Working Papers

WP281. Publicly funded cultural institutions – a comparative economic valuation study

Cultural institutions are the main creators of cultural goods and services and are responsible for their accessibility; cultural institutions are also the main beneficiaries of public funds for culture. The aim of this study is to evaluate the division of public resources into different branches of culture that are rooted in political 'adhocism' and historical dependencies. Based on the observed visitations and their costs, a two-stage budgeting model is employed to investigate the change in consumer surplus related to the loss of access to the markets of cinemas, museums, and theatres in Warsaw, the capital city of Poland. The institutions vary in terms of public good characteristics and importance as public bodies, expressed in terms of subsidies. The inclusion of the entire markets of institutions helps to overcome the embedding effect, which affects many single-site valuations. It also enables a comparison between cultural sectors, which is rare in cultural economics. We find that people assign a positive value to the accessibility of all institutions and groups of institutions. However, the estimated value generated by each type of cultural institution is not aligned with the division of subsidies between these markets. For theatres, the total benefits exceed public support. Museums are found to deliver a lower level of benefits to society; the value they generate is outweighed by the subsidies they receive. Cinemas receive little direct support; however, they are valued twice as much as museums. The problem of cultural policy lies in the division of resources, which is much more equal relative to benefits attributed to groups of museums and theatres. At the same time the division between single institutions within all three branches of culture is unequal, with the significant exclusion of non-public institutions.