Cultural economics

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Cultural economics is a branch of economics interested in the economics of creation, distribution and the consumption of works of art. For a long time confined to visual and performing arts in the Anglo-Saxon tradition, its spectrum widened since the beginning of the 1980s with the study of cultural industry (cinema, book or music publishing), and the economy of cultural institutions (museums, libraries, historic buildings). It corresponds to the Z11 dimension of the classification of the Journal of Economic Literature.

[edit] Introduction

Cultural economics is concerned with arts in a broad sense. The goods considered have creative content, but that is not enough to qualify as a cultural good. Designer goods are not considered to be works of art or culture. Cultural goods are those which value is determined by their symbolic content, and not their physical characteristics.

Economic thinking has been applied in ever more areas in the last decennia, including pollution, corruption and education. Works of art and culture have a specific quality, which is their uniqueness. There aren't two Mona Lisas. As their is no equivalent item for each, classical economist Adam Smith held it was impossible to value them. Alfred Marshall noted that the the demand for a certain kind of cultural good can depend on its consumption: The more you have listened to a particular kind of music, the more you appreciate. In his economic framework, these goods do not have the usual decreasing marginal utility. Key works in the cultural economics as such were those of Baumol and Bowen (Performing Arts, The Economic Dilemma, 1966), of Gary Becker on addictive goods, and of Alan Peacock (Public Choice).

[edit] Baumol and Cultural Economics

The seminal paper by William Baumol and Bowen introduced the term cost disease for a relative cost growth of live performances. This cost growth explains the increasing dependency of this kind of art on state subsidies. It occurs when the consumable good is labour itself. To perform the play "Tartuffe" in 1664, you needed two hours and twelve actors. In 2006, you still need two hours and twelve actors. Now, the artist trade needs a considerable investment in human capital, and needs to be paid accordingly. The artists' pay need to rise along with that of the population in general. As the latter is following the general productivity in the economy, the cost of a play will rise with general productivity, while the actors' productivity does not rise.