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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.


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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 infuture, despite perhaps not using it ever before

2) Existence value a value that a good has just because it exists, though perhaps onewill never use it

3) Bequest value the value that a good has for our children and other generations tocome

4) Prestige value the value that a good has for our identity and feeling of pride andbelonging to a certain value or system of values

5) Educational value the value for the system of transferring knowledge and valuesto 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,

1Other 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).


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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, so-

called 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

2In 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, yetthese two types of methods remain largely unused in cultural economics (Ready et al., in: Navrud & Ready,

2002).


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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 fundsand 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 specificregion, 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 localtransport 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 localarts 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 presumptionthat 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, widelydiffering 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 couldinflate economic impact figures and should not be counted is from visitors who would


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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 themultiplier 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 ofvalue 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 intechnological 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).


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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 ofcompeting 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 theperiodicity of the elicited WTP values.

(i) Authors are dedicating a great deal of attention to presenting an accurate description of the

goodto be valued, presented in a form that meaningful to therespondent

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 existenceof 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.


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Yearly budget Grosuplje-City of Sculptures Year 2004 Year 2005 Year 2006 Year 2007

Grosuplje Municipality 7.000,00 8.000,00 9.000,00 0

Ministry of Culture RS 2.500,00 2.500,00 2.500,00 3.000,00

Sponsors 6.000,00 7.000,00 7.500,00 11.000,00

SKUPAJ 15.500,00 17.500,00 19.000,00 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 moreor 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 thereforedecided 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 WTP

N 424

S.E. 15,7161

R2 0,117

R2 adj. 0,110

F (3, 420) 18,464 p(F) 0,000

Independent variables b S.E. t p(t)

Constant 0,802 1,165 0,688 0,035

DOH 4,104 0,645 6,358 0,000KORIST -2,806 1,117 -2,513 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 whihcresults 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 b l 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.

4The 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.6Very 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) andfollowing (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 PONVR

Explaining variable B Z p(z)

Constant -0,579280 1,678784 0,0932

BIDZ 0,064869 -1,899067 0,0576

Dependent variable PONVR1

Explaining variable B Z p(z)

Constant -0,578258 4,942074 0,000

BIDDR 0,062038 -4,451539 0,000

(1,2) -0,294 0,000

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 WTP

Independent variable B S.E. Z p(z)

Constant 0,165 0,334 0,495 0,620

DOH -0,136 0,057 -2,364 0,018

POZN -0,151 0,033 -4,558 0,000

ATT3 0,180 0,072 2,509 0,012

KORIST 0,272 0,100 2,705 0,007

Dependent variable WTP1

Independent variable B S.E. Z p(z)

Constant -0,744 0,271 -3,181 0,000

DOH -0,109 0,061 -1,778 0,075


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KORIST 0,258 0,118 2,185 0,029

POZNGMK 0,664 0,145 4,573 0,000

(1,2) -0,368 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 construct-

theoretical 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 assumedthis 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 aPublic Good', Journal of Cultural Economics, 21, 1-28

3. R.T. Carson, R.C. Mitchell, M. Conaway (2002): 'Economic Benefits to Foreigners VisitingMorocco 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 CulturalEconomics, 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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6. T.C. Haab, K.E. McConnell (2002): Valuing Environmental and Natural Resources: TheEconometrics of Non-Market Valuation, Cheltenham, UK & Northampton, USA: Edward

Elgar

7. N. Hadker, S. Sharma, A. David, T.R. Muraleedharan (1997): Willingness-to-Pay for Borivli National Park: Evidence from a Contingent Valuation, Ecological Economics, 21, 1997,

pp.105-122

8. W. M. Hanemann, J. Loomis, B. Kanninen (1991), 'Statistical Efficiency of Double BoundedDichtomous Choice Contingent Valuation', American Journal of Agricultural Economics, 73,

pp. 1255-1263.

9. M. Hutter, R. Shusterman (2006): 'Value and Valuation of Art in Economic and AestheticTheory', in: V.A. Ginsburgh, D. Throsby (ed.): Handbook of the Economics of Art and

Culture, Volume I, Amsterdam. Elsevier

10.A. Klamer (1996): The value of culture: on the relationship between economics and arts,Amsterdam: Amsterdam University Press

11.C. Madden (2001): 'Using 'Economic' Impact Studies in Arts and Cultural Advocacy: ACautionary Note', Media International Australia incorporating Culture and Policy, No. 98, pp.

161-178

12.A. Mas-Colell, M.D. Winston, J.R. Green (1995): Microeconomic Theory, New York, Oxford:Oxford University Press

13.R.C. Mitchell, R.T. Carson (1989): Using Surveys to Value Public Goods: The ContingentValuation Method, Washington D.C.: Resources for the Future

14.S. Mourato, A. Kontoleon, A. Danchev (2002): 'Preserving Cultural Heritage in TransitionEconomies: A Contingent Valuation Study of Bulgarian Monasteries', in: S. Navrud, R.C.

Ready (ed., 2002): Valuing Cultural Heritage. Applying Environmental Valuation Techniques

to Historic Buildings, Monuments and Artifacts, Cheltenham: Edward Elgar Publishing Ltd.

15.S. Navrud, R.C. Ready (ed., 2002): Valuing Cultural Heritage. Applying EnvironmentalValuation Techniques to Historic Buildings, Monuments and Artifacts, Cheltenham: Edward

Elgar Publishing Ltd.16.W. Santagata, G. Signorello (2002): 'Individual preferences and allocation mechanism for a

Cultural Public Good: Napoli Musei Aperti', in: S. Navrud, R.C. Ready (ed., 2002): Valuing

Cultural Heritage. Applying Environmental Valuation Techniques to Historic Buildings,

Monuments and Artifacts, Cheltenham: Edward Elgar Publishing Ltd.

17.B. A. Seaman (1987): 'Arts Impact Studies: A Fashionable Excess', v: A.J. Radich (ed.): TheEconomic Impact of the Arts: A Sourcebook. Denver, Colorado: National Conference of State

Legislatures

18.B.A. Seaman (2003): 'Economic impact of the arts' , in Towse (ed.): A Handbook of CulturalEconomics, Cheltenham: Edward Elgar


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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 culturaleconomics, Berlin, Heidelberg: Springer Verlag

21.J.D. Snowball, G.G. Antrobus (2002): Valuing the Arts: Pitfalls of Economic Impact Studiesof 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 andCultural Organisations, Journal of Arts Management, Law and Society, Vol. 34, No. 3

23.D. Throsby (2001): Economics and Culture, Cambridge: Cambridge University Press24.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 procesuusklajevanja razvojnih interesov in varstvenih zahtev. Aplikacija metod za ekonomsko

vrednotenje prostorskih vrednot na primeru obmoja krajinske zasnove Volji Potok,

Ljubljana: Intitut za ekonomska raziskovanja

dublin srakar 1

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