other
unobservablecharacteristicsthat describe the individuals'valuationfor the
opera. Hence, we cannot know the thresholdvalues for the observablesat
which individualsswitch their vote from one choice to the other.We use a
logit representationwhich assumes that the probabilityof voting "yes" can
be describedby a cumulativelogistic probabilityfunctionof these exogenous
variablesXi:
Pi = F(ao + P3Xi)=
1
1 + e-(a+fxi)
(1)
Thus, Pi/(1-Pi)=ea+fxiand takingnaturallogarithmsresultsin
log
Pi
i = a + BXi
1 - Pi
(2)
Naturally,we do not have individual data (for which Pi would not be
observable),but grouped data for each ballot district. Assuming identical
individualswith respect to Xi,21we can approximatethe probabilityPi that
a representativevoter will vote "yes" by the fractionof voters that actually
voted "yes", i.e. Pi = yi/vi with yi denotingthe numberof voters in ballot
district i who actually voted "yes" and vi denoting the number of voters
participatingin the referendumin this ballot district.22Thus, we replace Pi
by Pi to arrive at the regression equation
log
yi/vi
1 - yi/vi
= a + jXi + ui
(3)
Forindependentobservations(binomiallydistributed)it can be shownthat
the errortermin Equation(3) is asymptoticallynormallydistributedwith zero
mean and variance
Var(ui) =
vi/Yi
vi - yi
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(4)
139
Table1. Overviewof the employed variables
Variable
Description
Testedinfluence of
APPROVAL
log[approvalrate/ (1 - approvalrate)]
endogenous
variable
AGEMIDDLE
shareof populationaged 40-64
BIRTHRATE
CULTAMEND
DISTANCE
EDUCATION
opportunitycost
conspicuous
consumption
birthrate
bequestmotive
approval rate for the proposed constitutional culturalsensitivity
amendmenton cultural policy on the federal
level
dummy variable describing the distance to
the city center in five groups 0-15/16-30/3145/46-60/>60km
share of people with college or universitydegree
INCOME
tax revenueper capita as proxy for income per
capita
PAPER
numberof subscriptionsto eitherof the leading
two newspapers
SELFEMPLYD shareof self-employedpeople
monetary and opportunitycosts
education
income
political
responsiveness
opportunitycosts
so thatEquation(3) must be dividedby Var(u) in orderto makethe regression homoscedastic.23This gives us our regressionequation.
We test the hypothesesderivedin the previoussectionby checkingwhether
the respectivevariableshave the expected sign and are significantlydifferent
from zero. Our sample consists of the 170 ballot districtsoutside the City of
ZUrich.All data sources are stated in Appendix A, selected data characteristics are given in AppendixB. The variablesused in the reportedregression
equationsare summarizedin Table 1. Note that these variableshave already
been transformedaccording to Equation (4) in order to make the data set
homoscedastic.All datareferto the ballot districts(which are identicalto the
municipalities)and are eitherabsolutevalues or shares;per capitavalues are
averages.
3.3. Results
The estimationresults are summarizedin Table 2. We see that income and
educationtogetheralreadyexplain over 70% of the variationin the approval
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140
Table2. Regressionresults
(endogenousvariableAPPROVAL)
Variable
(1)
Constant
-0.226
INCOME
(-6.32)
0.000145**
EDUCATION
(2)
0.178
(2.46)
0.0000686*
(3)
0.193
(2.70)
(4.23)
0.0681**
(2.05)
0.079**
0.0000691"
(2.11)
0.0850**
(6.55)
(8.27)
(8.78)
PAPER
(4)
-0.891
(-6.70)
0.0000638*
(2.40)
0.0391**
(4.53)
0.000785*
DISTANCE
-0.162**
(-6.23)
SELFEMPLYD
-0.125**
(-4.29)
-0.0146*
(2.24)
-0.0791**
(-3.55)
(-2.57)
CULTAMEND
0.721**
AGEMIDDLE
(3.79)
0.0240**
BIRTHRATE
(4.63)
0.202**
R2
R2
F-statistic
0.72
0.72
214.47
0.77
0.77
188.25
0.78
0.78
147.59
(3.77)
0.87
0.86
151.87
Number of observations: 170 in all cases; t-statistics in parentheses.** indicates 1%
significancelevel; * indicates5% significancelevel. For data sources see AppendixA.
rates.24This is in line with earlierresults and supportsour hypotheses of a
clear educationalprofile in the opera audienceand that opera performances
are superiorgoods.
The approvalrate diminishes ceteris paribus with increasingdistance to
the city center. This is not surprising,because the utility derived from the
opera - whether through actual consumptionor as an option - decreases
with increasingtravel costs, both in terms of money spent and in terms of
opportunitycost of time. Apartfrom using a five-stepdummyto measurethe
distanceto the city centeras the crow flies, we have also used travel-timeto
the city centerby public transportor by car.The estimatedcoefficientswere
also negativeandhighly significant.We refrainfromreportingthem because
they provideno additionalinsight.
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141
We triedto capturethe generalawarenessof, and responsivenessto political issues by includingin the regressionthe numberof subscriptionsper 1000
inhabitantsto the two leading newspapers(PAPER).25The variableindeed
turns out to exert a significantpositive influence on the approvalrate. This
can be interpretedin two ways: the interest people take in current(political) issues as expressed by subscribingto a majornewspaperis positively
correlatedwith the interest they take in culturalactivities and the pleasure
they derive therefrom.This variableplays a significantrole in addition to
the variablemeasuringeducationbecause the latterrefersto a formaldegree
earnedin the past, whereasthe formerdescribesa revealedpreferencein the
present.Alternatively,one could arguethatthis variablecapturesthe media's
influenceon the electorate.These two alternativeinterpretationsare difficult
to disentangleempirically,especially since the two newspapersadvocatedthe
bill andthe variableturnsout to have a positiveinfluenceon the approvalrate.
The approvalratefor the constitutionalamendmenton culturalpolicy was
includedin the regressionas an indicatorfor genuine interestin the support
of the artsin general. It turnsout to be significant,the coefficient assuming
quite a high value. This points to a correspondingvoting behaviorin the two
referendaon culturalissues.26
The influence of the opportunitycosts of time spent to attend an opera
performancewas measuredin two ways. First, we consideredin the regression equationthe shareof self-employedpeople, since self-employedpeople
typically have higheropportunitycosts than salaryearnerswith more or less
fixed workinghours.This measureturnedout to be significantand of expected (negative) sign as in column (3), however lost its significance as more
explanatoryvariableswere added (e.g. those in column 4). Second, we considered the share of people aged 65-79 years, as these people are mostly
retiredbut not yet too old to go to the opera. This upperlimit is somewhat
arbitrary,butwas dictatedby dataavailability.It turnedout to be insignificant
as well. On the other hand, the influence of the shareof people aged 40-64
yearsturnedout to be significantlypositive. This contradictsourhypothesis6
since this is the groupwith the highest opportunitycosts; moreover,it stands
in contrastto the results derivedby Frey and Pommerehne(1989: 169-172).
Ourresult,however,supportsthe view thatthe performingartsand the opera
in particularhave a conspicuousconsumptionaspect. The averagemarginal
tax rate (for each municipality)as a proxy for the expected additionalcosts
accruingfrom the proposedtransferof subsidizationwas insignificantin all
regressionequations.
In order to test for the influence of the bequest motive (preservationof
the culturalheritage as a legacy to future generations),we introducedthe
birthrateas an additionalvariable.We would have preferredto use the actual
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142
Table3. Elasticitiesof the probabilityto approvewith respectto the exogenous variables,at
the joint mean, regressionEquation(4).
INCOME EDUCATION PAPER CULTAMEND AGEMIDDLE BIRTHRATE
0.04
0.09
0.04
0.24
0.10
0.08
percentageof minorsin the totalpopulation,butthese datawere not available.
Nonetheless,the birthrateturnsout to exerta significantpositive, albeit small
influenceon the approvalrate.Notice, however,thatthe coefficientis likely to
underestimatethe influenceof the bequestmotive, since thereis an opposing
effect of the birthrateon the approvalrate:parentswith small childrenhave
higher opportunitycosts in the form of baby-sitting,etc. The results of previous studiesthatfound the bequestmotive to be of considerableimportance
(Schneiderand Pommerehne1983) is thus corroborated.
To gain more insightinto how the exogenous variablesinfluencethe probability of supportof the bill, we calculate the respective elasticities at the
mean of all the exogenous variablesX:
8pXk(X) :=
BP Xk
ax k P
f(X'3)3 k
X=X
Xk
F(X'3)
= [1 -F(X"f)]6k
Xk (5)
with X being the vector of the means of all explanatory variables and Xk
the k-th element thereof. f denotes the derivative of the logistic function F.27
Equation(5) also shows thatthe regressionparameterBk cannotbe interpreted
as the marginaleffect of a changein the explanatoryvariableon the expected
probabilityof a "yes"vote. Since we have applieda logit representation,the
marginaleffect varieswith the probabilityandis the productof fk andf at this
particularpoint. In Table3 we providethe elasticities for the six explanatory
variablesappliedin regressionEquation(4) of Table2 at theirjoint mean, as
this regressionhas the highest explanatorypower.28
A 10%increasein income will, for example,increasethe approvalrateby
0.4% given that the other variablesstay at their mean values. At first sight,
these values might seem relativelysmall; yet, since thereis a large variation
across ballot districts (cf. Table 4) the variablesdo influence the approval
rate very significantlydespite moderateelasticities at the mean. Moreover,
in logit models (like in normit models) the exogenous variableshave their
highest marginalimpact at P = 0.5; the probabilityat the vector of means
(F(X',8)), however, is 0.68.29 At a high level of approvalthe incremental
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143
effect of increasedincome is relativelysmall (i.e. the logistic functionis flat),
but it is quite substantialif the election is "close".
4. Conclusions
Why is it that governmentsall over the world supportthe arts by way of
public funding, regulatorymeasures, and the provision of informationand
education?Empiricalstudies on public funding of the arts come to the conclusion that some of the observed variancein the levels of public support
can be explainedby the lobbying activitiesof organizedspecial interests,the
ideological orientationof the incumbent government,and a few summary
statisticscharacterizingthe socio-economic compositionof the populationat
large.30
Whereasit is clear - at least in principle- how interestgroups and governmentideology influence culturalpolicy, there are two ways of interpreting the influenceworking throughthe characteristicsof the population.The
characteristicsof the populationare usually interpretedas representingthe
informationpoliticians employ to arriveat appropriatepolicy decisions. In
this view these characteristicsreflect the needs of the population as seen
by the paternalisticpolicy-maker,i.e. simply anotheraspect of government
ideology. A political economist, on the other hand, would ratherexpect that
public supportfor the artsis to some extentcoupledto the voters'preferences,
the reasonbeing thatthe electoratepossesses at least some informationabout
the government'sconductof culturalpolicy andwill accordinglycall the governmentto account at the next election. Accordingto the political-economy
view, the population characteristicsidentified in the empirical studies are
thus interpretedto reflectthe electorate'spreferenceswhich influencecultural
policy via the reelectionconstraint.
Which interpretationis the correct one? Is public support for the arts
mainly determinedby governmentideology, or do the voters' preferences
constrainthe government'spolicy discretion?If culturalpolicy were ideologydriven,public supportfor the artswould be ratheruncertainandmightexhibit
a great deal of volatility since governmentideologies, of course, depend on
the party affiliationof the incumbentand are formed in a complex and potentially unstableprocess within the political parties. If, on the other hand,
culturalpolicy were closely relatedto the preferencesof the electorate,one
would expect to observemuch more stabilityin the conductof culturalpolicy
since individualvoterpreferencesare usually assumedto be fairly stableover
time and the composition of the electorate does not undergo any dramatic
changes in the shortrunundernormalcircumstances.
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144
The referendumwhich we investigatedprovides an outstandinglyrich
data set which is quite incomparableto what culturaleconomists had to be
content with so far. Our investigationindicates that voter preferenceswith
respect to the public supportof the arts as revealedby the referendumdepend to a substantialdegreeon a few observablecharacteristicsof the voters.
Moreover,the identifieddeterminantsof the preferencesturnout to coincide
with those populationcharacteristicswhich are usually employed to explain
culturalpolicy decisions in representativedemocracies.We thereforepropose
the following conclusion:the stabilizinginfluenceof the voters' preferences
on culturalpolicy is not only felt in directbut also in representativedemocracies. The political economy of culturalpolicy should thereforenot leave out
of considerationthe politicians'reelectionconstraint.
Notes
1. The publicationof David Throsby'sinsightfultreatisein the Journal of Economic Literature (1994) documentsthis breakthroughin the economics professionat large.
2. Summariesof these studies are to be found, for example,in Throsby(1994, pp. 7-9), and
in Krebsand Pommerehne(1995, Section 2.1).
3. See, for example,Throsby(1994, pp. 20-22) or Heilbrunand Gray(1993, pp. 230-232).
4. See Frey andPommerehne(1989, p. 42) and Schulze and Rose (1998), respectively.
5. The normativequestion as to whetherthe arts should be subsidized at all, and if so, to
what extent, is the subjectof a relatedstrandof literature.An outline of this approachis
to be found in Throsby(1994, pp. 22-26).
6. The median voter theorem underliesthe study by Withers (1979). The influence of interestgroupsis analyzedin KrebsandPommerehne(1995) and Schulze andRose (1998).
Bernholz (1974) is a classic paper analyzing the influence of interest groups on policy
formationin general.
7. Throsby(1994), p. 22.
8. See, for example, Diamondand Hausmann(1994, p. 54) or Bishop and Heberlein(1986,
p. 134).
9. This cannot/shouldnot be construedas a statementsaying that analyzing referendais
inherentlysuperiorto CVM studies. Even thoughCVM is rathercontroversial(the symposium on contigentvaluationpublishedin the Journalof EconomicPerspectivesin Fall
1994 gives a taste of this controversy),a case againstthe referendummethodandin favor
of CVM can, in principle,be made. Mitchell and Carson(1989 pp. 296-7), for example,
arguethatCVM studysubjectsmay well be betterinformedthanvotersandthat,owing to
systematic abstention,referendadata may not be representative.These claims, however,
have not been corroboratedby comparativestudies so far.
10. There existed an understandingthat in returnfor the Opera House take-over the municipality would assume full financial responsibility for the other three main cultural
institutionslocated in the city of Zuirich(the theater,the symphony orchestra,and the
museum of fine arts), which were also subsidizedby the canton. The municipality'snet
benefitof the whole package,however,was still substantial.It was estimatedto amountto
approximately25 million Swiss francsper year (see Neue ZiircherZeitung,30.8.1994, p.
47) indicatingthat the lion's shareof public supportfor the arts goes to the OperaHouse.
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145
11. On the level of the municipality,of course, the deal also had to be approvedby the
legislative body.
12. See Neue ZiircherZeitung,26.4.1995, p. 54.
13. The view of self-interestedvoting behavior has not gone unchallenged,but empirical
evidence suggests thatit is a good approximationin particularfor single-issue referenda.
See Holcombe (1989) for a discussion, and Pommerehne(1978) and Weck-Hannemann
(1990) for empiricalevidence for Switzerland.More importantly,the empiricalanalysis
itself will show to what extent voter behaviorcan be explainedby the political economy
paradigm.
14. Those variablesthat induce an individualto actually attend the opera will also induce
individualsto value the option to potentially attendthe operain the future.
15. A surveyon demandfor operaperformancesis to be found in van Gemerden(1989).
16. Alfred Marshallwas the first to address this point in his Principles of Economics, see
Stigler and Becker (1977) and Becker (1996) for a discussion.
17. We use the percentageshareof people with a universitydegree or a degree by a college
that presupposesa high-school degree (i.e. "Maturititsschule"and college for primary
school teachers). We exclude those (less advanced)colleges that do not require highschool degrees (such as schools for social workers, HWV, HTL). There is ample empiricalevidence that well-educatedpeople are overrepresentedin artsperformances.See
O'Hagan(1996) for a recent study.
18. The federal referendumwas held on 12 June 1994. The bill was not approvedby the
voters.
19. The bequest motive applies to stocks (like a collection of paintings)that should be preserved ratherthan to flows which cannot be stored (like a live performance).The opera
house is a hybrid phenomenon:it produces non-storableservices, but given the strong
persistenceof subsidy levels (in real terms), a budgetcut means a long-lastingreduction
in size and quality of the opera. Personnelmust be laid off or replacedby less qualified
people, resultingin a reductionof the productivecapital stock.
20. One original reference is McFadden(1973); a good textbook reference is Pindyck and
Rubinfeld(1991, ch. 10).
21. Although largely ignored by the voting literature,McFaddenand Reid (1975) show that
for heterogeneousgroupsthe use of averagesmay lead to an underestimationof individual
elasticities. There is no way of avoiding this problemwithout the knowledge of the covariancematrixof X for each group.Since such dataare not available,our resultsfocus on
the averagebehaviorof the groupand constitutea lower limit for individualbehavior.
22. This approximationis sensible because yi is binomiallydistributedwith frequencyyi/vi.
23. See Amemiya (1985: 275-277) or Maddala(1983: 28-30) for a derivation.
24. Income and educationalone performequally well, in part because they are closely correlated;the partialcorrelationcoefficient amountsto 0.75. We checked our data for multicollinearitywhich is typical for data sets like ours; it turns out not to be a problem.
As expected, EDUCATIONand PAPERare correlated;the partialcorrelationcoefficient
E,p = 0.55 shows, however, that PAPERexerts an independentinfluence beyond the
formal education.In addition,INCOMEand AGEMIDDLEare correlated(R2A = 0.5),
which reflects the life-cycle earningpattern,and consequentlyAGEMIDDLEand EDUCATION,and INCOMEand PAPERare correlatedas well. All other partialcorrelation
coefficients are below 0.25. All insignificantvariables are only very weakly correlated
with any other variable and the more substantiallycorrelatedvariables are all highly
significant.Thus, there is no multicollinearityproblem in selecting and interpretingthe
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146
25.
26.
27.
28.
29.
30.
influenceof the explainingvariables;due to the high correlationbetween income andeducation there remainssome uncertaintyconcerningthe point estimates of the parameters,
but not concerningtheir significanceor sign.
The two newspapersare the conservativeNeue ZiircherZeitung, one of the most highly
regardednewspapersin the German-speakingcountries,andthe Tagesanzeiger,the largest
non-tabloidnewspaperin Switzerland.The Tagesanzeigerusuallytakesa social-democratic
stance.
This interpretationis reinforcedby the fact thatourendogenousvariableandthe approvalrate of the constitutionalamendmentare significantlycorrelated.The partialcorrelation
coefficient is 0.40.
f is the density functionof the hyperbolic-secant-square
distributioneZ/(1 + eZ)2
Since the explanatoryvariableDISTANCEis a dummy variable,we do not reportthe
respectiveelasticity.
Note that the probabilityat the vector of means of X (0.68) is larger than the mean
probability(0.62) since the logistic functionis concave for probabilitiesexceeding 0.5.
See, for example, Throsby(1994, pp. 20-22), or Heilbrunand Gray(1993, chapter13).
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Appendix A: Data sources
All data employed refer to the 170 municipalitiesin the Canton of Ziirich except
the City of Ziirich itself. The municipalitiesare identical with the ballot districts.
We took the following data from theStatistical Yearbookof the Canton of Ziirich
1994/95, partB, municipalitydata ("Gemeindestatistik"),
pp. 327-499: averagetaxable income as a proxy of total personalincome, ("Steuerkraft"
per capita), and the
numberof the subscribersper 1000 residentsto the canton'sleadingtwo newspapers,
the Neue ZiircherZeitungandthe Tagesanzeiger.The birthrate,dataon the age structure,and variousmeasuresfor distancesare also takenfrom the statisticalyearbook.
The birth rate is defined as the percentageshare of live births per total residents.
To portraythe age structurewe have used the share of people aged 20-39, 40-64,
65-79, and over 80 years, respectively. DISTANCE is a dummy variable for the
distancebetweenthe communityandZiurichmain stationthattakes on the value 1 for
a range of 0-15 km, 2 for 16-30 km, 3 for 31-45 km, 4 for 46-60 km, and 5 for any
distance exceeding 60 km. The percentageof residentswith college educationthat
presupposesa high-schooldegree("Maturititsschule"andcollege for primaryschool
teachers) and with universitydegrees are taken from the 1990 census (Eidgendssische Volkszdihlung
1990), Table 6.002-00.01, pp. 218-222. These two percentage
shares are added up to obtain the variable EDUCATION.The 1990 census also
providesthe percentageof variousprofessionsof total employmentin each municipality: top management,self-employed, professions that requirea universitydegree,
unskilled workers,agriculturalsector (Table6.003-00.01, pp.328-337). The results
of the referendumanalyzedare given in the official gazette of the canton (Amtsblatt
des KantonZiirich1994, p. 1656-1668). The results of the federalreferendumheld
on 12 June 1994 on a constitutionalmandateof the federationto supportcultural
is also given by the official gazette on pp.
institutions("Kulturfirderungsartikel")
878-890.
Appendix B: Data description
In Table 4 we present some descriptive statistics characterizingour data set. All
values referto the originaldata,i.e. uncorrectedfor heteroscedasticityas describedin
Equation(3). The datacover the 170 cantonalmunicipalities(ballotdistricts)outside
the City of Ziirich.
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149
Table4. Descriptivestatisticsof the employed data
Variable
Unit
APPROVAL
AGEMIDDLE
BIRTHRATE
CULTAMEND
log (odds ratio)
%
%
DISTANCE
EDUCATION
INCOME
2.8
dummyvariable
%
7.47
SFr/month
2006.3
share
Mean
0.495
31.9
1.19
0.43
Median
0.498
32.0
1.17
0.44
Maximum Minimum Std. dev.
1.92
40.0
2.64
0.81
3.0
6.67
1755.5
5
20.73
8157.0
164.5
10.54
369.0
27.08
-0.521
22.0
0.40
0.14
1
1.79
18.1
0.485
3.7
0.33
0.09
0.98
3.44
1038.8
PAPER
numberper
1000 residents
SELFEMPLYD %
Numberof votes
in ballot district
169.2
11.47
1694.69
Percentageof
approvingvotes %
61.46
916
62.19
27102
87.26
1.4
2.88
113
37.27
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79.8
4.47
2600.47
10.70