where v(y, z) is the respondent’s indirect utility function and y is income. The probability that an amount A is at least as high as the respondent’s WTP is

where v(y, z) is the respondent’s indirect utility function and y is income. The probability that an amount A is at least as high as the respondent’s WTP is:

where is a continuous nondecreasing function. The functional form of WTP is assumed to be:

where and is a continuous and increasing function such that and

Second, the respondent was asked whether she was willing to pay anything at all to ensure the baseline level of community art activity, that is:



T_i indicates whether the respondent was willing to pay the suggested price:

The log likelihood for the sample is then equal to:

Following Hanemann (1984), assuming a linear utility function:

where  and  are coefficients, y denotes income,  is a vector of coefficients, and s denotes a vector of socio-economic and demographic characteristics gives:

where denotes an approximation of the utility change. Using a logistic distribution G_wtp we have:

The variance was computed using a Gauss approximation.

Four dichotomous choice bids X ($5, 10, 25 and 50) were randomly distributed among the sampled residents. The bids were chosen to provide sufficient information about the tails of the empirical survival distribution. In our survey, 57 percent of the respondents were willing to pay a positive amount to sustain current levels of community art activity. The large number of respondents unwilling to pay a positive amount shows the importance of using a distribution that allows for a zero WTP. Popular distributional assumptions such as log-logistic, lognormal or Weibull imply that all respondents have a positive WTP. Use of such an assumption may, therefore, result in a biased benefit estimate. The resulting estimated value function is provided in Table A1.

*Multiple response question

*Multiple response question

**Includes a broad spectrum of events


Table III-7

Places Visited to Experience Arts Events/Activities

*Multiple response question

*Multiple response question

*WTP = Willingness to Pay

*Willingness to pay a positive amount

The final section of this research report discusses the total economic impact of the arts in Watauga County as well as the study's limitations and factors not considered in the computation of the total economic impact of the arts.

This research project was designed to assess the economic impact of the arts in Watauga County, North Carolina. The project consisted of three sections. In the first section arts patrons were surveyed and their economic impact was estimated as the sum of arts patronage spending (both residential and visitor) and additional spending by visiting arts patrons. The second section surveyed artists and arts organizations in Watauga County. The economic impact of artists and arts organizations was estimated as the sum of the sales revenue they derived in Watauga County, their employee payroll expenses, and subcontracting expenses. The final section of the study involved a survey of Watauga County residents. This survey assessed their willingness to support arts events.

The total economic impact of the arts in Watauga County, North Carolina was computed to be the sum of the economic impact of arts patrons in Watauga County, $11,089,275, plus the economic impact of artists and arts organizations operating in Watauga County, $14,840,703, plus an additional amount representing the willingness of Watauga County residents to support the arts in the county, $539,658. Therefore, the total economic impact of the arts in Watauga County was estimated to be $26,469,636.

Discussion

Although a random sampling procedure would have been preferable for surveying arts patrons and tourists, practical limitations precluded this procedure. In addition, it is possible that a very small amount of double counting of arts patrons may have occurred since about ten percent of Appalachian-related arts patrons purchased season tickets.

However, the $26,469,636 economic impact estimated reported herein is expected to be to be low. There are several reasons for this expectation. First, the marginal effect of property taxes paid by resident art patrons, artists and art organizations were not accounted for. Second, not all arts events in Watauga County were sampled, leading to an underestimate of number of attendees and their resultant spending. Third, no attempt was made to account for arts events occurring in restaurants and bars in Watauga County. Finally, the study ignores the multiplier effect - additional spending on items such as additional supplies or any other good or service needed to supply a business, the amount of money arts employees spend as part of their daily lives in grocery stores and malls, and the additional jobs that result from this spending.

The $26,469,636 economic impact estimate seems to compare well with other estimates of economic activity in Watauga County. For example, the Boone Chamber of Commerce reported 2001 retail sales of $670 million. Further, the North Carolina Department of Commerce estimated tourism spending in Watauga County for the year 2001 to be $147.32 million. Overall, the results of this study suggest that the arts are one of the major industries in Watauga County, North Carolina.