I don’t see how it does. Americans for the Arts sees it differently – writing about the recent Bureau of Economic Analysis accounts, they write:
Much has been written about the truly mind-bending sum of $698.7 billion in industry expenditures—a substantial contributor to the economy that supported 4.7 million jobs in 2012 and represented 4.32 percent of GDP.
How big is $698.7 billion and 4.3 percent of GDP?
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If the arts and culture in the U.S. was a state, its $698.7 billion would be larger than the Gross State Product for 45 out of 50 states.
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Arts and culture’s 4.3 percent of GDP in 2012 represented a larger share of the economy than Travel and Tourism (2.6 percent), Agriculture (1.2 percent), and Transportation (2.9 percent). Worth remembering is that transportation and agriculture have major federal agencies to ensure their stability and effectiveness, and are represented in the President’s Cabinet.
But let’s think about this.
Start with agriculture. That it accounts for 1.2 percent of GDP is one of the great miracles of the past century of economic growth and technological change. That we can have such an abundance of food at such low cost is a wonder. As this chart shows, in growing countries where people move off the land and into services and manufacturing, incomes rise and agriculture’s share of GDP falls. So we would not say agriculture is a troubled industry based on its low GDP share.
Now consider health care. As this chart shows (see especially exhibit 6), the US leads the world, by a long way, in terms of health care’s share of GDP, at 16 percent, with France coming in second place at a distant 11 percent of GDP. Is there anyone who believes this truly ‘mind-bending sum’ represents success? In fact it is a policy priority of the US government to contain and reverse that figure, to bring it closer into line with other rich nations, who, for a much smaller proportion of GDP, obtain comparable, or better, health outcomes.
So I don’t get awfully excited about culture representing 4.3 percent of US GDP, it is hard to see how that is either a positive or negative result. I expect it to increase – after all, that is the story of ‘cost disease’ that every arts manager is familiar with. The measure of the cultural life of Americans lies elsewhere, in the degree of enjoyment we get from making and contemplating and taking joy in stories, sculptures and songs. How much we spend on it – which is what share-of-GDP measures – is not the point.
Now I don’t get too worried about Americans for the Arts making a big deal out of these statistics. But I do worry about the National Endowment for the Arts getting on this track. In the same piece, they quote NEA Research Director Sunil Iyengar as saying:
“In 2015 and 2016 the NEA and BEA will pilot an effort to collect and report data on arts/cultural production for as many states as possible, and to understand distinctive regional patterns shaping the arts’ contribution to U.S. economic growth. Ultimately, we want to know not only what the numbers and trends are, but how the data can be used by state and regional policy-makers and arts practitioners to spur their local creative economies. It’s doubtful that we’ll get to such detail at the MSA level, but our exploration of the state data is a promising start.”
But how does the BEA data aid policy-makers and arts practitioners to spur their local creative economies? I don’t understand this. There will be variations in share of state-level GDP across states, but there are no policy implications from that, no guide as to whether public spending through grants or tax credits or other policy tools ought to be increased (or decreased). Does it mean that the figures can be used in ‘advocacy’? Again, I don’t get it – how does share-of-GDP indicate anything about whether public spending on culture ought to rise?
In an earlier post I criticized the NEA for moving to use the BEA reports – which are very useful in understanding economic trends, no doubt – in producing ill-considered ‘economic impact’ estimates. And I am increasingly worried that the NEA is losing the plot regarding the point of this research. It is to better understand the sector; the estimates do not contribute to arts policy or funding. As they begin to use the BEA estimates in advocacy it throws into question the whole point of the research.
Relating arts funding to macroeconomic numbers like GDP does not create a precise picture, nor is it intended to. The purpose is provide a broad overview of support for the arts in political entities for the sake of international comparison. Generally, the percentage of GDP spent on culture correlates to more precise forms of analysis. Countries that have higher percentages also have higher numbers of cultural institutions per capita, better systems of arts education, lower ticket prices, and a wider demographic of cultural participation.
UNESCO thus recommends that governments use 1% of total expenditures for culture – a principle that most European countries follow or exceed. In the USA, that would be 39 billion from the Federal government alone. This would be in line with the 11 to 13 billion spent by France and Germany which have a third or quarter the population.
In reality, the U.S. Federal Government only spends 0.003% of its outlays for culture – about 1/300th the amount recommended. The low status and condition of arts in the USA make the negative effects obvious.
Thank you for your comment. The share-of-GDP figure is about all spending on arts and entertainment (including television production, publishing, and so on) by all consumers private and public. It is not a measure of government support or arts education, and certainly not of lower ticket prices (the opposite, in fact).
It’s true, in some cases the numbers are a general catch all, and include parks, zoos, swimming pools, Hollywood movies, and so on. In some countries the numbers are broken down into categories and are much more precise, even with a specific focus on the high arts. It’s difficult to collect numbers for the USA, because funding sources are very scattered, but macroeconomic numbers can be constructed in ways that are useful.
One answer to “how the data can be used by state and regional policy-makers and arts practitioners to spur their local creative economies” is to help identify existing strengths as well as opportunities for increased investment. Having a set of comparable data will help us share best practices in arts support across geo-political boundaries. I believe you have to define a field with replicable measures before you can develop it. I am excited about the NEA/BEA partnership bringing the US into the international creative economy development conversation.
Thank you for commenting. I would say two things in response.
The first is that none of the things that you hope for in the NEA/BEA data are true. It will not identify existing strengths, nor opportunities for increased investment, nor best practices. That’s not a problem with the data – it was never intended for that purpose. The data measure the amount of final spending that occurs in the sector. That’s it. It is good data, but it doesn’t help with investment decisions.
The second is that arts advocates have leapt to a false notion of what the data imply. Americans for the Arts, and now I suppose others, think there is a fresh case for increased spending to be found in this data, There isn’t. If someone wants to make an economic case for increased public support of the arts, they need to know some economics, otherwise they are just wasting their efforts. And, not for the first time, that’s what seems to be happening here.
No question that the BEA data are a blunt instrument at best, but I think this information helps convince policymakers whose received wisdom is that the arts and entertainment sectors in their communities are tiny to replace that wisdom with something closer to reality. We can’t use these data to go into cause and effect, but perhaps we can raise awareness that this sector we are in ought to matter to policymakers?
Though the cause and effect data on “arts create jobs” are hazy, nonetheless policymakers are struggling to figure out in the post-industrial environment what they can do with public policy to enhance local economies. I don’t know exactly what they should do either but continuing to ignore the arts sector on the grounds that it’s too small to matter ought to be a thing of the past.