the rationale for urban government action for arts funding

THE RATIONALE FOR URBAN GOVERNMENT ACTION FOR ARTS FUNDING

Abdul Khakee

Traditionally economists have studied public decision-making with regard to the allocation of resources to the arts by means of the neo-

classical framework, incorporating the principles of welfare economics and at least loosely applying Pareto optimality criteria. More recent- ly several studies have been carried out to explain public outlays using the positive public choice approach.(1) Even though these studies have provided useful insights into the factors determining allocative decisions concerning the arts, there remains a lot more to do with respect to the theoretical and empirical examination of the rationale for government action in subsidizing the arts.(2)

In this paper, the rationale for urban government action in allocat- ing resources for various cultural activities has been studied with the help of a model based on the New Institutional Economics (NIE).(3) The model presented in this paper rests on the premise that the study of decision-making must recognize the limitations of the decision- maker's knowledge and the irrelevance of the assumption of un- bounded rationality. Insofar as the outcomes of decision-making are shaped by the political and constitutional processes, such study must include major variables from political, organizational and legal theory.(4) The model outlined below is designed to do so.

A Model of a Public Decision-Maker

In our model of a public decision maker we have taken into consideration four aspects: administrative (rationality), budgetary, welfare economic and public choice considerations (Figure 1). Taken separately they do not adequately describe the process whereby resources are allocated for different purposes in the public sector.

Taken together, the model shows a greater degree of relevance as well as realism. Even then, the four aspects do not cover all elements of decision making.(5)

Figure 1 Four Aspects of Public Decision Making.

Rationality

Considerations

Electoral support

Considerations

Welfare Budgetary Methods

Satisficing Impact

Our model is basically a satisficing model in which, 1) there is a limitation to rationality consideration because of the limited insight of the decision-makers, 2) welfare considerations are non-optimal in character, 3) a satisfactory electoral support rather than vote maxi- mization is the goal when decisions are made, and 4) budgetary methods to some extent steer the behavior of the decision-maker. Another premise of the model is the assumed connection between roles and information. The behavioral side of the model implies that the decision-maker simultaneously behaves as an "administrative man", an "economic man", a "public choice man" and a "budgetary man".

According to this "quadrilateral" character of the decision-maker, the following features can be discerned in the decision-making process. The decision-maker is imperfectly informed and makes decisions in terms of the broader everyday sense of rationality. Decision-making is incremental in character and the extent of rationalism depends on the nature of the problem under consideration. Current decisions are made an the basis of accepting previous decisions, considering marginal adjustments to earlier decisions and evaluating new programs which need to be included in the public activities. Despite the past decades' numerous innovations in budgetary techniques, the decision- maker's major concern is on the expenditure side of the budget. He is nevertheless interested in the methods used to produce public services. The failure of program budgeting has made him skeptical of managerial and scientific techniques but it has left him with some interest in linking planning and budgeting.(6)

The decision-maker knows little, if anything about the analytic criteria of welfare economics. He is, however, concerned about the size and distribution of the benefits of public services. He lacks a common yardstick to evaluate the results of the different programs. Decision-making becomes a matter of value preferences between the different ends. His welfare judgement is tempered by his desire to take into consideration the electoral support for his decisions.(7) The decision-maker examines the arguments presented by the electorate through various pressure groups. The party program which he sometimes refers to contains proposals which are trade offs between ideological premises and the demands made by pressure groups. In some cases his party bargains with other political parties in order to ar- rive at a decision which is acceptable to a larger part of the electorate. The result of such bargaining (which should not be confused with vote trading or "log rolling") may lead to a greater efficiency both in terms of the allocation of resources and in the distribution of welfare.(8)

The Application of the Model

Two sets of empirical studies were carried out to test the relevance of the model: a budget study and a questionnaire survey among decision-makers and art bureaucrats in two Swedish municipalities: Goteborg and Umea. Since the results of the budget study have been presented elsewhere (9), only a brief mention of its results will be made here. The budget study analyzed the municipal arts funding according to three criteria: for various arts activities, for arts activities aggregated according to their level of affiliation to the municipal government and geographical distribution. No attempts were made to analyze decisions concerning the distribution of funds to recipients within every single art form.

The budget analysis made it possible to make some observations about the administrative and public choice aspects of decision-making. A majority of the changes in the distribution of municipal funds to various arts forms were small and incremental in character where past commitments played a major role. The few notable changes occurred in the wake of some specific capital investment programs. Further- more, a preponderant share (around 90%) of the municipal funds went to municipally-owned arts establishments (like public libraries, theaters, concert companies, etc.) (10) and the remaining share went to some established arts associations (theater and music societies, extra mural cultural association run by labor unions and other popular move- ments). These arts agencies increased their share of public money over

the years whereas the poorly organized arts groups had very limited access to the public resources.

The questionnaire survey covered 48 decision-makers and civil servants with responsibilities for cultural policy in Goteborg and Umea. The questionnaire consisted of 24 multiple-choice questions with ample space for open ended comments. It was made up of questions dealing with four aspects of public decision-making: welfare considerations, rationality aspects, electoral support and the impact of budget methods. There were six questions for each topic.There is no point in presenting the percentage figures for response for each question. It may suffice to note that on average, every question had 42 responses out of a maximum of 48. Six of the 24 questions were answered by all; for other questions, the rate of response varied from 47 to 34. There is no specific trend about the level of response varied from 47 to 34. There is no specific trend about the level of response between the two municipalities or between politicians and civil servants. The reason for not answering a specific question often depended on the lack of knowledge on a particular issue or on the fact that the question was felt to be either meant for the politicians or civil servants.

Welfare Aspects of Arts Policy The first set of questions concerned the welfare theoretic public

support arguments, in order to find out what rationale the decision- makers had for public intervention in cultural activities.

The respondents were asked to select the most valid argument for public support among the following: 1) Welfare distribution: opportunities to learn to appreciate arts for citizens denied such opportunities; 2) promoting the "good" society: social benefits for all members of the society; 3) economic benefits conferred on business in the vicinity of cultural activities; 4) social contributions to future generations; or 5) education of minors for rearing a finer civilization. Of the 45 responses, 13 selected the promotion of the good society, 11 each for the welfare distribution argument and for social contributions to future generations. Onlytwo respondents considered that economic benefits to business was the most valid argument for the public support. This is interesting since one would ~xpect that economic benefit argument would be among the most important arguments for urban developers. A strong support for welfare distribution arguments reflect a strong egalitarian basis in public policy making in Sweden.

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This question was supplemented by five other questions related to welfare considerations. Two of these questions concerned the national cultural policy and the Swedish National Council of Cultural Affairs' delineation of prioritiy areas for the 1980's. In1974, the Swedish Par- liament established eight main goals for national arts policy. These were as follows: 1) protect frdedom of speech, 2) give citizens opportunities for creative activities and social contacts, 3) counteract commercialization's negative impact on culture, 4) promote arts at local community level, 5) give priority to cultural activities for disadvantaged groups, 6) facilitate artistic regeneration, 7) guarantee the preservation of cultural heritage, and 8) promote regional and inter- national understanding. The respondents were asked to rank the three most important goals. The goals given the highest rankings were: 1) give priority to cultural activities for disadvantaged groups (low income families, unemployed, immigrants, etc.), 2) give citizens opportunities for creative activities, and 3) protect freedom of speech.

This egalitarian welfare bias in arts policy was confirmed when those interviewed were asked to give the highest rank among the five priority areas for arts in 1980's delineated by the Swedish National Council of Cultural Affairs. These areas are: 1) stimulate that local and regional development which gives a more equal provision of arts, 2) stimulate arts activities in schools and day care centers, 3) involve new groups in artistic activities, 4) develop a proper interaction between the new medias and local culture, and 5) create further possibilities to promote artistic regeneration. A majority of the respondents (40 out of 48) gave the first two priority areas the highest ranks. These answers imply that the municipal decision-makers see arts as a vehicle to further the egalitarian goals of the society. The municipal arts expenditure has been 539 Sw. Kr. (about $90 U.S.) per inhabitant in Goteborg and 425 Sw. Kr. per inhabitant in Umea. Goteborg has the 7th and Umea the 33rd place among the 284 municipalities in Sweden. A majority of the respondents (28 of the 48) considered that arts expenditure per inhabitant were too low and should be increased. The remaining considered that the expenditure was neither too high nor too low. None of the respondents considered that the expenditure was too high. Several of the respondents from Goteborg felt that a considerable share of the cultural activities was used by people not residing in the municipality. The figure could have been considered ade- quate if the municipal resources were used exclusively by the municipal citizens. The supply of cultural services could be increased if non- municipal citizens were required to pay for these services or if the

neighboring municipalities paid a portion of the total expenditure. On the whole, the respondents from both municipalities desired an increase in public arts expenditure.

In the wake of the slow economic growth since the middle of 1970's and the increase of structural unemployment, the municipal decision- makers have become increasingly concerned with what some see as negative aspects of the interaction between private and public cultural activities. It is felt that at the municipal level, public action can help to redress the undesirable consequences of the socio-economic development and it can counteract the negative external effects of commercial culture the supply of which has increased greatly in the wake of the growth of the new medias. These negative externalities are distribu- tionaUy not neutral and the incidence of negative commercial arts externalities falls primarily among the "victims" of the socio-economic crisis.

A majority of the respondents felt that the distribution of arts had an a priori bias. The respondents were asked to choose one measure to make arts accessible to the majority of the populations. The measures suggested were: 1) direct subsidies to the public rather than to the arts institutions, 2) increased resources for arts in schools and extra mural educational activities, 3) redistribution of resources in order to support arts which had a low level of previous support, and 4) stimulate arts associations and free groups in the local community.

Of the 47 answers, 37 preferred the encouragement in the formation of tastes for the arts by providing more resources to schools and extramural educational activities. This is in line with the Scitovsky argument for collective decisions on public education in the arts.

As far as the municipal arts policy's possibilities to counteract the negative externalities of commercial arts (violence, sadism, general tas- telessness, drug and alcohol abuse and anti-social behavior generally) are concerned, a majority of the respondents (35 out of 48) felt that such possibilities were limited. In a supplementary sub-question, the interviewed were asked to choose the most important measure to strengthen the municipal action to counteract the negative external effects. The measures proposed were: 1) to increase the supply of arts in schools and day care centers, 2) to expgmd cultural activities in housing districts and work places, 3) to improve the information about public arts programs, 4) to increase citizens' access to creative activities, 5) to improve the conditions of artists and cultural workers, and 6) to stimulate arts associations in further activities. Thirty-two out of

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the 48 respondents considered the increase of arts activities in schools and day care centers as the most important measure to this end. Only 7 showed a preference for the second measure while the other four measures were preferred on average by two respondents. A majority of the respondents felt that in a market economy, it is very difficult to encourage the formation of Certain tastes and to discourage others. The only way to do this is to start cultivating these tastes during the for- mative years in the schools.

Incrementalism in Public Decision-Making The aim of the questions pertaining to rationality aspects was to

find the way decision-makers deal with the allocation of resources for competing arts forms. The overwhelming majority of the respondents stated that the municipal cultural policy was not subjected to a peri- odic overhaul. There was, however, a significant difference between the respondents when asked if there have been any major changes in the objectives of the arts program during the last five years. A majority of the respondents in Goteborg (18 out of 26) stated that no such change had taken place. In Umea, on the other hand, 17 out of 22 respondents answered that the objectives of the municipal cultural program had changed. The main reason furthered was the building of the cultural infrastructure in the city and an increased realization about the role of arts in an expanding urban area.

When it comes to the annual disbursement of resources to the arts, those interviewed were asked to indicate the single most important factor which affected decision-making. The factors proposed were: 1) public opinion, 2) activities of arts pressure groups, 3) demonstration effects from other municipalities' cultural programs, 4) past commitments, 5) weighing benefits of arts against other social amenities, 6) decision-makers' preferences for certain arts forms, and 7) the presence of powerful cultural personalities in the municipality.

For the majority of respondents (35 out of 48), there were very few possibilities to make any fundamental changes in the resource allocation since relatively large share of the resources was already committed from previous years' budgets. In comments to this question, many respondents mentioned that there was very small amount of uncom- mitted resources available in the annual budget. Several of the respondents replied that marginal adjustments in the disbursement of resources were often dictated bymajor investments in arts establishments and

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only in the second hand by public opinion including the activities of the pressure groups.

The disbursement of resources through the annual budget is based on a resource oriented approach. According to this approach, the municipal executive council, on the basis of an inventory of available resources, proposes a preliminary allocation of resources for different sectors. The different sectors are then allowed to prepare a detailed proposal for the distribution of resources to activities in accordance with resource availability. These proposals are then submitted to the executive council who decides on a final budget. Thus the municipal executive council makes the overall assessment of arts in relation to other municipal amenities while the cultural committee is responsible for the allocation of resources to various arts forms. Some form of budgetary dialogue takes places between the municipal executive council and the cultural committee.

Major policy decisions including the reappraisal of ongoing programs involves the overall assessment of arts in relation to other urban amenities. Respondents were asked to assess the division of responsibility between the executive council and the cultural committee The question was addressed primarily to the politicians. Twelve out of the 22 interviewed found the present arrangement satisfactory whereas the other 10 found that the present system does not provide proper arrangements for making major policy decisions on the arts. A closer examination of the responses reveals that politicians who are members of the executive council are satisfied with the present arrangement whereas those in the cultural committee are not. In their comments those in the committees want more contact between themselves and politicians on the executive committee.

Another relevant issue is the division of labor between politicians and civil servants in preparing the underlying information about the various arts programs. The respondents were asked to choose the most appropriate characteristic role of politicians and civil servants in preparing the arts budget. The proposed characteristics were: 1) civil servants formulate the overall arts program as well as the detailed proposal of resource allocation with politicians only taking part in the final decisions; 2) politicians prepare general instructions for the program while civil servants prepared' the detailed proposals; 3) politicians and civil servants could work together to prepare both the overall and detailed proposals; 4) politicians would only work with policy issues with civil servants responsible for the budgetary work; 5)

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politicians would prepare detailed proposals while civil servants only assess the impact of the proposals; or 6) politicians would always take the initiative in both policy and routine decisions.

Thirty-nine out of 48 interviewed answered this question. Of the respondents 17 stated that the second characteristic describes the

�9 . . r

&vision of labor adequately and 14 preferred the third characteristic. Each of the other characteristics was chosen by a couple of respondents. A majority of the respondents from Goteborg chose the second characteristic while those from Umea chose the third characteristic. In a way this difference depends on the way the municipal arts sector is organized in the two municipalities. A more interosting observation, however, is that neither of these two characteristics allows for the type of decision-making which would involve a major overhaul of the arts policy, or a search for several possible outcomes and examination of outcomes in terms of the objectives. The existing set-up allows almost solely for incremental adjustments in the municipal decision-making with regards to the public support for the arts. Let us examine these results in light of public choice theory.

Public Choice Models and Local Support for the Arts

In this section, we examine only two of the public choice theoretic principles, namely the importance of electoral support in deciding public support for the arts and the decision-makers' awareness about households "voting-with-the-feet" in face of the unequal geographical distribution of arts resources within the municipality. We do not aim to test any theoretic model like the median voter theorem or the Tiebout model. The standard empirical tests of these and other public choice models is to examine the observed level of public goods under a wide range of assumptions about voters' and politicians' behavior. What we simply try to investigate is the extent to which decision-makers are influenced by electoral support considerations.

Those interviewed were asked to choose the factor which had the greatest importance for municipal support for different art forms. The factors proposed were: 1) political parties' arts program, 2) the median voter's preferences for various arts activities, 3) the established cultural associations' needs for resources, 4) opinions of the arts groups in the community, and 5) the public debate in the mass media.

Ten of those interviewed (mostly civil servants) preferred not to answer the question. Of the 38 respondents, 14 chose the party program and 12 respondents considered the median voter to be the

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most important factor in deciding on the municipal arts policy. The established cultural associations' needs for resources was considered to be the most important factor by 8 respondents. It is difficult to draw any definite conclusion from these responses,in that the political parties' cultural programs reflect each party's median voter attitudes, not the preferences of the general median voter that seem to be important in this instance.

But in many budgetary decisions, the party programs are not so well defined and decision-makers do respond to the arguments put for- ward by different interest groups. In the case of municipal arts decision-making, we can distinguish between three main groups: 1) representatives of various arts establishments owned by the municipalities, 2) arts associations including those who have their own premises and/or are responsible for extramural cultural activities, and 3) other arts groups including those arranging informal activities in housing districts and music and theater groups run by young en- thusiasts.

All of the respondents considered the strength of these three groups of lobbyists in the same order as presented above. Several respondents mentioned that the arts associations and the arts groups are as aggressive and offensive as the latter. This in turn implies that representatives of the municipally controlled arts establishments had a powerful influence on the decision-makers, A majority of the respondents (38 of the 41 replies) felt that the lobbying practiced by the arts associations and arts groups was only a tiny fraction of what private business enterprises tried to exercise over the municipal decision- makers.

The respondents were also asked to characterize the exchange of information between the decision-makers and the arts pressure groups. Of the 40 respondents to this question, 29 considered that such an exchange was satisfactory whereas 11 respondents considered that it was unsatisfactory. Again the exchange of information was quite satisfactory when it came to municipal owned establishments and pointed out .the unevenness in the quality of information exchange. Some arts associations and a few arts groups have developed a practice of regularly informing the municipal authorities about their activities, others lack any kind of routine ih this matter.

Arts, like sports, belong to the type of amenities where there are very few national statutory directives. The municipal governments have a very large measure of freedom in deciding about the support to

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these amenities. The sports associations have developed very powerful pressure groups and there are quite a few examples where politicians have promised extra resources to various sports activities during election campaigns. In comparison, the arts do not provide many such examples. However, the arts' importance has increased substantially during the past 'decade. The recent debate on private funding of the arts in Sweden has also brought to attention the impfica- tions of arts associations' activities to get more public support.

Many arts activities can be characterized as quasi or local public goods for which the issue of accessibility is important. Following the municipal merger reforms, the new municipalities are geographically quite large with a considerable minority of the population residing in small urban centers which formerly were independent municipalities. There is some evidence about well-educated, higher income households moving to the central city areas in order to enjoy social and cultural amenities.

The respondents were asked to evaluate their own feelings about the movement of well-to-do families into the central city areas in order to have a better access to cultural services. Of the 44 respondents to this question, 8 respondents pointed out that it was a positive development, 10 felt that it was a negative development whereas a majority (26 respondents) felt that it was neither positive nor negative development. Many of the latter commented on this answer by saying that this is an issue for housing policy. Urban renewal and housing subsidies should make it possible for all groups of people to reside according to their preferences. Those who regarded this movement as a positive one were of the opinion that such a movement counterbalanced the rapid expansion of commercial and business premises in the central business district.

In order to increase the accessibility to arts services, those interviewed were asked to choose the most important method among the following: 1) improve opening hours, reduce ticket prices and transport costs in order to allow all categories of citizens to enjoy cultural activities; 2) build up the cultural infrastructure in housing areas; 3) stimulate citizen participation in extramural cultural activities; 4) increase cultural institutions' performances in suburban areas and outlying urban centers; or 5) increase cultural activities in schools, youth leisure centers and other public premises.

Of the 48 respondents to this question, 21 chose the fifth measure, 15 chose the second measure and 12 chose the fourth measure. There

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is a certain identity between the three measures in so far as they all favor decentralization of arts activities from the city area to the outly- hag districts. A majority of the respondents to this question said they were conscious of the problem of improving access to cultural and other services. Several of them pointed out that arts belong to the public services whose distribution has a bias towards the well-to-do people. Some of the respondents suggested that since there are ob- vious limits to spreading out of cultural amenities, efforts should be directed toward the direct subsidy of audiences who reside in geographically disadvantageous areas and belong to low income groups.

The Impact of Budgetary Methods on Decision-Making The Swedish municipal budget is a product of budget reforms

which have taken place over several decades. The main emphasis in the budget is on the expenditure control but there are important elements of appropriation structure, management improvement, work performance and planning. Though the attempt to institutionalize program budgeting (PPB) during the 1970's failed, it has left some impact on the budgeting practice.

The following are some very broad characteristics of a municipal budget. The budget is divided into several main programs. Each main program is made up of one or more appropriation units (correspond- ing to the municipal departments) or programs. For example, arts is an appropriation unit which belongs to a main program which includes other appropriation units related to leisure activities. Each appropriation unit is in turn divided into several sub-programs. Each of the sub- program is often divided into several activities. For example, the sub- program "theater" is made up of public theaters, theater associations, mobile theater activities and so on. At the activity level, work cost measurements are sometimes made in order to evaluate the efficient performance of prescribed activities. This, however, is not a general rule. This is followed by classification of expenditures by line category including personnel, rent, office supplies and other inputs.

In our model we have made an assumption that a particular way of classifying information has some impact on the actions of budget makers. The municipal arts expenditure are classified in ten items: 1) public libraries, 2) music schools, 3) extramural cultural activities, 4) theater, 5) museums, 6) dance, 7) painting and public building adorn-

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ment, 8) film and photographic studios, 9) grants to premises owning cultural organizations, and 10) scholarships to artists.

The respondents were asked to make a personal evaluation of the importance of each item by ranking them with numbers i to 10. Table I shows the rank of each item according to the budget between 1980 and 1984 and the respondents' ranking of the items.

Many of the respondents in their comments mentioned that the importance of the various arts forms will be roughly the same even in the future. The table shows remarkable similarities between the budget ranking and the respondents' ranking of the different arts forms. In the two supplementary questions, the respondents were asked 1) to suggest a proper size of resources for the arts in relation to other urban amenities, and 2) to present their own proposal about how municipal support for the arts should be divided among the competing arts forms.

A majority of the respondents abstained from giving figures in both cases. With regards to the size of public support to the arts in relation to other urban amenities, some of the respondents regretted the lack of detailed information about intersectoral comparison of benefits. In the absence of such knowledge it was difficult to present a figure about the relative share of municipal arts activities.

When it came to the division of municipal support for the arts among the competing arts types, the respondents did suggest minor changes as compared to the division in the budget. The respondents' comments in this context were that they were either supporting their own favorite activity or that they felt that certain arts forms were neglected in relation to others. The respondents found the current piecemeal adjustments as the only practical way for achieving long term changes in the distribution of arts funds.

An interesting question in this context is if the decision-makers react differently if the information on resource disbursement is provided in another way. The respondents were asked to look at the allocation of cultural funds according to the level of institutionaliza- tion. According to this approach, municipal arts funds are divided into five items: 1) municipally owned cultural establishments, 2) grants to premises-owning arts organizations, 3) grants to "established" arts associations, 4) recurrent cultural festivals, and 5) spontaneous arts activities. Several of the respondents gave figures for the relative distribution of funds between the five items. But a majority of the respondents

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Tab le 1: R a n k of Arts I t em s

G o t e b o r g B u d g e t R e s p o n -

L i b r a r i e s 1 Mus ic s c h o o l s 4 E x t r a m u r a l c u l t u r a l 5

a c t i v i t i e s T h e a t e r 2 M u s e u m s 3 D a n c e 8 P a i n t i n g a n d p u b l i c 7

b u i l d i n g a d o r n m e n t F i l m / p h o t o g r a p h i c 1 0

s t u d i o s G r a n t s to p r e m i s e s 6

o w n i n g o r g a n i z a t i o n s S c h o l a r s h i p s to a r t i s t s 8

d e n t s 1 3 5

Umea B u d g e t R e s p o n -

d e n t s 1 1 2 2 5 5

2 3 4 4 4 3 8 8 8 7 7 7

9 9 6

6 6 6

10 10 10

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felt that grants to arts associations and spontaneous activities were small and should be increased. Several respondents suggested that there should be a mobile fund which could be used to encourage innovative arts activities.

In a supplementary question, the respondents were asked to suggest which was the best possible way to save in the arts sector if the municipal government was obliged to make a cut in public spending. The respondents were given five options: 1) expenditure for premises for own establishment, 2) artists and cultural workers employed by the municipality, 3) administrative costs, 4) municipal grants to arts associations, and 5) support grants to artists and arts groups.

A majority of the respondents chose cuts in administration as the best possible solution under such circumstances. Municipal grants to arts associations and arts groups was considered as a solution of the last resort.

In another supplementary question, those interviewed were asked about the most suitable way in which the municipal government could provide support to new arts activities in the future. The respondents were asked to choose between two suggestions: 1) future arts activities should be taken over by the municipal government, 2) municipal government should provide grants.

With the exception of three respondents, all others preferred the second solution. Several respondents felt that municipal engagement in the arts should as far as possible be concerned with grants, encouragement and other support arrangements. The municipal "take over" should not be as common as it has been in the past.

There is a contradiction in the reaction of the decision-makers when the information of resource disbursement is presented in two different ways. This provides some support for our assumption that decision-makers are influenced by the budget method (and therefore by the way the information is classified) which is in use.

Concluding Remarks The preceding analysis provides a picture of the decision-maker

as a complex individual with several behavioral components. It provides a good case of disjointed incrementalism where the decision- maker satisfies in the light of provisional targets. He makes small adjustments as he muddles through a myriad of budget data. What are the implications of such decision-making for the arts in

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Swedish urban communities? The cultural establishments which the municipal authorities have inherited from the private patrons of the arts of earlier times and the cultural establishments which these authorities have built on their own initiative during the past few decades require an ever increasing share of the public funds. As the costs of running these institutions exceed the rate of inflation, municipal authorities are compelled to pump in more money to keep them going. As a result, public resources for the noninstitutionalized arts activities have decreased steadily. Even though municipally owned theaters, concert halls, and museums are a matter of civic pride, their activities are reproductive but not always innovative. Moreover, they benefit a tiny portion of the urban community. Professionalization and specialization have characterized the development of public amenities during the postwar years. This development has made it increasingly difficult for the municipal authorities to interact with noninstitutionalized and spontaneous activities. Whenever those engaged in the latter have approached the municipal authorities for grants, there has been a tendency to "tie" them to the prevailing bureaucratic norms. These include requirements about applying for grants, rules for using public premises and so on.

Arts by their very nature need to have a large measure of spon- taneity and freedom if they are to remain innovative. New arts activities arise often through voluntary efforts and are less amenable to the laws governing well organized associations.

These developments ought to be a source of concern for municipal decision-makers who are interested in counteracting the negative effects of commercial culture and provide encouragement and support to members of the community who supply cultural services.

The aim of this study has been to contribute toward positive political analysis and empirical investigation in the area of cultural activities. The study has been limited to answering the question: How do municipal authorities allocate resources to these activities? There is a need for further theoretical and empirical research about the rationale for municipal government in subsidizing the arts. Topics for research include the examination of the relationship between arts output in terms of quality and quantity and the input of financial resources, the impact of municipal action upon public participation in cultural activities and the role of the municipality in (and its relationship with) public sector arts provision. Research in these and other issues would provide important knowledge for understanding the economic benefits

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of the local arts' sector and its contribution in improving the quality of life and in educating and binding local communities.

University of Umea

F O O T N O T E S

1. F. Schneider and W. W. Pommerehne, "Private Demand for Pubfic Subsidies to the Arts: A Study in Voting and Expenditure Theory" inEconomicSupportfortheArts. Akron: Association for Cultural Economics, 1983, pages 53-63, and G. Withers, "Private Demand for Public Subsidies: An Econometric Study of Cultural Support in Australia". Journal of Cultural Econornics, 1979, Vol. 3, pp. 53-61.

2. Peacock, A. "The Politics of Culture and the Ignorance of Political Scientists". Journal of Cultural Economics. 1983, Vol. 7, pp. 23- 26.

3. The main tenets of NIE have been discussed in a number of papers presented at the Mettlack Symposium in Western Germany and presented in Vol. 140 of the Journal of Institutional and Theoreti- calEconomics. See especially, Hutchinson, T.W. "Institutionalist Economics Old and New", Journal of Institutional and Theoreti- cal Economics, 1984, Vol. 140, pp. 20-29.

4. Williamson, O.E. "Reflections on the New Institutional Economies", Journal of bzstitutional and Theoretical Economics, 1985, Vol. 141, pp. 157-195.

5. We exclude a number of important factors like man psychology, counter-economic deep motives of individuals, impact of leaders, changing ideologies and shifts in special values. For a discussion of some of these factors' importance in shaping decisions, see, for example, Elster, J. and Hyland,

A. Foundations of Social Choice Theo13; Cambridge: Cambridge University Press, 1986.

6. The budget in Sweden is usually a part of a four or five year economic plan. The main link between the budget and the rest of the plan is, however, the capital investment program.

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7. In the case of the bureaucrats, it is a question of enlarging the domain.

8. Vote trading in public choice literature is regarded as a logical ex- tension of the economist's rational self interest maximizing model.

9. Khakee, A. "A Comparative Study of Public Decision-Making and Municipal Arts Expendi ture in Sweden", Osterreichische ZeitschiiftfitrPolitikwissenschaft, 1987, Vol. 16, pp. 45-57.

10. With cost increase, the income gap for the municipally-owned cultural institutions widens leaving less resources for other arts activities. This provides good evidence for the so called Baumol's Disease.

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the rationale for urban government action for arts funding

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