How the Arts Impact Communities – Princeton University:


Economic impacts are perhaps the most widely touted benefits of the arts.
The literature on economic impact studies of the arts tends to fall into two categories:
on the one hand, advocacy studies based on quick appraisals that often exaggerate the
impact of the arts (Azmier 2002; Bryan 1998; Eckstein 1995; Perryman 2001;
SCDCAC 2001; Singer 2000; Walesh 2001).

• The arts attract visitors (art as ‘export’ industry):

Tourists visit a community primarily in order to attend an arts event
(alternatively, tourists may prolong a trip in order to attend an arts
event). They will spend directly on the arts event and may also shop,
eat at a local restaurant and/or stay at a hotel in the community. To the
extent that these tourist dollars are spent by the arts organization – as
well as the stores, restaurants and hotels – on local goods and services,
the dollars brought in to the community for an arts event will have
indirect multiplier effects on the local economy.

• The arts attract residents and businesses:

The density of arts organizations and prevalence of arts events may
play a role in attracting residents and businesses to (re)locate to a
community by improving its image and making it more appealing. This
is especially true for attracting highly skilled, high-wage residents, who
will have a larger economic impact than less-skilled people. Businesses,
especially those that employ highly trained mobile personnel, may
consider the presence of art venues when making (re)location decisions
(Cwi 1980b: 18-19). The presence of the arts (i.e., improved image of
an area) may work to enhance the impact of tax incentives for business
location decisions (Costello 1998: 147-9).

High concentrations of artists and/or high-skilled workers may
produce agglomeration effects, where businesses (especially those in
the fast-growing ‘creative industries’ (Walesh 2001)) are drawn to an
area because of the availability of creative talent and/or high-skilled
workers, and vice versa.

• The arts attract investments:
By improving a community’s image, people may feel more confident
about investing in that community. So for example, people are more likely to buy property in an area that they feel is “up-and-coming” because of the presence of the arts. Or, banks may be more likely to lend to businesses in areas perceived as more secure and stable, and so on/. An indirect multiplier is based on the idea that a portion of each dollar spent on some good or service is then used by the recipient to pay for more goods and services. To the extent that the money circulates within a community (e.g., a city), it ‘multiplies’ within that community. So for example, if you spend $20 on a ticket to a play, the playhouse turns around and spends $15 of that for set design supplies from local markets. The employees also spend locally some portion of their income that is derived from that $15 to pay for more goods and services; and the stores from which they bought supplies in turn use some of that money to pay their workers and buy more supplies, and so on. This ‘multiplies’ the value of the initial $20..


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