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Economic Impact of Culture and Valorization of Small Cultural Events: Contingent Valuation Study of International Sculpture Symposium in Grosuplje

Author: Andrej Srakar PhD Student, Faculty of Economics, University of Ljubljana

Abstract

The paper addresses the question on the methodology to valorize the economic impact of a cultural event. The theoretical debate on economic impact and contingent valuation studies is briefly presented, as well as different concepts of value of culture. Next, a case study of a small cultural event is performed using a contingent valuation method, following guidelines by NOAA Blue Ribbon panel, as well as using a particular methodology developed in studies by Hadker, Sharma, David and Muraleedharan (1997) and Verbi and Slabe-Erker (2006). The question of appropriate method to evaluate such events is discussed in conclusion.

1. Introduction

The paper presents the methodologies used to economically valorize cultural events and presents a valuation of international sculpture symposium in Grosuplje in Slovenia. Methodologies to valorize cultural events can be broadly classified into three strands (Seaman, 2003): firstly, economic impact studies are used to valorize impacts on short-run spending; secondly, revealed preference methods (hedonic pricing, travel cost) are used to valorize long run growth effects; thirdly, stated preference methods (contingent valuation, choice experiments, conjoint analysis) are used to quantify the consumer valuation. In the paper we firstly focus on economic impact studies, and present arguments showing number of fallacies of this methods that were presented by cultural economists in the last decades. We secondly present stated preference methodology, which is according to some authors (Bille Hansen, 1997) the only method capable of valorization of total economic value of an event. In the final part of the paper, we apply the arguments presented in first part of the paper to valorize the sculpture symposium in Grosuplje in the eyes of its inhabitants.

2. Value of culture, culture as a public good

There have been strong debates over the term value of culture in past years in cultural economics. Three basic concepts of value stand to the fore: economic use (or market) values, economic non-use values and cultural values. According to Debreu, value is used synonymously with market price times the commodity volume. Use or consumption value is still assumed to drive the economy (Debreu, in: Hutter & Shusterman, 2006). In past thirty years the prominent focus when discussing value has been devoted to external effects or external economies, as developed in the work of Alfred Marshall. Examples for positive external effects are education and skills, while negative external effects can be presented in form of pollution or other kinds of environmental diseconomies. When applied to arts, one can on one hand speak about externalities on the form of indirect or induced effects, usually evaluated in additional production, value-added and employment effects on local economy, which are usually evaluated by economic impact studies, and on the other hand about non-use values, which are values of a cultural event of artifact for those who do not directly use it. Non-use values can be classified to (Frey & Pommerehne, 2001): 1) Option value a value that a good possesses for having and option to use it in future, despite perhaps not using it ever before 2) Existence value a value that a good has just because it exists, though perhaps one will never use it 3) Bequest value the value that a good has for our children and other generations to come 4) Prestige value the value that a good has for our identity and feeling of pride and belonging to a certain value or system of values 5) Educational value the value for the system of transferring knowledge and values to future generations1

Beside use and non-use values in the past twenty years some economists (Klamer, 1996; Throsby, 2001) pointed towards cultural values as a concept which should bring closer economic valuation and aesthetic considerations of value. Throsby speaks about aesthetic,

Other authors have slightly different classifications, e.g. Bille Hansen (1997) uses also the vicarious consumption value , while others tend to use the term altruistic value (Navrud & Ready, 2002).

spiritual, social, historical, symbolic and authenticity value as components of cultural value, which he also links to the term cultural capital (Throsby, 2001: 28-29).

Total economic value of culture therefore falls into three main parts. Use value is defined as the maximum willingness-to-pay (WTP) to gain access to the cultural experience. However, a cultural experience might generate values even to those who do not visit it. Non-use values, described by the latter approach include benefits that people enjoy despite not using the cultural goods themselves. Finally concept of cultural values encapsulates value of an artwork or cultural event outside of its place in the economic system. The total economic value of cultural experience will then include both use values, non-use values and cultural values.

3.

Existence of externalities of cultural activities Economic Impact Studies vs.

Contingent Valuation

According to Bruce Seaman (Seaman, 2003), there are three broad categories of the economic impact of a cultural asset: first, there is the consumption value, including the value received by both users and non-users, in the previously determined sense; second, there are long-run increases in productivity and economic development linked to the cultural asset; and finally, there are short-run net increases in economic activity, related to the net injections of new spending into the region as a direct consequence of the cultural asset. These economic impacts can be summarized according to Seaman in his notorious equation as2:

In pragmatic sense, the most commonly use methods to evaluate the economic impact, socalled economic impact studies, measure only the short-run spending impact side of the equation. It has been therefore proposed to use remaining two types of methods, with an obvious pronunciation in the past years on the contingent valuation methodology3, consisting

In his 2006 paper, Seaman repeats that for proper valuation of a cultural event, one should include results of both economics impact study and contingent valuation, but warns that mere addition would not present a proper result. 3 Ready and co-authors point that there is a potential for hedonic pricing and travel cost methodology, yet these two types of methods remain largely unused in cultural economics (Ready et al., in: Navrud & Ready, 2002).

of questionnaires, asking for the respondents willingness-to-pay for a particular cultural good in question.

The main failures of the economic impact methodology have been summarized already by Seaman (Seaman, 2003: 228-229): 1) Direct base (spending diversion) error: the failure to subtract local sources of funds and non-local uses of funds from the budgets of the subject entities 2) Induced (ancillary spending) base error: the erroneous attribution of all hotel, restaurant, retail and other spending by non-local arts consumers to the existence of those arts organizations or arts events) 3) Multiplier (indirect impact) error: the failure to adapt the multiplier to the specific region, including the failure to recognize that smaller less self-sufficient regions that are more likely to have more net injections of non-local spending also have smaller multipliers because of more extensive spending leakages 4) Supply constraint (crowding-out) error: the failure to consider whether the local transport and hospitality infrastructure could simultaneously absorb the influx of arts event visitors as well as the 'normal' flow of local tourists 5) Ex post verification error: the failure to verify whether any observed closures of local arts organizations or temporary interruptions of activity due to labor have had any adverse economic effects consistent with prior economic impact claims 6) Policy interpretation (partial vs. general equilibrium) error: the incorrect presumption that a positive economic impact is a sufficient condition to make a claim for government support without considering the opportunity costs of diverting such

support from other potentially higher rate of return public sector investments

The failures have been considered and added by South-African economists Snowball and Antrobus as (Snowball & Antrobus, 2006): 7) Defining the area of study: Depending on how the area of impact is defined, widely differing results for a particular festival can be obtained. The larger the area under consideration, the less would be the leakages and thus the greater the multiplier and the reported economic impact. 8) Including time switchers and casuals: Another area of the expenditure that could inflate economic impact figures and should not be counted is from visitors who would

have come to the area regardless of the event being measured, referred to by Crompton (1995) as time switchers and casuals . 9) Determining the size of the production and employment multiplier: The size of the multiplier depends on the extent of the leakages from the economy being considered. The quite common practice of using a multiplier from similar studies done in other areas is highly debatable. The employment multiplier is also regarded problematic, as it frequently provides an incentive to overstate employment figures in order to argue for government funding. 10) Non - including non-market costs and benefits: in light of previous classification of value of culture, the studies frequently (in correctly) assume they are the only source of cultural value and impact

Is should be noted that since most (and best) of the economic impact studies are made according to input-output methodology, they suffer from two general types of failures, specific for this methodology: 11) Homogeneity of products: input-output tables are insensitive to changes in technological structure of products 12) Linear structure of input-output coefficients: non-sensitivity to economies of scale

Due to all the failures, which could be immediately observed in number of economic impact studies (for critiques see e.g. Snowball, 2008; Sterngold, 2004; Madden, 2001; Snowball & Antrobus, 2006; Seaman, 1987), cultural economists began pointing to contingent valuation methodology in hope it could provide a more firm answer to the problems of the valorization of impact of cultural events. The contingent valuation methodology, which came to the forefront of attention in nineteen-eighties, due to accident of Exxon Valdez in 1989, proved to be a better (in fact the only) suited tool to evaluate the value of public goods. The accident of Exxon Valdez prompted the famous Blue Ribbon Panel evaluation (perfomed for National Oceanic and Atmospheric Association - NOAA), chaired by Nobel laureates Kenneth Arrow and Robert Solow, which lead to the conclusion, which remains widely accepted till today: CV (contingent valuation) produces estimates reliable enough to be the starting point of a judicial process of damage assessment, including passive -use values (i.e. nonuse values)' (Arrow et al., 1993: 4610).

First contingent valuation study in cultural economics has been made by Throsby and Withers (Throsby & Withers, 1986). First real wave of such studies in culture came in the nineties, provoked by the positive evaluation by the Blue Ribbon Panel. The findings of contingent valuation studies in culture have been summarized by Pearce, Mourato, Navrud and Ready (Pearce et al., in: Navrud & Ready 2002): (a) Few economic valuation studies have been undertaken in the area of cultural heritage (either built or movable heritage). (b) The existing studies vary widely both in terms of the type of good or activity being analysed and the type of benefit being evaluated. (c) Generally, the findings suggest that people attribute a significantly positive value to the conservation or restoration of cultural assets. (d) Several of the studies show a relatively large proportion of respondents stating a zero WTP (up to 89%). (e) Values for users (visitors or residents) are invariably higher than for non-users. (f) Non-visitor benefits are positive. (g) The issue of competing cultural goods and of part-whole bias (when the value of a group of cultural goods is not significantly different from a smaller subset of those goods) has been insufficiently addressed by the existing studies. (h) Little attention has been given to the periodicity of the elicited WTP values. (i) Authors are dedicating a great deal of attention to presenting an accurate description of the good to be valued, presented in a form that meaningful to the respondent

The findings by researchers (e.g. Bille Hansen, 1997; Santagata & Signorello, 2002; Carson & Mitchell & Conaway, 2002; Mourato & Contoleon & Dantchev, 2002) prove that contingent valuation is probably the only available method we have to evaluate the externalities of cultural activities (cf. Bille Hansen 1995). They also prove that non-use values are an important, sometimes decisive part of the value of any cultural activity, and that therefore the public nature of culture can be both measured and proved important. In her evaluation of Royal Theatre in Copenhagen, Bille Hansen concludes: Thus, if the subsidy shall be justified, it has to be on account of the non-market benefits of the Royal Theatre.' (Bille Hansen, 1997: 3). Therefore if there exist any externalities of culture in a classical economic sense, they can at present be measured (regretably, as stated by Epstein (2003)) only by contingent valuation studies, evaluating also the non-market or non-use values of culture. By proving the existence of those we are able to prove that cultural goods have public good status, which derives from
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the basic definition of externalities i.e. the effect whenever the well-being of a consumer or the production possibilities of a firm are directly affected by the actions of another agent in the economy (Mas-Colell & Whinston & Green, 1995). If we are able to prove the existence of non-use values of cultural events, we are able to prove that cultural artefacts have externalities, i.e. they can be seen in light of public goods terminology. As presented before, the proof of this can be found in numerous contingent valuation studies, made in the field of culture in past decades (e.g. Bille Hansen, 1997; Carson & Mitchell & Conaway, 2002; Santagata & Signorello, 2002; Mourato & Contoleon & Dantchev, 2002), which all prove the existence and importance of non-use values in the valuation of cultural goods. Perhaps the proof of the above can be done also by valorization of cultural values yet this question remains to be answered. In any way the existing literature and findings from the above mentioned studies don't give many reasons for doubt: cultural goods have externalities which are reflected in non-use values, and can at present be evaluated only by means of contingent valuation studies.

4. Case study: Grosuplje City of Sculptures

City of Sculptures is a sculpture project, which was started by the Slovenian Sculpture Association and City Municipality of Grosuplje in 2004, with the objective of bringing cultural identity to a small, suburban town. During seven years of its taking the project acquired 24 new sculptures by international artists, and gained extremely positive feedback from local public, while experts see in it a slovenian model example of urban regeneration by art projects.

It was my intention to evaluate the actual contribution the project brings to the everyday life of the community seen in the eyes of the inhabitants. The project receives the subventions in the amount of ca. 20.000 yearly (Table 1), which are provided by local authorities and sponsors. In 2007 (immediately after my study) the municipality funds have been cut off due to political incorrectness (the Mayor of Grosuplje, the founder and main supporter of the project belonged to different political option than the majority of city councilors). So the research gained also an unintented political message, proving that the funds, actually cut-off and allocated for 'more beneficial' activities, were not over-rated but on the contrary, extremely under-rated.

Yearly budget GrosupljeCity of Sculptures Grosuplje Municipality Ministry of Culture RS Sponsors SKUPAJ

Year 2004 7.000,00 2.500,00 6.000,00 15.500,00

Year 2005 8.000,00 2.500,00 7.000,00 17.500,00

Year 2006 9.000,00 2.500,00 7.500,00 19.000,00

Year 2007 0 3.000,00 11.000,00 14.000,00

Table 1: Yearly Budget of project Grosuplje City of Sculptures (source: author's research)

When trying to valorize the symposium I was brought to a number of methodological considerations. Firstly, contingent valuation was obviously the only method possible to valorize the symposium. Grosuplje is a small town (ca. 17.000 inhabitants) and the symposium was brought with the main reason of its regeneration and bringing a new identity the town needed, as it was previously mostly considered as a sleeping place for people working in nearby Slovenian capital city of Ljubljana. When making the valorization the symposium took place for the fourth year. For all these reasons the economics effects of the symposium would be negligible, as there were very few turists visiting Grosuplje because of the symposium, and most of the value of symposium was to be observed in the eyes of Grosuplje inhabitants. For this reason economic impact methodology would be completely useless, even if all the fallacies were taken concern. Travel cost method would be inappropriate for the same reason (very few outside visitors), while hedonic pricing method would also be mostly inappropriate as there were no particular related private goods, which would be affected by the value of symposium. Again, all these methods would possibly be appropriate in the future years if the symposium was to develop and bring more tourists and material benefits to the town.

Secondly, the survey instrument was chose to be telephone interviews. Although some authors (e.g. Ready et al., in Navrud & Ready, 2002) claim that personal interviews are more or less the only reliable method to perform a CV study, we refer to claim by the NOAA panel that face-to-face interviews are usually preferable, although telephone interviews have some advantages in terms of cost and centralized supervision. (Arrow et al., 1993). Due to financial limits (the survey was part of my masters thesis project and was only in part covered by Municipality of Grosuplje) we therefore chose the telephone interviews as the survey instrument. The survey was performed in April 2007, using the sample of interviewees chosen among the inhabitants of Municipality of Grosuplje, having own income sources. Survey questionnaire consisted of four parts, first three in accordance to the CVM guidelines, and an
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added fourth, mostly irrelevant for my study interests, which was prepared and ordered by the Municipality of Grosuplje. The survey grouped the participants into six categories, according to their yearly income, and then presented each category with three basic valuation questions. First two, dichotomous questions presented them two different sums, which varied according to their category of income. Second sum depended on the first one, and was twice the first one, if the interviewee said yes to the first sum, and half the first one, if he answered negatively to the first question. The third question, which was decriptive and was the same for all categories, asked the for the final and largest amount of interviewees contribution. The methodology closely follows the previously made studies by Verbi and Slabe-Erker (2005) and Hadker, Sharma, David and Muraleedharan (1997).

Several steps wrere taken when analysing the results of the empirical study. Firstly, particular care was addressed to follow the NOAA guidelines as much as possible. Firstly the contingent scenario was formed with consideration for time and space limits, and was pretested during a pilot study on several frequently visited places in Grosuplje, as well as by telephone. On the basis of pilot study, the final wording of the questionnaire was decided. We decided to include a sentence to address the budget limit, namely we warned the respondents that they won't be able to use the money for more common purposes (paying the monthly bills, going to sports or recreation venues, paying for educational activities, etc.). The payment mechanism chosen was voluntary fund, as payment through taxes was both unlikely (this is only a municipal project) as well as subject to suspicion and protest, as tax issues were rather hotly debated in Slovenian press at the time. Embedding issue was addressed by warning the respondents that they are paying only for the Grosuplje symposium and not for culture in general. Respondents were also given prices of sculptures and sculpture tools, to make them better acquainted with the budget situation of the symposium. In the scenario we also included a warning that we are asking only for the individual contribution (and not the contribution of the whole household), as the units of our survey were all Grosuplje inhabitants with own source of income.

Particular care was taken also about sequencing of questions in the questionnaire. As is well known, the most problematic question in CV studies is the income question, which is the casue of most protest answers. The problem we faced was that elicitation questions needed the answer on mothly income question for the double dichotomous choice (DC) question to be properly addressed and the respondent placed in the proper income category. We therefore decided to start with a general, attitude questions, next we asked for sociodemographic data,
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including income question at the end (with an obvious pronounciation to the respondent that the answer will be used only for research purposes). Immediately following that was contingent scenario and elicitation questions. The questionnaire ended with a part, addressing the cultural events in Grosuplje, which was required for the co-financing from the municipality, and was largely irrelevant for our purpose. Finally, at the end we included two questions for the interviewer, about how much he feels the answers given by the respondent were reliable and credible.

All together there were 501 final answers, which represent ca. 25% response. We have to note that the sample chosen is rather large, and that almost all Grosuplje households with telephone were called during the survey. After completing the field survey, we firstly eliminated three groups, which were suspects for protest or strategic answers. Firstly, all those not stating their monthly income were eliminated. Secondly, we eliminated those who didn't want to answer the first DC question or didn't want to state their maximum willingness to pay. Finally, we also eliminated all those, for whom the interviewer was not convinced of the reliability of their answers. This all together left us with 424 valid answers. According to Mitchell and Carson (1989), the minimum size of the sample to secure 85% reliability would be 683, but we note that in a lot of studies (e.g. studies in Navrud & Ready, 2002) the sample can be smaller.

Following the analysis by Verbi and Slabe-Erker (2005), we firstly calculated the observed willingness to pay, which was to be derived from multivariate OLS regression of the maximum willingness to pay to a set of independent variables. The results of the OLS regression are given in Table 2:

Dependent variable N S.E. R2 R2 adj. F (3, 420) Independent variables Constant DOH KORIST

WTP 424 15,7161 0,117 0,110 18,464 b 0,802 4,104 -2,806 S.E. 1,165 0,645 1,117 p(F) t 0,688 6,358 -2,513 0,000 p(t) 0,035 0,000 0,012

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POZNGMK

-2,590

0,960

-2,697

0,007

Table 2: Results of the linear regression model

Final WTP was estimated at 10.73 . The explaining variables, which were significant with 95%, were monthly income (DOH), which was highly significant, with every higher category of income contributing to 4.10 of additional WTP value; next number of uses (KORIST) that the respondents saw in cultural events also proved to be significant, with every new unit of use contributing 2.81 of additional WTP4. Similarly, the variable measuring the respondent's knowledge of the symposium (POZNGMK) also proved to be significant, with every additional category of acquaintance with symposium giving 2.59 of additional WTP5.

As pointed out by Hadker, Sharma, David and Muraleedharan (1997), while the open question method gives us responses which are not prone to starting point bias, they suffer from other methodological problems, most of all they appear to be prone to strategic behavior on the side of the respondents. On the other hand, the closed questions (most of all DC questions) can provide the respondents with a situation closer to real-market decisions and are more immune towards their strategic behavior. Some authors (Hanemann et al. 1991) therefore name them as true willingness to pay value, in contrast to observed willingness to pay value whihc results from open questions method.

In the following we therefore tried to come to the true value of willingness to pay, which was enabled by the specific elicitation method used in our study6. We use the fact that the value function is a function of true willingness to pay on the side of the respondent. We can basically state that in an equation TWTP = x' + e, where x' is a vector of explaining variables, a vector of regression coefficients, and e a stochastic error term. We use the notation where bm is the amount, offered to respondent in a first DC qeustion, while bl is the amount in case he declines the first offer (it is half the first amount), and bh is the amount in case he accepts the first offer and it amounts to double the first amount.

The variables KORIST and POZNGMK were reversely ordered, where lower number on scale means more uses or more knowledge of the symposium. 5 See previous footnote. 6 Very similar method is used by Santagata and Signorello in a study on Napoli Musei Aperti (in: Navrud & Ready, 2002), yet they apply only single DC question, followed by an open question.

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We therefore try to maximize the following maximum likelihood function:

L = Pdd * Pdn * Pnd * Pnn where

Pdd = P (bm TWTP in bu TWTP) = P (bm TWTP | bu TWTP) * P (bu TWTP) = P (bu TWTP) = = P (bu x' + e) = P (e bu - x') = P (z 1/ * (bu - x')) = 1 (1/ * (bu - x')); Pdn = P (bm TWTP in bu TWTP) = P (bm TWTP bu) = P (bm x' + e bu) = P (bm - x' e bu - x') = P (1/ * (bm - x') z 1/ * (bu - x')) = (1/ * (bu - x')) - (1/ * (bm x'));

Pnd = P (bl TWTP in bm TWTP) = P (bl TWTP bm) = P (bl x' + e bm) = P (bl - x' e bm - x') = P (1/ * (bl - x') z 1/ * (bm - x')) = (1/ * (bm - x')) - (1/ * (bl - x')); Pnn = P (bm TWTP in bl TWTP) = P (bm TWTP | bl TWTP) * P (bl TWTP) = P (bl TWTP) = P (bl x' + e) = P (e bl - x') = P (z 1/ * (bl - x')) = (1/ * (bl - x')); are probabilities that the respondent accepts the given amount, d and n are subscripts denoting saying yes (d) or no (n) to either the first or the second DC question, and denoting the multiplying over all possible values of the variable.

To explain the respondents true willingness to pay, we therefore have to estimate the bivariate probit model, which will take into account the correlation of both questions and their standard errors. The average value of willingness to pay will be calculated following the formula by Haab and McConnell (Haab & McConnell, 2002):

WTP

= - 0 / 1 ,

where 0 is the value of the regression constant, and 1 is the value of the regression coefficient for the explaining variable in the probit regression to estimate the response to the offered amount in the DC question. The explaining variables are starting (BIDZ) and following (BIDDR) amounts of offered sums, while the dependent variables are responses of
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respondents to the offered amounts (PONVR and PONVR1). The results of the bivariate model are given below in Table 3:

Dependent variable Explaining variable Constant BIDZ Dependent variable Explaining variable Constant BIDDR (1,2)

PONVR B -0,579280 0,064869 PONVR1 B -0,578258 0,062038 -0,294 Z 4,942074 -4,451539 p(z) 0,000 0,000 0,000 Z 1,678784 -1,899067 p(z) 0,0932 0,0576

Table 3: Results of bivariate probit model calculating the WTP

Based on these results, we can calculate the true willingness to pay for the firstly offered amount to be 8.93 , and for the secondly offered amount to be 9.32 . The coefficient of correlation among standard errors of the both regression equations is not negligible and significant, which shows that we gained on efficiency by estimating bivariate model.

To estimate the theoretical validity of the survey results we also calculated a bivariate probit equations using all the explaining variables (Table 4).

Dependent variable Independent variable Constant DOH POZN ATT3 KORIST Dependent variable Independent variable Constant DOH

WTP B 0,165 -0,136 -0,151 0,180 0,272 WTP1 B -0,744 -0,109 S.E. 0,271 0,061 Z -3,181 -1,778 p(z) 0,000 0,075 S.E. 0,334 0,057 0,033 0,072 0,100 Z 0,495 -2,364 -4,558 2,509 2,705 p(z) 0,620 0,018 0,000 0,012 0,007

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KORIST POZNGMK (1,2)

0,258 0,664 -0,368

0,118 0,145

2,185 4,573

0,029 0,000 0,000

Table 4: Results of bivariate probit model testing theoretical validity

where WTP is a binomial variable, denoting saying yes or no to the first dichotomous choice question, and WTP1 a binomial variable denoting saying yes or no to the second dichotomous choice question. POZN is a variable denoting knowledge of culture (aggregated variable, formed from questions on knowledge of European, Slovenian and local culture). ATT3 is a variable denoting attitudinal variable, expressed in range of 1 to 5. All of the coefficients are properly signed and significant to 90%, which is one argument for the theoretical validity of the survey results.

The bivariate probit model gained two estimates for WTP, namely 8.93 (first model) and 9.32 (second model). Because saying yes or no to both questions was much more frequent than changing the answers, the second model is more close to the true value, and therefore we took 9.32 as our estimated value of willingness-to-pay for symposium in Grosuplje.

The values and signs of parameters are all in expected limits, so the results have constructtheoretical and content validity, according to CVM guidelines. Final proof of the validity of the study would of course be comparison to a market valuation, which was of course unfeasible in the present situation.

When aggregating the sum across Grosuplje residents, we multiplied the estimated true willingness to pay (9.32 ) with the number of Grosuplje town adult residents (we assumed this number to be a good proxy for the number of residents with own sources of income). The final aggregated yearly value of Grosuplje symposium is 131.400,00 , which surpasses the actually raised yearly funds by a factor of approximately 6:1. This means that the actual funds are much underestimated, and that the project possesses important value for the inhabitants of Grosuplje municipality. This also proves the importance of using CVM as an method of study, as this was the only method to estimate the total economic value of the event, as previously elaborated.

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5. Conclusion

The results of the survey including the theoretical speculations bring us to number of questions. It is often claimed that contingent valuation method is too expensive to be performed in smaller communities and projects. It would of course necessitate further evaluation whether our method has brought any significant proof of the counter statement. Yet it can perhaps provide a tool for smaller projects to be evaluated, in search for evaluation of the funding given to the project. No method is most often justified than contingent valuation to perform this task, as we have shown in the case of Grosuplje symposium. Necessary tools would have to be developed for the method to be more operational in smaller and lower-budget situations. In any case it would be necessary that cultural economists finally answer the question which method to use to properly valorize cultural events, both of small as well as wider scale. Economic impact studies of art events have been subject to a number of justified attacks in past decades, yet what is the alternative if contingent valuation studies are both too complex and expensive, prone to critiques on the side of their validity and reliability, as well as measuring only part of the economic value of the event, as pointed by Seaman (2006). Without an answer to this question, wrong, misspecified and overblown results of economic impact studies are probably to foster despite the justified criticism.

Literature: 1. K. Arrow et al. (1993): Report on the NOAA Panel on Contingent Valuation, http://www.darrp.noaa.gov/library/pdf/cvblue.pdf (30.Sept. 2007) 2. T. Bille Hansen (1997): 'The Willingness-to Pay for the Royal Theatre in Copenhagen as a Public Good', Journal of Cultural Economics, 21, 1-28 3. R.T. Carson, R.C. Mitchell, M. Conaway (2002): 'Economic Benefits to Foreigners Visiting Morocco Accruing from the Rehabilitation of the Fes Medina', in: S. Navrud, R.C. Ready (ed., 2002): Valuing Cultural Heritage. Applying Environmental Valuation Techniques to Historic Buildings, Monuments and Artifacts, Cheltenham 4. R. Epstein (2003): The Regrettable Necessity of Contingent Valuation, Journal of Cultural Economics, Vol. 27, pp.259-274 5. B.S. Frey, W.W. Pommerehne (2001): Muze na trgu. Odkrivanje ekonomike umetnosti. Murska Sobota: PAC, Pomurski akademski center; Kranj: Ustanova za podjetnitvo

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19. B.A. Seaman (2006): 'The Relationship Among Regional Economic Impact Models: Contingent Valuation Versus Economic Impact in the Case of Cultural Assets', Working Paper, Atlanta: Georgia State University 20. J.D. Snowball (2008): Measuring the value of culture: methods and examples in cultural economics, Berlin, Heidelberg: Springer Verlag 21. J.D. Snowball, G.G. Antrobus (2002): Valuing the Arts: Pitfalls of Economic Impact Studies of Arts Festivals, South African Journal of Economics, Vol. 70, No. 8, pp.1297-1319 22. A.H. Sterngold (2004): Do Economic Impact Studies Misrepresent the Benefits of Arts and Cultural Organisations, Journal of Arts Management, Law and Society, Vol. 34, No. 3 23. D. Throsby (2001): Economics and Culture, Cambridge: Cambridge University Press 24. D. Throsby, G. Withers (1986) 'Strategic Bias and the Demand for Public Goods', Journal of Public Economics 31, pp. 307-327 25. M. Verbi, R. Slabe Erker (2005): Ekonomski vidik prostorskih vrednot v procesu usklajevanja razvojnih interesov in varstvenih zahtev. Aplikacija metod za ekonomsko vrednotenje prostorskih vrednot na primeru obmoja krajinske zasnove Volji Potok, Ljubljana: Intitut za ekonomska raziskovanja

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