Seppo Suominen Essays on cultural economics
Essay 4: Are the spectators of performing arts and the spectators of the movies the same?
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1.4Essay 4: Are the spectators of performing arts and the spectators of the movies the same?The fourth essay uses a similar framework than the fourth essay, but the comparison is made between performing arts and cinema, and the effects of household incomes and family background have been added as explanatory variables. The marginal effects of the socio-economic variables on the performing art consumption in the multivariate logit model are examined using the ISSP 2007 survey data. The descriptive statistics of the explanatory variables reveal that age (age-group) and education are related. Most of the youngest in the sample were pupils or students (at a comprehensive, an upper secondary, a vocational school or at a college) and correspondingly the oldest had a rather low education (elementary or comprehensive school). A college level education was mainly replaced by bachelor’s degree education in the early 1990’s and therefore people having a bachelor’s degree from a polytechnic (university of applied sciences) are somewhat younger than persons having a college diploma. People less than 50 –years old on average have a (better and) longer education than people older than 50. Age and education are related with the household or personal incomes. Middle-aged and high-educated seem to have the highest incomes (including all social security contributions, e.g. child benefit that may explain why the age-group 30-34 has the highest incomes). There are some differences in education between genders. Men are somewhat less educated than women. Since the income variable in the sample includes all social security contributions (e.g. child benefit) the number of children is used as an explanatory variable. There are two different variables: the number of less than 6-year-old children and the number of 7-17-year-old children. The results of the bivariate probit analysis when the age-cohort 50-54 and elementary school (edu2) are considered as reference value (i.e. the constant in the equation) show that the two spectator groups are not independent since the correlation coefficient of the error terms ρ = 0.625. Hence the hypothesis that the spectators of movies and arts belong to independent groups can be rejected. There are common characteristics, a common background which could be called an intrinsic culture orientation. If a person likes art exhibitions, opera and theatrical performances, she also likes to see movies at the cinema and vice versa, given that the institutions in the region offer these events. Those that are inactive and culture orientated do not go to exhibitions or performances and to the cinema. However, there are some particular effects that are related with exhibitions and performances or with movies. The importance of gender is very strong: females are more active in both arts (highbrow) and movies. The direct marginal effect of gender (female) is positive but the indirect marginal effect is negative. Both the direct and indirect marginal effects have been reported only for the highbrow art (art exhibition, opera and theatrical performances). The negative indirect effect describes the preference of seeing a film on the cinema. These leisure time activities are to some extent substitutes. Marital status matters: married or common-law married citizens go more often to see highbrow art than single people. If the effect of age on cultural consumption is relative to the age cohort 50-54, all younger cohorts prefer more movies and only the oldest (70-74) seem to go less often to the cinema than the reference group. The indirect marginal effect of age on highbrow art is negative for each younger age cohort. The direct marginal effects of cohorts are not significant. The results indicate that age is not a relevant variable to classify highbrow art consumption into active and inactive groups. Education seems to be very important to classify culture consumption structures. When the reference level is elementary school (edu2), citizens with any other education level are significantly more active in culture consumption, in both directions: highbrow art and movies. Omnivores have a higher level of education. Household’s size matters only indirectly to highbrow art consumption since bigger families seem to favour movies. The number of small children (less than 7) or older children (7-17) significantly reduces both culture consumption segments. The household incomes (or personal incomes, not reported here) are not significant. The age cohorts 30-34 and 35-39 are most omnivore, but this indication is unreliable to some extent. The results of the MNL analysis confirm the importance of gender. Females are more active to go to an arts exhibition, opera and/or theatrical performances. Both the marginal effects of the gender variable or over individuals show that females most often belong to the group ‘less often’ (occasionally). The only marital status variable to classify into three groups is ‘married’. There are no differences if the person is single or living in common-law marriage. Married people most often belong to the group ‘less often’. The age cohort 25-29 is most passive in going to see performing arts. Surprisingly the older age-cohorts (55-59, 65-69 and 70-74) are most active. The oldest seem to strongly classify into totally not-going and actively going groups, but the probability of belonging into ‘less often’ –group is the lowest. Education is very important to classify performing arts consumption. 1.5ConclusionsThe essays have added information on the economics of culture in Finland. The sophisticated methods have been used. The role of public, non-advertising information on the cultural consumption decisions has been underlined. Essay 1 gives evidence that critical reviews published in the newspapers do have an impact on movie admissions when the world-of-mouth is taken into account. In the ice hockey case, considered in essay 2, the public information in the form of series situation or the winning percentage of the team has an impact on the attendance figure, which verifies the result of the first essay. Published information has an impact on attendance. It is reasonable to assume that the marginal costs of most cultural events are almost zero, and the producers or distributors should maximize revenues. The cinema ownership in Finland is very concentrated and this leads to strategic behaviour. Essay 1 shows that movie attendance has price elasticity minus one or lower , which as such follows the optimal pricing rule of monopolies. Movies are the most homothetic product in cultural capital, at least in respect of the most popular movies, though the number of annual attendees varies to significantly greater degree than in ice hockey or in highbrow culture. In the latter case, the policy is usually to satisfy all supply by means of special discounts e.g. in last minute reservations. Essay 1 also shows that a wide release with extensive advertising should be used with mainstream films. Since the word-of-mouth is important the bad experiences of low quality films has a smaller effect on attendance. A hit-and-run strategy should be used with lower quality films while a platform release with a small number of initial screens should be favoured with high quality films. This is compatible with the results of Schmalensee (1978) who argue that low quality products should be advertised more intensively. The live opera performances from the New York Metropolitan Opera that could be seen in the biggest towns’ cinemas in Finland were launched using a platform release. During the first year only live performances were offered but during the second season also encore performances were given some days later. Since the performing art audiences are highly educated the ticket prices for these cinema opera performances are substantially higher than the normal cinema tickets. The audience composition can be studied using bivariate probit analysis. This analysis is an important method to classify audiences of different cultural events and simultaneously to classify consumers into omnivore and other groups. Essay 4 indicates that the time constraints on leisure activities are connected with the number of children in the family. Formal education is an important factor to classify consumers into different groups. Highly educated are more active in highbrow consumption, but according to essay 3 they go less often to sport events. However, the omnivorousness increases with formal education. Overall, essays 1 through 4 reveal that gender differences are important in both the performing art consumption and the sport consumption. Essay 3 shows that sport consumption has similar types of characteristics although it is less elitist and typically favoured by men. 25% of total population attend at least once a year in the ice hockey match and the preferences are fairly price inelastic. Fans are loyal to the local ice hockey team, also to a large extent irrespective of its success or failure. The latter results only in limited substitution of a less successful team with the one with better recent performance. Fans are still loyal to ice hockey and not to the team. All this offers opportunities for monopoly pricing and we have observed in recent years substantial increase in the ticket prices. Intellectual assets including cultural capital are highly agglomerated in the greater Helsinki area (Helsinki, Espoo and Vantaa): 52% of cultural capital and according to a recent study 48% of intangible capital is located in the capital region with a population share of 30% (Piekkola, 2011). These areas also have on average more educated inhabitants with human capital. Cultural capital has been shown to be sensitive to the human capital of the attendees. In essays 3 and 4 highly skilled are typically more active than low educated and are engaged in several types of activities including cultural events. One can also categorize the cultural capital in terms of the degree of experience consumption. Movies stand out again as the cultural capital with the least surprise content and hence most close to experience consumption. Highbrow cultural capital is less frequent and includes the biggest unknown element, although in certain dimensions sports are the most unpredictable. All these findings are of big importance in the evaluation of cultural policy and subsidies for cultural consumption. The inelastic part is quite insensitive to subsidies and it is expected that rather high share of subsidies in the form of cultural spending voucher (kulttuuriseteli) benefit the price elastic cultural activities such as theatre. Both the state and local authorities subsidy production of highbrow cultural events but they should reallocate the policy towards consumption in terms of cultural spending voucher subsidies and diminish direct production related subsidies. The institutions should also offer last minute places to low-income students with reasonable discounts. It is also noteworthy that price elasticity is likely to be lower for high educated that can better afford allocate their time to several activities. On the other hand, highly educated people are more time constrained and do more voluntary work. The study also shows clear substitutability between highbrow cultural capital and movies. Cultural capital is highly concentrated in the greater Helsinki area and there is every reason to believe that a fairer regional distribution will lead to much greater demand for highbrow cultural capital. Cultural capital policy is important regionally also because it has been shown that older people consume it less and hence the demand for cultural capital can be subject to dramatic changes in the rapidly ageing areas, many of which are located in rural areas in eastern and northern Finland. The substitutability between highbrow cultural consumption and sport events attendance is less low; this explains why sport events demand falls into inelastic part while the movie attendance has price elasticity minus one. Is cultural capital enjoyment or long-term investment? This study shows in many respects low price elasticity and hence the importance of non-monetary reasons for cultural capital consumption. Clearly price mechanism has only limited role or can lead easily to monopoly pricing rules, where our price elasticities show some evidence in movie attendance. This is supported by the surprisingly limited role that critics have on the consumer decisions. It is also noteworthy that the price elasticity in Finnish movie consumption has been found to be lower than that observed in the Great Britain or the United States (Davis 2002, 2006). References Akerlof, George A (1970): The Market for ‘Lemons’: Quality Uncertainty and the Market Mechanism. Quartely Journal of Economics 84, 488-500 Alderson, Arthur S., Azamat Junisbai and Isaac Heacock (2007): Social status and cultural consumption in the United States. Poetics 35, 191-212 Bauer. Hans H.. Nicola E. Sauer & Stefanie Exler (2005): The loyalty of German soccer fans: does a team’s brand image matter? 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