More on income-sensitive tickets

I was pleased to see that Wednesday’s post on income-sensitive tickets got some traction, as it was picked up by You’ve Cott Mail, Parabasis, and smArts & Culture (“revolutionary”? You guys sure know how to make a blogger blush!). At the end of my post, I noted,

I realize that there are some potential holes to be plugged, but I’m interested to know what people think. Is there any reason, besides political will, why something like this couldn’t work in practice?

After reading some of the critiques of the idea in comments and talking to a few other people, I haven’t yet seen anything that makes me doubt its overall feasibility, but it’s clear that the implementation would pose several challenges. Here are the main problems that would have to be overcome, as I see them:

  1. Privacy concerns.
    Jodi SC in the comments to my original post raised an expected concern, that she’s “not sure if [she likes] the idea of everyone having a card that classifies them by income.” Maryann Devine mentioned as well that a report on arts participation by college students indicated that they were embarrassed to ask for student tickets at the box office. I suggested that perhaps the Art Card could only be used online, thereby bypassing any personal interaction when receiving the discount and limiting the number of people with exposure to the amount of the discount. On the other hand…
  2. The digital divide.
    It’s well known that lower-income people are not only less likely to own a computer themselves but also less likely to have access to credit cards or bank accounts, both of which would be required for online ticket purchases. I suppose the Art Card could work like a charge card that would need to be paid off every month, but that would add a whole other layer of complexity for the issuing body (most likely the city) that doesn’t seem worth the trouble. So, certainly, an online option should be available, but the card will still have to be accepted at the box office in order to promote truly fair access.
  3. The potential for fraud.
    The biggest potential issue with price discrimination is that the discount buyer, having received the good, can then turn around and resell it to someone else, thus becoming a direct competitor to the original supplier. So, let’s say we had a program like this in place for the Nintendo Wii. Because I’m po’, I could buy my own Wii for, oh, $120, and then turn around and sell it on eBay for full price, taking profits that arguably should have gone to Nintendo (since I clearly didn’t care enough about the Wii to keep it). Moreover, in theory I could do this many times, enough so that I could establish a side business as a bootleg Wii-seller sucking all kinds of profits from Nintendo. (Of course, if I got rich doing this I would no longer qualify for the discount program, but that’s not an issue in the short term.) The reason this is not an issue for something like college financial aid is because (a) it’s not possible to “resell” one’s college admission, and thus finanical aid package, to another party; and (b) you can’t keep going back to college over and over again to keep getting the “discount.” Now, arts tickets have more in common with the first situation than the latter, but some simple safeguards can protect against this kind of abuse. First, all online purchases with the Art Card could be held at “Will Call,” and the arts insitution could make a policy to ask for either the card or photo ID when picking up the tickets. (This gets in the way of problem #1 above, but you can’t have everything, I guess.) Second, it should be possible to disallow multiple purchases from the same Art Card for the same show (or the same day). That means that couples would have to each apply for their own card, unless there were a “family edition” of the card for married couples filing jointly, perhaps. And then what about the kids? Well, many museums and so forth already have kid-friendly admission prices, so hopefully that wouldn’t be too much of an issue. After that, you run into some questions of fairness–is it right to enable a family of 8 to see a show in a small theater for peanuts and take away other people’s seats, for example? I’m not sure. There would have to be a line drawn somewhere, I would think.
  4. Where will the money come from?
    To be sure, organizations could compensate to some extent for the loss of revenue from lower-income customers by raising prices for higher-income customers and tourists. However, there is a limit to how far they can go with this without losing market share to other tourist attractions and cutting into their donor base. I suspect that in order to make the program palatable to arts institutions, the city would have to offer, either directly or indirectly, some sort of subsidy — or perhaps a guarantee of a minimum level of income for the first year or two based on previous years’ performance. This, of course, raises the cost of the program and makes the political challenge harder — hopefully not by that much though.

Taking all of this into account, I’m still not totally sure myself where this idea falls on the continuum between “interesting” and “great,” but I definitely think it is worth discussing, especially as arts institutions around the country struggle with questions of accessibility, diversity, and community relevance. We should give some serious thought to whether these aims would be best accomplished with the current haphazard, every-organization-for-itself approach or a more formal, centralized infrastructure like the one I’ve described.


New Blogs!

If I’ve learned nothing else in the first half of this year, I’ve learned that the arts policy blogosphere and its related universe is far more vast than I once imagined, and growing all the time. If you’re a regular reader of this blog, take note: these folks are all your friends and colleagues too. Please pay them a visit and say hello, because we are part of this movement together.

From now on, New Blogs will be an occasional feature whenever I have enough new ones to share with you.

Applied Imagination
Createquity reader Steve Dahlberg recently got in touch with me and pointed me to his blog about “creativity, creative thinking, creative problem solving, innovation, applied imagination, education, creative studies and more.” Steve brings a welcome science-oriented focus to his writing that is missing from most of the other content I keep up with; a number of posts, for example, highlight current trends and conversations in neuroscience. Steve also runs a consulting service called the International Centre for Creativity and Imagination.

Arts Council Blog
My good friends at the Arts Council of Greater New Haven have been maintaining this cool little blog for quite a while, actually. Currently, it appears to be toiling in some obscurity, judging by the paucity of comments, but it would be an ideal place to talk about how things that are going on nationally (like the recession, the new administration, etc.) impact on the local arts scene. I encourage anyone who’s reading this in New Haven to check it out. And even if you’re not in New Haven, there’s lots of eye candy in the form of photos from recent exhibitions and events around town to keep you entertained.

NYC Performing Arts Spaces Blog
As if the Fractured Atlas blog weren’t enough, NYC Performing Arts Spaces (which is now a Fractured Atlas project) just introduced one of its own. There’s some content overlap, but the NYC PAS blog tends to focus more narrowly on space-related and NYC-specific issues.

The IdeaFeed
Totally fascinating site from the head and keyboard of Jay Corless, a Miami-born cultural policy maven who has done time in Paris and London and and is now once again based in the States. You must check out this extremely intricate interactive report on the development of the UK creative industries policy in the 1990s. Jay is also gearing up for an awesome-looking cross-country tour of creative community-building efforts in 35 cities across the United States that will result in an online travelog and hardcover book. If you want to help him out, it looks like the donation page could use a little love.

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Free tickets? How about income-sensitive tickets?

On Monday, I posted a note about a new program from the Highland Street Foundation to pay for free museum admission on Fridays at various Massachusetts cultural institutions during the summer. There are similar programs in other cities, such as Target Free Fridays, not to mention more traditional access programs like student discounts or rush tickets.

These strategies are certainly welcome antidotes to the often eye-popping prices of mainstream big-ticket arts events. In essence, arts organizations already pursue price discrimination to a significant degree, making it possible for both high payers and low payers to experience the art by having the former effectively subsidize the latter. But the instruments used to identify such consumers are quite blunt, aren’t they? I mean, take senior discounts for example. Sure, many elderly folks basically live off of Social Security and aren’t in a position to pay $200 for a seat in the orchestra section. But on the other hand, many of the museum’s or the opera’s biggest individual donors are probably over 65. They certainly don’t need a senior discount. Or take the free Fridays – it’s pretty easy to imagine a family that was planning to come on Saturday deciding to go on Friday instead to save some cash. In that scenario, the foundation’s grant amounts to little more than a boost to that family’s expendable income. Is that the most efficient way to accomplish things?

If this is really about expanding access to the arts, why not make tickets income-sensitive? All of this classifying and filtering of customers into students, seniors, non-tourists, etc. basically amounts to a guessing game about their income. If a customer exhibits certain behavior or characteristics, the logic goes, s/he is more likely to be in need of subsidization. But why not just go to the source?

Educational institutions have this down to a science. Instead of guessing about students’ financial situations, they have the students and their parents fill out a series of federal and school-specific forms and submit their tax returns, so as to make a determination about just how much financial assistance each faimly really needs. Invasive? It sure is, but considering the amount of money to be saved, I don’t hear too many people complain about that. And hey, no one’s holding a gun to anyone’s head to apply for financial aid. (For the record, I was able to attend Yale College at an approximately 80% discount thanks to that institution’s generous financial aid program, which has only become more generous in the intervening years. If I were a student there today, my parents probably wouldn’t be paying a thing.)

Here’s how this could work in the arts. A city-wide agency, like the local cultural council, could offer an “Art Card” to all residents. Eligibility would be based on financial aid criteria like that described above, particularly tax returns. This information would be fed into a formula that would then be connected to the resident’s account with the city agency. The Art Card would then act something like a supermarket loyalty card for its holder, with a preset individualized discount off of any posted price for participating organizations. So say I want to go to City Opera. I buy a $50 ticket, present my Art Card to the box office or the website form, and am told that my price for this ticket will be $37.16 based on my personal financial situation. This setup would be expensive to implement, but it would be fundamentally fair — and would have the additional benefits to participating organizations of allowing them to dispense with other hard-to-verify discounts and raise prices on their highest-income customers (just as colleges and private schools have been doing with tuition for years). It also benefits residents and extracts value from tourists, something any local government should be able to get behind. And if institutions are reluctant to play along, the city could always make participation in the program a requirement of receiving grant funds (at least for its largest institutions).

I realize that there are some potential holes to be plugged, but I’m interested to know what people think. Is there any reason, besides political will, why something like this couldn’t work in practice?


Around the horn: MBA edition

Createquity began in October 2007 in large part as a vehicle for me to share the novel experience of business school from an artist’s and nontraditional student’s perspective. That experience ended today, as I officially received my Master of Business Administration degree from the Yale School of Management, but Createquity will live on. Though the blog may have gotten a bit quiet while I was getting ready for the big graduation, I have plenty of exciting treats planned for the next couple of weeks. Some of the juiciest goodies in store include a wrap-up of my public policy and the arts independent study, a reflection on the most important things I learned in business school, a look at what “sustainability” means for the arts, and the start of a new series taking a close look at key arts policy and management texts and what they tell us about how to do our jobs.

And of course you’ll also continue to receive timely updates from the field via the Around the Horn series, of which this post is merely the latest episode!

  • OK, tell me if you’ve heard this one: Ted Turner, Bill Gates, Mike Boomberg, and Oprah walk into a bar Rockefeller University to discuss how to solve the world’s problems. This “secret meeting” is probably about as close to a “sexy news story about philanthropy” as this field is going to get. Too bad the reporter who would write such a story at the paper of record isn’t interested.
  • Nick Rabkin has a first-hand account of the recent meeting between grassroots arts activists and the White House over at the Americans for the Arts blog. There’s also this cool story about a group of creative types trying to make a difference (and seemingly having some success) in Alexandria, VA.
  • The economy claims another victim, as there will be no JVC Jazz Festival this year.
  • Times Square is now closed to vehicle traffic between 42nd and 47th Streets. So far so good, says the Times.
  • Great idea:

    To address the economic reality that more Massachusetts residents will be staying local this summer rather than taking pricey vacations, the [Highland Street] Foundation also announced its Free Fun Fridays will kick off July 3. Every Friday for two months, admission will be free at different cultural institutions. The institutions include locations such as the Museum of Science, Peabody Essex Museum, the Museum of Fine Arts, Springfield Museum and the Boston Harbor Alliance.

  • My (now former) business school was kind enough to post this profile of me on their website a couple of weeks ago. You can read other profiles of current and former Yale SOM students here.
  • Consultant Kris Putnam-Walkerly has a very helpful list of 15 Things to Do Right Now if you’re starting a consulting business. Though she mentions consulting specifically, many of her nuts-and-bolts suggestions are equally applicable to anyone looking to start a small business, including independent artists and musicians.
  • This week’s BLOGGERS ON FIRE are 1. Richard Florida, for posting like 7,000 entries on Creative Class Exchange this week in addition to guest-blogging at Andrew Sullivan’s Daily Dish and his weekly blog at The Atlantic; 2. Holden Karnofsky, for asking the tough questions that matter: What can the developed world teach the developing world? and Why not just give out cash?

    Why do cash handouts seem to be so rare in the charity world? Perhaps it’s because extensive experience and study have shown this approach to be inferior to others. Or perhaps it has more to do with the fact that giving out cash fundamentally puts the people, rather than the charity, in control.

    Holden and the Givewell team have also provided some additional follow-up on the Harlem Children Zone study mentioned two Around the Horns ago. I have been known to give Givewell a bit of a hard time in the past, but I cannot tell you how remarkable and valuable a service it is to translate studies such as these from academese to real, actionable recommendations in ways that are both agenda-free and faithful to high standards of scientific measurement and analysis. Having done a fair bit of literature review myself for my public policy and the arts independent study, I can attest that doing it well requires hours of painstaking work and a keen eye for distinguishing useful information from red herrings. You can read Givewell’s latest charity reviews here, though the list is still in progress.

  • Tactical Philanthropy‘s Sean Stannard-Stockton will be participating in a live Chronicle of Philanthropy chat tomorrow (Tuesday) at noon eastern time.
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Around the horn: end of the road edition

It’s a race to the finish here, as grades for my classes are due in just a few short days. In less than a week, I will be officially done with business school! As for the Around the Horn feature, the response to my query last week was limited but uniformly in favor of keeping the horn around, as it were. So here’ s what I’m going to do: Around the Horn will continue, but I will try to be a little more selective about what I include in it, and I will write up mini-articles based on things like the news about Rocco Landesman from last week a little more readily. Let’s see how that goes and things can always be adjusted later if necessary.

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New Blogs!

With this post, I have now published more entries in half a year of 2009 than I did in the entirety of 2008. Woohoo! Here are this week’s newly added blogs.

I didn’t realize until recently that Doug McLennan, the brains behind the ArtsJournal empire, also had a blog of his own. Doug’s continual monitoring of over 200 publications might just make him the most informed individual in the arts, so his perspective is uniquely relevant as a crisis in the profession of journalism itself collides with hard times for the arts more generally.

The Hub Review
Thomas Garvey’s blog was one of my first Twitter discoveries: someone pointed me in the direction of his excellent anti-manifesto on the value-destroying properties of the internet, which is one of the most challenging and thoughtful pieces I’ve read all year. The Hub Review has a Boston focus and basically provides a space for this ex-Globe critic to keep up his craft. Garvey’s writing is professional and very, very prolific.

New Voices of Philanthropy
This promisingly-named blog is run by Trista Harris, executive director of the Headwaters Foundation for Justice. As you might imagine, Trista writes mostly about issues of generational change in the social sector, and frequently invites guest bloggers to contribute to the conversation (there was a whole raft of them for the recent Council on Foundations conference in Atlanta). Few things are closer to my heart at the moment than the need for a coherent cross-generational pipeline in philanthropy, so I am very grateful that Trista is leading the charge in that department.

New York Times Arts section
Yeah, you’d kinda think that I would have subscribed to this one by now. Yet surprisingly, I was never a regular reader of the Times arts pages until quite recently, despite their huge importance in driving the national discussion. I simply didn’t feel the need to, what with ArtsJournal and other aggregators picking up the bulk of the good stuff. Some food for thought for what the web is doing to original content generators. I’ve given you the link for everything, but you can filter down by discipline here as well. Better take advantage of it while you still can.

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Rocco Landesman nominated to lead NEA

All the blogs are buzzing about it, but in case you’ve missed it:

Rocco Landesman, the Broadway producer of “Angels in America” and “The Producers” among many others, has been nominated to succeed Dana Gioia as the next chair of the National Endowment for the Arts.

I’m not personally familiar with Landesman, but the consensus so far seems to be that the choice is (a) surprising, given his background in the for-profit world of Broadway, and (b) a sign that Obama wants to shake things up at the NEA. People mostly seem hopeful to pretty excited.

For further reading, Adam Forest Huttler of Fractured Atlas fame pointed me to this op-ed by Rocco from the beginning of the decade:

It is disappointing enough that those of us in the commercial theater have long ago abdicated any purchase on sustained artistic enterprise. The idiosyncratic giants of an earlier day have given way, by and large, to syndicates of producers and corporations. Big Broadway successes are more often the product of well-crafted nostalgia brilliantly marketed than of bold and intrepid producing (”Chicago” and our own ”Smokey Joe’s Cafe” are recent examples). The road presenters poll their audiences’ response to various titles and stars before deciding on their seasons. The stakes (read costs) have simply become too high to assume undue risks. There is still a quotient of wonderfully reckless independent producers, but those careers usually don’t last long.

And now, in the nonprofit theater, too, the forces of risk control are at work. The managing directors, with their good board relationships, audience development campaigns and marketing strategies, are asserting their clout as the pressures to ”succeed” increase.

Sounds like a man who wants to shake things up to me.


Around the horn: turning the corner edition

Here’s a question for my long(er)time readers: should I continue with the weekly “around the horn” posts, or would you prefer if I selected only the articles that I have something to say about and gave them their own entries? I would then put articles that I merely find notable on my Twitter feed. Do comment, if you please. (I will interpret a lack of commentary as an endorsement for the latter strategy.)

  • A new candidate for NEA Chair? Scuttlebut says Nathan Cummings Foundation arts and culture program director Claudine Brown is being seriously considered for the position.
  • This somehow escaped mention last week, but NewMusicBox is celebrating its 10th anniversary with a look back at the previous decade. Check out this cool video cobbling together some of the more entertaining interview moments.
  • The Council on Foundations annual conference was last week, and Sean Stannard-Stockton hosted a rotating crew of commentators on his website. I especially appreciated this post from Kathleen Enright, CEO of Grantmakers for Effective Organizations, who notes that “the current pace of philanthropy is completely out of sync in our changed world.” Meanwhile, Philanthropy 2173 blogger Lucy Bernholz was on fire last week, challenging philanthropists to “consider the alternatives” to the status quo at even the most basic levels and questioning why institutional isomorphism (organizations mimicing like organizations) need be rampant in the sector. Change, it seems, is just around the corner, if those in the driver’s seat are ready to take the wheel. Will the L3C help get the party started?
  • Speaking of bloggers on fire, Holden Karnofsky from Givewell has been on a roll lately, publishing two important posts last week. The first makes the case against funding small, unproven charities if you’re an individual donor. I am more or less on board with his reasoning, with the caveats that (a) this really is about lay individual donors, not foundations who theoretically should have the expertise to evaluate unproven models; and (b) this idea is much more applicable to “save the world” type charities with very general missions, rather than organizations in fields that thrive off of diversity and competition (like, for example, the arts). Then, over the weekend, Karnofsky pointed attention to a new study showing unprecedented educational outcomes for Harlem Children’s Zone. This development, as Holden explains, is really an astounding event given the rigor of the study and the sheer magnitude of the impact demonstrated.
  • And for the final entry on the “bloggers on fire” series, Andy Horwitz of Culturebot looks to be emarking on another grand multi-part rant on the future of arts management. The first installment is here.
  • Things may have changed a lot in recent decades, but Europe still hearts the arts way more than the US of A. The latest is that Pennsylvania is threatening to completely zero out arts funding from the state budget, while across the country, the arts continue to get hit hard from all sides. Despite high hopes for the new administration, Quincy Jones’s culture czar idea seems to be going nowhere fast (though Quincy isn’t about to give up advocating). Meanwhile, across the pond, Britain is funding rehearsal spaces for rock bands. At least Forbes is showing public art some love.
  • Arts policy geekout alert: Canadian consultants Lord Cultural Resources publishes a cool-looking quarterly called Cultural Capital. The spring edition is here.
  • Great article about how Yale Med school is using art history/appreciation classes to help train doctors’ attention to visual detail.

Reconstructing Florida

I’ve had a chance to look at the two papers that Richard Florida and his colleagues sent to me in response to my essay from last month criticizing the quantitative methodology used in his best-selling book, The Rise of the Creative Class. The short version is that (a) a lot of work has been done on this since that book was published; (b) generally speaking the creative class does seem to predict economic growth reasonably well, and at least sometimes more accurately than traditional human capital measures; (c) on the other hand, it remains unclear how much Florida’s other theorized inputs, especially his Tolerance index, contribute to creative class concentrations.

I’ll do a close reading of each paper in turn, then offer some concluding thoughts.

I. Marlet and van Woerkens

The first paper, authored by Dutch researchers Gerard Marlet and Clemens van Woerkens, compares creative class theory to human capital theory (human capital means the collective skills of a population, often represented by the percentage of adults with a college degree). This is the same question that was considered by Ed Glaeser in his review of The Rise of the Creative Class. Glaeser found that human capital was a better predictor of population growth in the set of US metropolitan areas mentioned in Florida’s book, though he did not look at employment growth.

Marlet and van Woerkens find that the creative class concentration in 1994 was a significant and reliable predictor of employment growth from 1994-2003 in Dutch cities. Notably, they find that this effect seems concentrated in urban areas; regional creative class share does not impact employment growth within the city. They test two different formulations of the creative class, Florida’s liberal definition which comes out to about 35% of Dutch workers, and a tighter definition leaving out people like secondary school teachers and government administrators. The two definitions perform similarly to each other. The authors also tried to disentangle causality by examining “exogenous” variables such as theater and musical performances, proximity to nature, quality of restaurants and secondary schools, number of students, and so on. I’m not totally convinced by this analysis since, as the authors acknowledge, many of these variables are probably influenced by creative class concentration as well, but it’s interesting to consider.

Marlet and van Woerkens also tested the creative class statistic against the concentration of people with Bachelor’s degrees, and found that the creative class was a better predictor of employment growth than human capital, with both a higher coefficient and stronger statistical significance. These results are replicated with different sets of years and when specific variables in the model are left out.

Finally, the authors looked at the Bohemian index (the concentration of artists in an area) and found that, while it does seem to have some explanatory power for employment growth over and above the creative class, this effect disappears when Amsterdam is removed from the sample. Perhaps Amsterdam’s status as a “world city” enables it to take advantage of artist concentrations in a way that smaller population centers cannot.

Marlet and van Woerkens conclude as follows (emphasis mine):

Members of the creative class are essentially working, but not necessarily highly educated, while highly educated people are not necessarily doing any work at all. Highly educated people might end up without jobs after studies, or choose for easy routine jobs, leaving their human capital largely unused….Levels of human capital can therefore be higher in places with more people working in creative jobs than in places with the same levels of education but less people working in creative jobs – not only because individual levels of skills and knowledge grow, but because everyone is making more and better use of other people’s knowledge. This means that the use of human capital may be more productive in places where more highly educated, creative people are living and working. Equal levels of human capital can, in other words, have different production outcomes due to different ways in which human capital is actually used: ‘working human capital’ is more productive than ‘non-working human capital’.

We suggest that it is not creativity in the sense of painting or making sculptures that makes Florida’s creative class responsible for regional growth differences. In our view creativity is the creative use of skills and knowledge. Defining creativity in this way makes the creative class an indicator for human capital.

Our overall conclusions are that Creative Class is theoretically much the same as Human Capital. To that extent we agree with Glaeser’s comment on Florida’s popular book. At the same time, the Creative Class standard – and this is precisely what Florida said in his ‘Response tot Edward Glaeser’s review’ – is in the Dutch case “a slightly better handle on actual skills, rather than using only an education-based measure – to measure what people do, rather than just what their training may say about them on paper”. By introducing the concept of Creative Class Richard Florida has found better standards for measuring human capital than the often-used education levels, this being his major (perhaps only) contribution to a better understanding of regional growth.

So that answers one question. But what drives the creative class to a particular area versus another? Marlet and van Woerkens followed up with another paper in 2005 entitled Tolerance, aesthetics, amenities or jobs? Dutch city attraction to the creative class. The co-authors understand that of Florida’s “3T’s,” the Tolerance indicator is really the linchpin of the three. (“Talent” is, after all, just human capital, which we’ve demonstrated above to be more or less the same as the creative class; and the idea that people who specialize in technology would gravitate to places with technology firms seems rather tautological.) Marlet and van Woerkens find none of the tolerance subcomponents (gay concentration, artist concentration, or pub closing hours) to be statistically significant in explaining the share of creative class workers in a city, and only one (artists) statistically significant in explaining creative class growth–and that in the wrong direction!

Rather than stop there, however, Marlet and van Woerkens go on to construct their own theory of what attracts creative class workers to the same place. In contrast to the “bohemian index” concept of concentration of artists, the co-authors find instead that the number of live performances per 1,000 residents is highly predictive of creative class concentration. This suggests that it is not self-defined artists but rather artistic activity that drives this growth (though when looking at actual creative class growth, performances lose some significance). Other significant drivers include proximity to nature, proximity to jobs, and the historic nature of buildings in the area. Each of these factors has an independent, positive association with creative class concentration. The co-authors go so far as to create an “amenity index” that has more robust explanatory power for this variable than any other single factor.

These papers are great. They are both quite readable, even if you don’t understand the numbers, and the analysis is, as far as I can tell, thorough and theoretically sound.

II. Florida, Mellander, and Stolarick

The major contribution of this paper, Inside the black box of regional development (purchase only — an earlier, free draft is available here), is to introduce a “stage-based” model that looks at the development process as a multi-step evolution rather than a simple cause and effect. Quoth the authors:

Our modeling approach is designed to address a significant weakness of previous studies of the effects of human capital and the creative class on regional development. Most of these studies use a single equation regression framework to identify the direct effects of human capital and other factors on regional development. The findings of these studies, not surprisingly, indicate that human capital outperforms other variables. But that does not establish that these other variables do not matter. First, something has to affect the initial distribution of human capital. Variables that have not performed well in other studies may exert influence by operating through human capital and thus indirectly affect regional development, or certain variables may operate through different channels. By using a system of equations our model structure allows us to parse the direct and indirect effects of key variables on each other as well as on regional development.

This new “path model” represents a bit of a departure from the theory presented in The Rise of the Creative Class. While the “3T’s” are still in evidence, Florida, Mellander and Stolarick now add universities and service amenities into the mix, as follows (click to enlarge):

As far as the human capital vs. creative class question goes, the co-authors make a useful, if slightly confusing, distinction between income (money received from mostly passive sources like investments and royalties) and wages (money earned from salaries, tips, and the like). They find that human capital is associated more strongly with income, but that the creative class has a stronger relationship with wages. No attempt is made to connect either metric with employment growth.

So what did they find? In a series of structural equation models (SEMs), not surprisingly, the “Talent” factor scored the best in predicting both wages and income. The co-authors used three different measures of talent: human capital, creative class concentration, and the super-creative core. Of these, only human capital performed well in predicting income but all three were reliable inputs into wages. In all cases, the relationship between Technology and income/wages seemed pretty weak, never getting above a correlation of .36. Tolerance varied wildly; in the version with income as the dependent variable and the super-creative core as the talent indicator, the correlation was as high as .46, but in the version with wages as the dependent variable and human capital as the talent indicator, the relationship was totally insignificant.

How about the factors that draw the creative class to a region? Taking the model that shows the strongest case for creative class theory, the creative class/wages version, we see that tolerance and universities seem to have decent, though not extraordinary correlations of .36 and .32 respectively. Service amenities have a statistically significant but low correlation of .16 with creative class concentrations.

Notably, in the above construction the R-squared for the Talent indicator is very weak, at .332 (for the super-creative core it’s even weaker, at .316). That means that only 33% of the variation in Creative Class concentration in a region can be explained by the combination of Tolerance (i.e., gay and bohemian concentrations), university faculty concentration, and service amenities. Human capital is much better explained by these factors, driven by a much stronger correlation between the Tolerance measure and human capital. I suspect, based on other reading I’ve done, that this is simply because artists and openly gay individuals are much more likely than the general populace to have college degrees.

In case the above three paragraphs were gobbledy-gook to you, the plain English version is that while the analysis contained in the paper is a head-and-shoulders improvement over that contained in the book, it still doesn’t really tell us all that much. The major weakness comes down to causality; even the authors admit that

the graphic picture of the structural model (Figure 1) expresses direct and indirect correlations, not actual causalities. Rather, the estimated parameters (path coefficients) provide information on the relation between the set of variables. Moreover, the relative importance of the parameters is expressed by the standardized path coefficients, which allow for interpretation of the direct as well as the indirect effects. We do not assume any causality among university, tolerance and consumer services but rather treat them as correlations.

Though it’s a stretch to say that the Marlet/van Woerkens article establishes causality beyond doubt, at least that paper uses employment growth over a period of time as the dependent variable. In other words, their model asks, “what can the concentration of creative class workers in a city in 1994 tell us about what happens to employment in that city between 1994 and 2003?” By contrast, Florida et al.’s model asks, “what can the concentration of creative class workers in a city in 2000 tell us about wages in that city in 2000?” Set up this way, the model cannot even pretend to be predictive. And as a result, it becomes far less useful.

Furthermore, the theoretical model placing the “3T’s” at the center in this paper struck me as a little forced. The authors seem to bend over backwards to come up with reasons why Tolerance is a signifier for other things that may or may not contribute to prosperity. Witness, for example, this rather vague series of assertions:

Fourth, locations with larger artistic and gay populations signal underlying mechanisms that increase the productivity of entrepreneurial activity. Because of their status as historically marginalized groups, traditional economic institutions have been less open and receptive to bohemian and gay populations thus requiring them to mobilize resources independently and to form new organizations and firms. We thus suggest that regions where these groups have migrated and taken root reflect underlying mechanisms that are more attuned to mobilization of such resources, entrepreneurship and new firm formation.

When I see stuff like this I think, why not just measure the underlying mechanisms directly? If the point is that entrepreneurship and new firm formation is good economically, then why not include self-employment and new firms formed per year in the model? Instead, we have artists and gays as proxies for all of these other things. But here’s an important difference between the two: artists, by the very nature of their work, actually produce things that in themselves make neighborhoods more valuable — like live performances, gathering spaces, aesthetic markers, and so on. Can we make any such generalizations about gays, lovely people though they may be?

Concluding thoughts

The whole kerfuffle around which of human capital or creative class theory better predicts economic development, while providing much fodder for the blog, in the end amounts to little more than an academic pissing match. Both sides agree that the two measures are highly correlated and mostly capture the same people with some variation at the edges. The real question, in my opinion, is what draws these highly talented individuals with much to offer their communities to one place over another? To answer that question, Marlet and van Woerkens offer a simple model that performs markedly better than the 3T’s approach despite hewing closely to concepts embraced in The Rise of the Creative Class: namely, that highly educated, talented people value ready access to jobs, natural beauty, authenticity, and a lively street scene in their local environment. Florida et al.’s paper, on the other hand, still feels to me like a model in search of a justification; there is even a lengthy note on page 13 going into some detail about how many other regression techniques failed before they settled on the one used in the paper. It makes me wonder whether the 3T’s are more of a hindrance than a help in developing useful frameworks for these questions; taking a fresh look at the problem, as Marlet and van Woerkens did, may prove more fruitful in the long run. What I do appreciate about Florida et al.’s contribution is that it takes a step toward breaking out these complex interactions into their component parts; in other words, positioning talent concentrations as the result of numerous inputs with their own causal links, rather than the move-lever-A-get-result-B style of analysis we have seen in the past. Clearly, though, we still have a long way to go before we’ll have a complete understanding of the mechanisms behind regional development in the 21st century.

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On the Arts and Developing Communities

(photo by murcurialn, Flickr)

As part of my independent study on public policy and the arts, I’ve been reviewing a significant amount of literature on the potential of artists and arts organizations to serve a revitalization role in so-called “transitional” neighborhoods and communities. While many studies show a clear relationship between the presence and density of nonprofit arts organizations and various indicators such as property values, population growth, and poverty decline, the directionality of the causal link has not yet been firmly established. Furthermore, even if it can be determined that the arts have this impact on communities, the abovementioned positive results tend to be confounded by troubling side effects of neighborhood growth, including increased income inequality, racial and ethnic tensions, and in some cases physical displacement. The extent to which these negative impacts can be mitigated remains an open question for those working in creative community development.

For many years, the standard approach to creative community development was, essentially, to stick a giant performing arts center in the middle of downtown to draw tourists and suburbanites (and their dollars) into the city. One of the first examplars of this strategy was New York City’s Lincoln Center, for which Robert Moses cleared a 13-acre city “superblock” that had housed 1700 families and 380 businesses. If anything, the trend has only accelerated, with major performing arts centers having debuted in places like Philadelphia, Omaha, Nashville, Austin, Dallas, Madison, and Miami in the past decade, and another one in Las Vegas on the way.

Unfortunately, I haven’t come across much empirical analysis of the effectiveness of these cultural institutions on revitalization of their surrounding areas. The evidence that does exist appears to be mixed. Though Lincoln Center can arguably be viewed as a success story, due to the transformation of its neighborhood in the 47 years since it opened, development by way of these “cultural palaces” suffers from significant downsides. For one thing, without further thought and investment toward guiding the surrounding neighborhood in a positive direction, these beautiful monuments to culture can turn into imposing, inaccessible behemoth structures that cater only to the car-driving rich. Since lively pedestrian traffic is the lifeblood of cultural districts, such a result signifies a missed opportunity to bring the investment to its full potential. Kansas City is trying a more comprehensive approach, pouring well over a billion dollars into downtown redevelopment this decade. The anchor developments, which include the Power & Light District (operated by the people behind Baltimore’s Inner Harbor complex) and the $413 million Kaufmann Center for the Performing Arts, are augmented by a number of other cultural facilities and commercial tenants. Yet this strategy isn’t perfect either; the tight, top-down control of the Power & Light tenant mix has resulted in what some critics term a “sameness” that saps some of the fun out of the place due to overcommercialization.

One “cultural palace” that seems to have worked out rather well is North Adams’s Massachusetts Museum of Contemporary Art, or MASS MoCA. Backed by a $35 million investment from the state, the well-regarded museum had a dramatic effect on its surrounding community in just a few short years. In a 2006 study entitled Culture and Revitalization: The Economic Effects of MASS MoCA on Its Community, economist Stephen C. Sheppard and colleagues showed that in the three years following the facility’s opening the city saw significantly increased property values (within 1.7km of the museum), hotel tax receipts, total employment, and average salary per employee along with modest improvements in the number of small businesses in the city. It’s possible that, as a smaller city in a rural part of Massachusetts, North Adams was a more appropriate fit for a top-down investment strategy than most.

Rather than pouring hundreds of millions of dollars into a few city blocks, some culture theorists instead advocate the cultivation of so-called “natural” cultural districts. These organically-occurring neighborhood hotspots for cultural activity are associated with numerous positive trends in their surrounding communities, as impressively documented by Social Impact of the Arts Project’s Mark Stern and Susan Seifert. In their 2007 brief on the subject, Stern and Seifert showed that block groups in the metropolitan Philadelphia area in the top quartile of cultural provider density were four times as likely as block groups in the bottom quartile to see their population increase and poverty decline during the 1990s. By defining a “cultural asset index” based on four measures of artistic activity in a neighborhood, the authors additionally demonstrated that 83% of the neighborhoods that showed significant improvement in real estate markets from 2001-2003 also scored highly on the index.

Supporting “natural” cultural districts will tend to take the form of subsidizing artists more so than high-profile arts organizations. One of the most common methods of doing this is by establishing live/work spaces for artists, of the kind that Artspace is known for developing. The problem with these “natural” cultural districts is that the gentrification often associated with them can be hard to rein in, especially in already-hot urban real estate markets. The rapid development of New York City neighborhoods, particularly Williamsburg, has forced the displacement of longtime residents and more recent artist immigrants alike. In addition, an influx of artists in a neighborhood does not necessarily bode well for relations between the artists and existing residents. A study examining two developing neighborhoods in Oakland, CA looked closely at these issues. The 23rd St. and Telegraph Avenue district suffers from both rapid gentrification and a lack of integration between the neighborhood’s old and new residents. Meanwhile, in the nearby Village Bottoms neighborhood, a community organizer named Marcel Diallo is trying to create a “Black Cultural District” by buying up properties and making them available to African-American “founding buyers” at a discount, thus heading off the problem of displacement. Can organic, bottom-up developments like these really be guided intentionally toward positive ends? To the extent that successful examples may exist, they have not yet shown up in my review of the literature.

Another tension arises when considering who should benefit most from creative community development. Two studies, Mapping Cultural Participation in Chicago and the Philadelphia and Camden Cultural Participation Benchmark Project, focused strong attention on some of the poorest neighborhoods in their respective cities, neighborhoods nearly bereft of cultural providers and with hardly any local participation in the city’s flagship cultural institutions. Yet the researchers found that while the symphony, art museum, and repertory theater have trouble reaching these residents, the few organizations that actually conducted activities or were based in those neighborhoods were much more likely to engage them, especially if their programming was culturally specific. To put this in context, remember that many mainstream cultural institutions worry themselves sick about reaching “diverse audiences”—it’s like the Holy Grail to them. This research suggests that they aren’t likely to get very far so long as they’re located in hoity-toity neighborhoods and showcase predominantly dead white male artists.

That information is all well and good to know, but can it be translated into action? Artists do seem to have an at times unfortunate tendency to want to cluster around people who are like themselves—alike, certainly, in terms of artistic focus, but also in terms of educational background and, seemingly, racial and ethnic heritage. This clustering means that even “natural” cultural districts, if supported in place, are going to tend to privilege neighborhoods that are relatively well-off compared to the poorest districts in the city. For this reason, I wonder if it is realistic to hope that truly neglected communities can be “saved” through the arts, or at least the arts alone. Indeed, economic development goals for the arts would seem to be in some conflict with community revitalization goals, in that an economic development strategy aimed at wealthy suburbanites and tourists will tend to build on the already-strong assets of the city rather than invest in neighborhoods that have a long way to go.

Though the arts’ value-generating and revitalizing effects have been ably documented in several instances, there does not appear to be a clear formula for capturing the benefits of arts-based community development while leaving the drawbacks behind. Nevertheless, in light of the materials I’ve read and the conversations I’ve had to date, I do have a few concluding thoughts and recommendations:

  • More research is needed to place the merits of arts-based development in the context of alternative strategies. It’s nice to know that MASS MoCA adds (theoretically) $14 million to the local economy each year, but how much would the equivalent number be for a sports stadium? Or a subway system? Or an equal investment in biotechnology? While there is undoubtedly research out there on each of these subjects, I haven’t yet found any studies that do this kind of comparative analysis with the arts.
  • Out of all of the various measures of community prosperity, the arts seem to have the strongest relationship with real estate values. This, at its core, is a good thing – a clear demonstration of the arts’ power to create economic value for all residents of a community, whether or not they actively participate in arts activities. This argument should be very compelling for advocacy purposes.
  • Rising real estate values have differential impacts on property owners and property renters. All of the concerns about gentrification and displacement essentially come down to ownership and self-determination. If community residents have an active role in welcoming artists to a neighborhood and are positioned to benefit financially from rising values, rather than having to pay more for the same space without any input into the process, in theory gentrification should not be an issue. Sadly, such a utopian vision seems to have few, if any, antecedents in real life.
  • One way in which artists can help is by taking the initiative to forge more active relationships with longtime community residents. Artists don’t do themselves any favors in the advocacy department by remaining within cocoons of like-minded souls, tempting though that may be. Small steps like communicating with the neighbors in one’s apartment building or getting involved in local politics can go a long way toward combating negative perceptions and stereotypes.

Further reading: