Art Economics

Economics of the arts and literature or cultural economics (used below for convenience) is a branch of economics that studies the economics of creation, distribution, and the consumption of works of art, literature and similar creative and/or cultural products. For a long time, the concept of the “arts” were confined to visual arts (e.g., painting) and performing arts (music, theatre, dance) in the Anglo-Saxon tradition. Usage has widened since the beginning of the 1980s with the study of cultural industry (cinema, television programs, book and periodical publishing and music publishing) and the economy of cultural institutions (museums, libraries, historic buildings). The field is coded as JEL: Z11 in the Journal of Economic Literature classification system used for article searches.

Cultural economics is concerned with the arts in a broad sense. The goods considered have creative content, but that is not enough to qualify as a cultural good. Designer goods such as clothes and drapes are not considered usually to be works of art or culture. Cultural goods are those with a value determined by symbolic content rather than physical characteristics. (For further considerations, see also Cultural Institutions Studies). Economic thinking has been applied in ever more areas in the last decennia, including pollution, corruption and education.

Works of art and culture have a specific quality, which is their uniqueness. While other economic goods, such as crude oil or wheat are generic, interchangeable commodities (given a specific grade of the product), there is only one example of a famous painting such as the Mona Lisa, and only one example of Rodin’s well-known sculpture “The Thinker”. While copies or reproductions can be made of these works of art, and while many inexpensive posters of the Mona Lisa and small factory-made replicas of “The Thinker” are sold, neither full-size copies nor inexpensive reproductions are viewed as substitutes for the real artworks, in the way that a consumer views a pound of Grade A sugar from Cuba as a fully equivalent substitute for a pound of Grade A sugar from United States or Dominican Republic. As there is no equivalent item or substitute for these famous works of art, classical economist Adam Smith held it was impossible to value them. Alfred Marshall noted that the demand for a certain kind of cultural good can depend on its consumption: The more you have listened to a particular kind of music, the more you appreciate. In his economic framework, these goods do not have the usual decreasing marginal utility.

Key academic works in cultural economics include those of Baumol and Bowen (Performing Arts, The Economic Dilemma, 1966), of Gary Becker on addictive goods, and of Alan Peacock (public choice). This summary has been divided into sections on the economic study of the performing arts, on the market of individual pieces of art, the art market in cultural industries, the economics of cultural heritage and the labour market in the art sector.