I know: you’re a busy person. You don’t have a lot of time. You’d like to read my entire 7,000-word tome on Americans for the Arts’s economic impact study, but let’s face it: it’s just not gonna happen. At least not this week. Probably not next week, either. You suppose you could take it on vacation with you to Bermuda, though frankly that wouldn’t do you or Bermuda any favors. Is there any chance, you’re thinking to yourself, he could just make a little summary post like he did for that last one?

Well, you’re in luck. The Arts Policy Library series was created for people like you–people who would like to understand every facet of every research study or book that comes out, but just don’t have the time to spare. And so on the occasions, like this one, when APL entries run well past the normal length of a Createquity feature, it is my pleasure and privilege to provide you with a summary of the summary: everything you need to know in five minutes or less.

So without further ado, I present to you the Cliffs Notes version of Createquity’s Arts Policy Library entry on Arts & Economic Prosperity III, by Americans for the Arts.

  • Arts & Economic Prosperity III, which has been widely cited in the media during the past two years thanks to Americans for the Arts’s advocacy efforts, attempts to count up the total expenditures of nonprofit arts organizations in the United States, as well as the purchases made by those organizations’ audience members in connection with arts events on items like lodging, refreshments, souvenirs, etc. These expenditures are then run through an economic model to estimate further impacts such as employment totals, household income, and government tax revenue. To estimate the national totals, the study uses an intriguing distributed research method that involved partnerships with organizations in 156 communities ranging from small towns to entire states.
  • The study, which is for the most part constructed quite carefully and with admirable attention to detail, clearly shows that nonprofit arts organizations play a significant role in the nation’s economy, more significant than we are often led to believe. For example, the numbers reported for organizational expenditures (which should be roughly equal to revenues) are quite a bit larger than the total revenues for highly visible industries like coal mining, fishing, logging, and spectator sports. Furthermore, the arts often induce additional audience expenditures on local goods and services, a feature not replicated by most other industries.
  • At the same time, the study does not show in any real sense that the arts cause the economic activity with which they are associated. Many of the supposed impacts could be and probably are the result of substitution effects rather than newly generated value or wealth. For example, the meal that patrons had before the show was going to get eaten in some form or another regardless of whether there was an arts event involved that night. Many, if not most, of the workers employed by arts organizations would likely have found jobs elsewhere or started their own businesses if their time were not spent toiling for the museum or the symphony.
  • As a result, while the study deserves to be taken seriously as an estimate of the size of the nonprofit arts and culture sector in the United States, other claims about its deeper significance have tended to be overblown. Foremost among these claims is the idea that because the arts return an amount in taxes to government that is greater than the amount that government puts in, the arts represent a good “return on investment” from a financial standpoint. This is simply not true. The argument relies on an apples-to-oranges comparison that assumes that arts organizations would simply disappear entirely were they to be deprived of the 6% of their budgets that comes from government sources, a notion that I hope we can agree is silly. Furthermore, a return-on-investment argument is only useful to policymakers in context with comparative data from other potential investments, information notably absent from A&EP III.
  • Finally, there is reason to believe that the national estimates for organization and especially audience expenditures may be skewed a bit high, even though there are several factors working simultaneously in the opposite direction. This is because the sample for the smallest cities and counties in the study exhibits extraordinarily high average per capita spending as compared to cities in other population groups and, more importantly, to the multi-county regions and entire states included in the study. While the total spending estimates do not seem outrageously out of whack when checked against data from Giving USA, they are nevertheless higher by a noticeable amount.
  • Despite these issues, I believe that the strengths of Arts & Economic Prosperity III are considerable, and offer a strong foundation for further improvement of the study. This is data that the sector needs to have, and its occasional misuse as an advocacy tool notwithstanding, the problems cited above are relatively easy to fix or mitigate in future editions. I would particularly like to see AFTA make a move toward documenting a causal relationship between expenditures on the arts and local economic growth. Something as simple as adding a few questions to the survey instruments about counterfactual scenarios (e.g., how would you have spent your evening instead if you hadn’t come here tonight) could be an important first step in this direction.