The Economic Impact of the Arts in Watauga County, North Carolina

The research team, along with a team of volunteers, surveyed full- and part-time residents of Watauga County to estimate their preferences and value of the area’s art activities. We examine the economic value to residents separately from visitors for two reasons. First, resident preferences and values will be different and more varied than those exhibited by visitors. Second, revealing differences will enable planners and policymakers to better direct the allocation of resources to the intended audience.

The contingent valuation methodology employs survey techniques to elicit responses from a sample of the relevant population. For this study, the relevant population is Watauga County residents (42,909 in 2001), but we restrict the total population to those 18 years of age or older (35,915 in 2001). Due to the unique purpose of the study, the survey design follows established principles developed from decades of valuation research, and the resulting data is rigorously examined with technical empirical techniques.¹

The mail survey was undertaken between July and September of 2002 and entailed two elicitation procedures. Initially, 225 surveys were mailed to a randomly selected sample of Watauga County residents. Of those mailed, 117 were returned—a 52% response rate. Of the returned surveys, 20 were deleted from the sample due to problematic item non-responses. To supplement the sample, 118 personal surveys were performed at selected locations.² Combining the data yields a final sample of 215—a statistically representative portion of the relevant population.

Aggregate numbers provide an overview of the typical respondent and generally indicate a correspondence to the county averages. The typical respondent was 50 years old and lived in a household of 3.06 people with 1.70 being children. Sixty-five percent of the respondents were full-time residents and 53 percent were male. On average, the respondent lived in the area for 17 years, possessed 14 years of education (associates degree), and had a household (not personal) income of $49,000.

Before moving to estimating individual and community value for art activity, we first report findings of resident preferences. Results provide an overview of three areas of community preference regarding local art activity: interest and familiarity, resident participation and spending, and chosen events, locations, and venues.

Table III-2 provides a summary of community familiarity with local art activity. The numbers are consistent with the reality that household familiarity will be average at the aggregate level. Nearly 30 percent indicated a neutral or average familiarity with art activity, while 40.46 percent were familiar or very familiar and 29.76 percent were not familiar or not very familiar.

The likelihood of Watauga County households attending art events in the next 12 months is illustrated in Table III-4. The figures provide a strong indication that most households will participate in art activities in the next year. Over 57 percent stated they definitely will or probably will attend an event in the next 12 months, while about 31 percent indicated they definitely will not or probably will not.

Table III-6 provides a summary of the type of art events preferred by residents. Music appears to have the strongest preference, with music events receiving nearly twice the preference (58%) as the category with the next highest preference (crafts at 29%). Beyond music, the types of events receiving substantial preference include crafts (29%), folk arts (28%), dance (25%), and theater (20%). Responses also indicate that furniture-making, film, ceramics and pottery have sizable preference. Types of events that had relatively low preference levels include jewelry, painting, poetry/readings, sculpting, storytelling, and weaving. It is noted that the music category is broad while visual arts are separated into more narrow categories, and this may partially explain the relatively large preference of music relative to the more narrow categories of other art categories.

The places residents participate in art events is summarized in Table III-7. Indoor and outdoor performing arts facilities are popular venues for art events, with approximately 46 percent of respondents indicating they participated in art activities in such places. Responses indicate that galleries were visited in a similar proportion (42%). Other venues of note include restaurants (29%), museums (29%), and street fairs/festivals (26%). Studio hops and craft trails do not appear to receive much attention, which is likely due to relative information available to people. Venue preferences should be interpreted with the understanding that preferences for the art event may dominate any preference for the venue. For instance, residents may be visiting a restaurant for the music, not because of any preference for a restaurant.

Table III-8 reports how residents typically learn about art events. As one may expect, friends and family is a significant source of information. Nearly 44 percent indicate they learn of events through personal contact with friends and family. Newspapers are another important source of art event information with 47 percent of respondents identifying it as a resource. As expected from residents, previous visits provide substantial information about art events (22%). Other significant resources include radio (21%), brochures (20%), and television (18%). It is interesting to note that billboards provide relatively low levels of information (7%) and the internet is a noteworthy resource (11%). As one may expect with residents, the welcome center and hotels/motels were an insignificant source of information.

To get an individual value for all (100%) of the art activity in the community, we assume the value for the last 20 percent of art activity provides is the same as the previous 80 percent. Therefore the typical resident’s value for all of the art activity is five times the value of the last 20 percent provided to the community—$15.03. We note that this is a conservative estimate because rather than valuing all levels of art activity the same, people generally have diminishing marginal values for art or any other product. In other words, people generally value the last 20 percent of art activity less than the previous 20 percent, which would then have a lower value than the previous 20 percent, and so forth. As such, $15.03 is a conservative estimate for the individual value for all art activity in the community.

The estimated individual value is then used to calculate the total community value (Table 9). If the typical county resident is willing to pay $15.03 and we have 35,915 Watauga County adult residents (2001), the total community value is simply $539,658.80 ($15.03 x 35,915 = 539,658.80).³

Motivation. It may be of interest to examine why residents indicated they would or would not be willing to financially support current levels of art activity. Table 10 summarizes reasons provided by the respondents. The most prevalent reason for support was because art activity was important to the local culture (43%). The importance of the art sector on the local economy was the next most cited reason for support (25%). Significant reasons for non-support were that people did not feel it was their responsibility (18%) and they could not afford to contribute (14%). The relatively small response rate for needing more information is another indicator of a well-designed survey instrument.

Appendix: Methodology
For estimating individual and community value for the arts, we use a two-step process following Kriström’s (1997) spike model. The spike model allows for a nonzero probability of zero willingness to pay. First, the respondent is asked to accept or reject the scenario of paying a sum of money A. The scenario is represented as the change , where z⁰ denotes a scenario with less community art activity while z¹ denotes a scenario with a sustained art activity. The willingness to pay (WTP) to sustain current levels of art activity is defined as: