Economic & social implications
in international cultural
indicators
Elisabetta Lazzaro
University of Padua
Department of Economics
[email protected]
OECD Workshop on the International Measurement of Culture
Château de la Muette, Paris
December 4, 2006
• 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
E. Lazzaro, Economic & social implications in international cultural indicators
2
Outline
1. Economics & cultural indicators
2.Preferences and the demand for the arts
3.Habit formation
4.The role of experience & exposure in taste formation
5.From rational addiction to learning by consuming
6.Toward a more realistic process in the building of taste
7.Economics & the impact of social interactions on
preferences
8.Cultural diversity & participation
9.Implications in international cultural indicators/1
10.Empirical testability
11.An application: Spouses’ effects in museum demand
E. Lazzaro, Economic & social implications in international cultural indicators
3
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...)
E. Lazzaro, Economic & social implications in international cultural indicators
4
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
E. Lazzaro, Economic & social implications in international cultural indicators
5
3. Habit formation
Pollak (1970) JPE
All past
consumption levels
Individual’s current
preferences
Criticism: deterministic, myopic
E. Lazzaro, Economic & social implications in international cultural indicators
6
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
individuals; positive increment of capital
E. Lazzaro, Economic & social implications in international cultural indicators
among
7
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
E. Lazzaro, Economic & social implications in international cultural indicators
8
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/stochastic increase in taste;
+/- increment in taste; heterogeneity of tastes; quality &
individuals’ attitude toward risk; empirical testability; long-run
equilibrium
E. Lazzaro, Economic & social implications in international cultural indicators
9
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
E. Lazzaro, Economic & social implications in international cultural indicators
10
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,
bandwagons, herd behaviour
E. Lazzaro, Economic & social implications in international cultural indicators
learning,
imitation,
11
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.
E. Lazzaro, Economic & social implications in international cultural indicators
12
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
Bauman et al. (1990); Case and Katz (1991);
Evans et al. (1992); Brock (1993); Glaeser
• savings behaviour
et al. (1996); Katz et al. (2001); Jackson et
• computer ability
al. (1997); Farkas et al. (1999); Topa (2000);
Gaviria and Raphael (2001); Sacerdote
• asset market volatility
(2001); Cipollone and Rosolia (2003);
• ….
Miniaci-Parisi (2004)
E. Lazzaro, Economic & social implications in international cultural indicators
13
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)
E. Lazzaro, Economic & social implications in international cultural indicators
14
8. Cultural diversity & participation
OBJECT
Cultural diversity: expression, origin, creation
MODALITY
Cultural participation: public’s 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
E. Lazzaro, Economic & social implications in international cultural indicators
15
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 public’s cultural practices
• consideration of cultural non-partecipation/
consumption and of those factors which impede
potential or latent demand to become effective
E. Lazzaro, Economic & social implications in international cultural indicators
16
9. Implications in international cultural
indicators/2
 Modality of fruition:
• building of perceptions, tastes and preference
• public’s 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
E. Lazzaro, Economic & social implications in international cultural indicators
17
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, …)
E. Lazzaro, Economic & social implications in international cultural indicators
18
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
E. Lazzaro, Economic & social implications in international cultural indicators
19
11. Application: Spouses’ effects in
museum demand in Italy
An individual’s museum/temporary exhibitions
attendance at least once (possibly)* together in
the last 12 months (*: Upright, 2004)
explained by
among other factors, her/his spouse’s 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
E. Lazzaro, Economic & social implications in international cultural indicators
20
11.1 Some results
Individual’s museum “social” attendance explained by (also)
education
Husband
Education of alone
Husband &
Wife alone
wife
Wife &
husband
Respondent 0.277****
0.261****
0.283****
0.226****
Spouse
0.273****
-0.009
0.282****
-0.443
Conclusions:
After having controlled for an individual’s education,
• spouse’s education slightly stronger effect;
• though, when both attended only (reinforcement of similar
characteristics and attitudes)
E. Lazzaro, Economic & social implications in international cultural indicators
21