The nature of our economy is such that we tend to value science, technology and mathematics above humanities and the arts. Blessed with an abundance of natural resources, the Western Australian economy is increasingly preoccupied with the resources industry often to the exclusion of other sectors of the economy. These competing interests coupled with the recent economic downturn continually threaten the funding of our arts institutions.
Faced with growing pressure to justify funding for the arts we have fallen into the trap of trying to quantify the value of the arts in terms of economic impact. While economic impact assessments are very useful to quantitatively estimate the impact of our cultural institutions on the economy, this method does not account for the value of the positive externalities generated from the existence of the cultural institutions. To overcome this, alternative valuation methods such as the contingent valuation approach should be adopted in addition to an economic impact assessment when estimating the value of cultural institutions.
The contingent valuation approach was first applied by Robert Davis in 1963 and is widely used to estimate the non marketed value of public goods. Contingent valuation relies on surveys to elicit how individuals value public goods by determining their willingness to pay for hypothetical projects. While there are limitations to this approach, the contingent value approach is one of the only methods for valuing the intrinsic rewards that result from the existence our cultural institutions.
Pracsys will be applying this approach as part of an overall assessment of and business case for specific cultural institutions throughout Australia.
