1. Valuation and the cultural sector:
current issues and future directions
David Throsby
Professor of Economics
Macquarie University
Sydney
Lecture delivered at conference on Culture and Innovation: New Ways of Capturing
Value, organised by the Temple Bar Cultural Trust and held in Dublin on 9 May 2012.

2. The valuation issue:
• macro level: how to value the contribution of
the cultural sector to the economy?
• micro level: how to value the local, regional
and national impacts of cultural
organisations?
• how to value the work of individual artists?

3. Creative or cultural industries?
• creative industries are those industries in which
creativity is an identifiable and significant input
• cultural industries are those industries providing
specifically cultural goods and services

4. Cultural goods and services
• they require creativity in their manufacture
• they convey some form of symbolic meaning or
message through their cultural content
• they embody at least potentially some element of
intellectual property

5. Where do the creative arts fit in the economy
of culture?
• imagine the creative industries as a series of
concentric circles
• artists and arts organisations at the centre
• the circles represent increasingly commercial
industries
• creative ideas, skills and talents originate in the
core

6. The concentric circles model of the cultural industries
Core creative arts Other core cultural industries
Literature Film
Music Museums, galleries, libraries
Performing arts Photography
Visual arts
Related industries
Advertising
Architecture Wider cultural industries
Design Heritage services
Fashion Publishing and print media
Television and radio
Sound recording
Video and computer games

7. Public value
• The value that society as a whole derives from
public expenditure
• It poses a challenge to conventional cost-benefit
analysis which considers only those impacts
measurable in financial terms
• It suggests a broadening of value measures, e.g.
towards indicators of social well-being, etc.

8. Public value of the
arts and culture
Economic value Cultural Value

9. The cultural industries create economic value via:
• market value of output of cultural goods and services
• non-market value of public goods produced reflecting:
 existence demand for arts and culture
 option demand for arts and culture
 bequest demand for arts and culture
• flow-through effects to innovation processes in other
industries via:
 diffusion of creative ideas
 skills transfers
 movement of creative labour from the core

10. Cultural value
• aesthetic value
• spiritual value
• social value
• historical value
• symbolic value
• authenticity value

11. Measurement of value:
economic value can be measured in
money terms
cultural value is multi-faceted and has
no single unit of account

12. Measurement of economic value
• market value measured as observable financial
flows (gross value of output, value added, etc.)
• non-market value measured by revealed or
stated preference methods (e.g. hedonic
methods, contingent valuation, choice modelling)

13. Measurement of cultural value
• cultural indicators
• expert appraisal
• attitudinal analysis of public preferences

14. Impacts of new technologies
• understanding the effects on demand for cultural
products arising from the adoption of new
consumption technologies
• potential for the application of new technologies in
cultural organisations (e.g. museums, theatres, etc.)

15. New business models for arts and cultural
enterprises
• anticipation of demand shifts
• diversification of revenue streams
• online market development
• clearer articulation of value creation to funding
sources
• more flexible governance structures

16. Future directions for cultural policy
Effective cultural policy in the future will need to
• comprehend the economic benefits (market and non-
market) of the arts and culture;
• recognise the fundamental importance of cultural value as
a component of the public value created by the cultural
sector;
• foster a positive climate for private sector engagement with
the arts;
• promote cultural policy as a core government function
involving a wide range of ministries including culture,
heritage, education, social welfare, trade, urban and
regional development, etc.