241 27. Economic impact of the arts Bruce A. Seaman How might one answer the question: ‘What is the economic value of the Chicago Symphony Orchestra to the city of Chicago?’ This type of question has many variations. The cultural asset need not be a single organization but instead a whole sector, such as the arts industry in Chicago. The geographical area in which to measure this economic impact need not be a city boundary, but an entire metropolitan area, several counties, a state or a region (or nation). The focus of the inquiry can also be a single event or series of events, such as the Mozart Festival in Salzburg, the Boston Pops summer concert series in Tanglewood or Mardi Gras in Rio de Janeiro. Almost identical issues are raised when the concept of a cultural asset is expanded to include sports instead of arts-related subjects, and the comparison of those two sectors continues to be of great interest to practitioners and academicians (see Crompton 1995; Seaman 2006b). INTRODUCTION TO THE PROBLEM AND ANALYTICAL METHODS Special challenges exist in the case of cultural assets that are non-market goods, for which the exclusion of non-payers is largely infeasible or impractical (for example, icons such as the French language, the Kiwi as the symbol of New Zealand, the Brandenburg Gate or the Grand Canyon). While almost all cultural assets have non-market features, these cultural icons generate especially limited market data that can be used in the valuation process. However, economics does have analytical options in even the most problematic cases. An important revealed preference approach to this dilemma measures travel costs incurred to specific locations, while the hedonic price approach attempts to isolate the value of living near cultural amenities as capitalized into housing prices. Stated preference approaches include contingent valuation, willingness to pay and choice experiments, and share the essential feature of exploring how various hypothetical attributes of the object of study are valued via direct questioning of individuals under controlled experimental conditions (see Snowball 2008). The methodology followed in economic impact studies is a revealed preference approach that attempts to identify the incremental output, income, employment and tax revenues generated in a specified region by new spending stimulated by the existence or expansion of an organization or an event. However, since the preponderance of these studies are ex ante predictions of such impacts rather than ex post examinations of the evidence for such impacts, there are elements of stated preference theory in the attempt to identify what visitors are willing to spend and whether their visit to a region was primarily owing to the existence of event X or institution Y. When key data used in the study is linked to surveys of visitors and possibly local vendors, the studies are partly ex post empirically based even if no econometric estimation is performed. M4863-TOWSE_9781788975797_t.indd 241 23/01/2020 12:28