I’ve been away from the blog for a while, but I just can’t keep myself away from economic impact studies of the arts. The latest is from Arts Council England – you can read the report here. Three things:
First, the goals of the study are not clear. Britain’s Office of National Statistics conducts an annual business survey from which estimates can be derived of Gross Value Added from different sectors, and these figures form the basis of the (2015) arts-sector estimates contained in this report. In other words, we can look up the size of the book publishing, or sound recording, or performing arts sectors already, without a new report being commissioned. Since these numbers on their own have no discernible policy implications, the point of the exercise is not evident.
Second, the heaps of ridicule that have been levied on the tactic of using “multipliers” to gauge the “true” impact of the sector did not prevent the Arts Council from jumping in. So Gross Value Added is “multiplied” by a factor of 2.30, and employment is “multiplied” by an even bigger 2.77 (note the precision!) such that even though figures show 131,200 employed in arts and culture industry (for the sectors included in this report) the “aggregated employment impact” becomes 363,000. The report’s authors do not attempt to justify exactly what they are measuring, which is just as well. Note that if we did an economic impact study of each sector in the UK economy, and added up the numbers, we would find that employment in the UK is 2.77 times higher than employment in the UK. Yes, you read that correctly. This is simply an attempt to take a true figure and make it seem bigger, to inflate its importance. But not one decision-maker will take it seriously, and it deeply harms the parts of the report that might be credible.
Third, in its executive summary, and press release, and the main body of the report, we have this (p. 29 of the main report): “Based on the data provided by Arts Council England on the public funding of NPO’s for our analysis in Section 7.4, Cebr [Center for Economics and Business Research] estimates that £5 of tax is contributed by the arts and culture industry for every £1 of public funding provided.” There are different ways to interpret this, but it seems to me that the report’s authors clearly want us to draw a link between the two figures. Granted, they are not saying explicitly that public funding is the direct cause of the tax revenue. But they are saying … what, then? It doesn’t tell us that the public funding of the arts is well-spent, or should be higher or lower, or anything really about evaluating public expenditure on the arts. Neither does the 5:1 ratio tell us much – if I thought of a primarily-private sector part of the economy that somehow received a very small public subsidy I might say it had a ratio of tax revenues to subsidy much higher than 5:1. Indeed, cutting the Arts Council budget would more than likely make that 5:1 ratio even higher – cutting its budget in half is unlikely to reduce tax receipts from the sector by as much as a half. So I’m left with the conclusion that the impression they want to leave with the reader is in fact that public expenditure on the arts is a “good investment”, generating more in tax revenue than the public subsidy that caused it. I’m open to other interpretations here.
And so, as so often with such reports (in the US as well) I’m left wondering what the point is. The report has the appearance of something to do with arts policy, but there are no policy implications. It has the appearance of sophisticated economic analysis, but no report that ventures into multipliers and “aggregate impact” will be taken seriously as a piece of economic research. These reports are not produced cheaply, they represent significant expenditure by the Council. And for what?