It was quite a shock to me this year when I realized that the economic affect of culture has more to do with the market exchanges that occur as artists work than with ticket sales when they perform, or show. Whether the society likes what is being presented has less to do with actual economic activity. If a particular event bombs, or a company bombs or an artist's work just doesn't sell, those people still had to rent venues, buy scripts, materials, costumes, use sell and rent sheet music, sign recording contracts, use specially skilled tax prepareres, arts managers, contract teachers, pay school fees, buy arts books, arts agents and all the rest of the special services only the arts use, even the ones who will eventually bomb. That's the arts economy really, and it's that business that keeps cities and neighbourhoods hopping. The actual ticket sales are just the tip of the iceberg!

One of the problems here in the UK is that although measurement is necessary, it has created a situation in which governmental funding for culture has become driven by the demands of other policy agenda (contribution to local economies, social inclusion and so forth).

From what I understand, I know that in the US, funding is less centrally driven, so this could be a bit UK-centric. Nevertheless, it kind of chimes with, say, what the RAND foundation have written about and certainly with some of the conversations I had when visiting the US in July.

This said, it is encouraging that in the UK, there is a growing awareness that funding demands must take into account more intrinsic values of culture. In other words, you're not going to get too much of an economic effect if nobody likes the stuff in the first place. How, then, do you measure the intrinsic value of culture so that cultural practitioners have a reliable measure of performance and expectations are set around things accordingly?

It's something we've been working on: http://www.demos.co.uk/publications//culturallegitimacy

Hope that's useful.