Culture Vulture

<>Can economics make the case for propping up loss-making arts ventures?


Listener: 27 February, 2014.


Keywords: Literature and Culture;


I indulge in the Metropolitan Opera of New York’s Live in HD, cinema releases of live productions for large-screen high-definition viewing. I’m not really an opera fan, but given their quality, I am a regular. If I can get Live in HD a dozen times a year, why bother going to other productions? I have friends who are totally committed to opera – they would go to a Ring Cycle in the Chatham Islands – but they are a minority. What about the rest of us?


There is an electricity in a live performance, be it of opera, theatre, dance or music. (I gave up films of orchestral concerts; their cameras suffer from attention deficit syndrome.) As it happens I saw Aida live in New York as well as on film and, price aside, I cannot choose between them; the splendour of a live production is offset by the camera getting in close in the more intimate scenes that are lost on the large stage. (Television screens really are too small.)


Given the globalising technologies, could we end up with only one professional opera house in the whole world? Well, Met Opera needs others’ productions. Some of its shows are co-productions but it also needs training grounds for its stars. For all I know, the other productions in the great opera houses of Europe are just as brilliant, but I don’t see them.


I do go to local ones, both New Zealand Opera and local performances (Wellington is blessed with “Opera at Days Bay”). Aside from a night’s entertainment, I am not sure why I go, although I take pleasure at seeing young New Zealanders develop. I even go to amateur musical productions to encourage local activity – the amateurs usually pay a substantial subscription to enable them to perform, bless them.


So far the column has not had a lot of economic content. My professional interest is in opera – like most performance in the “higher arts” – being subsidised rather than being provided solely through the market. Rarely do audience contributions cover even half the costs.


MetOpera survives on the generosity of private donations; more commonly, as in Europe and here, enormous subsidies come from the public purse. How can I justify the taxpayer generously subsidising my attendance at otherwise loss-making ventures?


Unfortunately, standard economic analysis is very badly placed to provide an answer. It is centred on decisions with stable preferences. But the point of the arts, like education, is to evolve our preferences. A couple of years ago, I hardly went to operas; Live in HD has changed my preferences. Value theory simply does not work.


Moreover, economists treat all consumption of equal value. Yet as John Stuart Mill pointed out, there are different qualities of pleasure. But which are “merit” goods? Is there something about the arts that does not apply to, say, rugby or yachting, which we also subsidise?


Sitting behind this is the danger that we try to justify the arts through its contribution to the economy. It’s the reverse; the surplus the economy generates makes it possible to enjoy merit goods (even if economists don’t know what they are).


Yes, there are economic arguments for certain sorts of public spending on the arts – for example, on infrastructure (the platforms of performance), such as when your council provides a hall. But as for genuine education, the economist is as muddled as the rest of us on the wider issue.


In the end, there is no coherent economic argument for public spending on cultural activities such as domestic opera. It is politicians and their appointees who decide how much to spend. A Treasury economist is reduced to trying to make the subsidy as effective as possible, while reminding ministers that the funds could be spent on tax cuts, reducing child poverty or whatever.


Of course, economists go to see such publicly funded productions. I am going to a number of events at Wellington’s International Festival of the Arts. I bet they’re subsidised.