What is human capital?

Robot human and dog How does artificial intelligence (AI) impact human capital? What capital do non-human animals have?

The common use of the term ‘human capital’ is too narrow and will soon become redundant. It needs an overhaul. Here’s how to fix it.

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Measuring the economic impact of cultural policies

Sydney Opera House impactIs there a way to measure the impact of a country’s cultural policies overall, at a general, or ‘macro’, level?

Economic theory predicts that cultural policies will have an expansionary impact on the cultural sector (see Modelling the economic impacts of cultural policies). This article uses data from Australia and New Zealand to show the theory in action.

The article, published in Culture360 Magazine, uses data from Australia and New Zealand to compare trends in government cultural expenditure and cultural employment. The data reveal a remarkably strong correlation between cultural expenditure and employment in both countries: on both sides of the Tasman, as governments increased their financial commitment to culture, cultural employment grew.

The data are not only consistent with the predictions of Economic theory, they allude to a degree of cultural policy success in both countries.

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Policies for boosting arts demand

Demand expansion hand drawnPolicies that encourage arts demand can return balance to an oversupplied Australian arts sector and fix many of the ills of Australian cultural policy.

Policies for boosting arts demand, the second of my articles for Culture360[1], expands on my ideas for rebalancing an Australian arts sector that is showing the classic signs of oversupply.

As evidence of oversupply, I present data showing increasing levels of creative arts practice and declining relative incomes of professional artists. The policies that dominate Australia’s cultural policy system tend to work to boost supply, so they are likely to aggravate problems associated with oversupply, such as declining relative incomes. Policies aimed at boosting arts demand – ‘demand-side policies’ – can work to alleviate the problems. Continue reading

Modelling the economic impacts of cultural policies

Supply and demand curvesIn Policies for boosting arts demand I build on my argument that Australian cultural policy needs more demand-side policies. The case is based on the observation of recent data on the Australian cultural sector and some simple economic supply and demand modelling. This post supplements these articles by explaining the modelling process and reasoning that underpin them. This is a rough draft – I welcome comments or suggestions.

Recent data suggests that the Australian arts sector is grossly ‘oversupplied’. In the first decade of the century, Australian participation in creative arts work increased dramatically – in some arts activities it more than doubled or tripled! At the same time, artists’ relative incomes have declined. The Census, for example, shows that the full time incomes of artists dropped by $4,000 relative to other professionals. The figure below puts the two trends together to illustrate how dramatic the inverse relationship has been between involvement in creative arts practice and artists’ incomes.[1]

These are classic signs of a sector straining under the weight of labour supply: increases in labour supply tend to reduce wage rates, which is likely to be reflected in declining incomes. Australia’s cultural policies predominantly work on stimulating supply, and so are likely to have made matters worse. Continue reading

Advocating Creativity

This paper, written with Taryn Bloom and published in the International Journal of Cultural Policy, volume 7, number 3, 2001, brings together three aspects of my research at the time:

  1. The links between art and creativity
  2. Arts advocacy, or more specifically arguing for government support of the arts
  3. The economics of the arts

The paper examines how the concept of creativity is used by to advocating government expenditure on the arts. It  paraphrases the main creativity argument used by arts advocates – that, through encouraging creativity, the arts encourage innovation and economic growth. It then critically examines the argument, first by clarifying what creativity is and how it relates to art, then by evaluating the argument against theory and evidence from Psychology and Economics. The argument is found to be weakened both by a lack of ‘hard’ evidence and by the way in which it is used by arts advocates. The analysis suggests ways in which arts advocates can improve the persuasiveness of their creativity arguments and provides insights into the design and delivery of arts policies.

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Using economic impact studies in arts and cultural advocacy



‘Economic’ impact studies have been popular in arts and cultural advocacy. Yet the application is inappropriate. ‘Economic’ impact studies are not designed for the purposes of advocacy. In the case of art and culture, they are more likely to be self-defeating. They also distract attention and resources away from the articulation of better advocacy arguments. Economists have warned against the use of ‘economic’ impact studies for advocacy, but their efforts have been only partly successful. This paper summarises the case against using ‘economic’ impacts for advocacy, concentrating on commonsense issues for easy digestion by non-economists.

Economic’ impact studies in arts and cultural advocacy: a cautionary note>
Media International Australia Incorporating Culture and Policy, no.98 (February), 2001

About this paper

This paper extends the arguments in Discussion Paper: The Economic Benefits of Art. Many thanks to the publishers, who have kindly allowed the paper to be reproduced here.
Go to the Media International Australia home page

Living art: artists between making art and making a living

In this paper, I helped PhD candidate Merijn Rengers with his research into the artist labour market. The paper was published in 2000 in the Australian Bulletin of Labour, volume 26 number 4, and as part of Merijn’s final thesis.

The paper builds on the work-preference model of artists’ labour supply. The model is summarised, theories of multiple job-holding are investigated and an alternative graphical representation is introduced. After some simple alterations, the model is applied to data on Australian artists. Artists are found to respond to wage rates in both the arts and non-arts labour markets. Further refinements to the model and research methodologies are discussed.

Living art: artists between making art and making a living>
With Merijn Rengers, Australian Bulletin of Labour, 26 (4), pp. 325-354, 2000

Discussion paper: the ‘economic’ benefits of art

The phrase the ‘economic benefits of the arts’ has gained currency in arts sectors around the world, largely as a result of a new ‘economic’ rationalism in public policy. As with all areas of public policy, arts and cultural policies have come under the scrutiny of economics. But popular economic models have translated uneasily into the artistic sphere. The relatively young subject known as ‘cultural economics’ is only just beginning to mature. It is hardly surprising, then, that much of the application of economics to the arts has been less than satisfactory.

Some interpretations of how to apply economics to the arts have been at odds with acceptable economic and analytical practice: ‘economic benefits’ and ‘economic impacts’ arguments are an example of this. In their application to the arts, these analyses are only partial economic analyses and are typically associated with exaggerated claims. The word ‘economic’ has been misrepresented and the tools of economics misused with perverse results; the concentration on the financial elements of arts economics has distracted attention from more useful discourses on arts policies, has weakened arts advocacy and has caused undesired policy responses.

This paper is intended as a discussion document as part of Creative New Zealand’s project to outline the benefits of the arts. The overall objective of the paper is to clarify the phrase ‘economic benefits of the arts’. In doing so, the discussion illustrates many of the analytical weaknesses in focussing on the financial aspects of artistic activity. The paper formed the basis of my article Using economic’ impact studies in arts and cultural advocacy: a cautionary note, published in Media International Australia Incorporating Culture and Policy, no.98 (February), 2001.

This paper looks at both art and economics separately, investing particular attention on building a simple notion of economics. The paper then attempts to combine systems of economics with systems of art, as petitioned for cultural economics by Throsby (1996). A number of important lessons are highlighted in the process. The following structure is adopted:

• a definition of ‘economics’ (and an examination of the term ‘economic benefit’)
• a definition of ‘art’
• a integration of the two into the ‘economics of art’
• an investigation of the economic benefits of art, theory and practice

Read the full paper:
Discussion Paper: The Economic Benefits of Art
Christopher Madden
Published by Creative New Zealand, 1998

About the discussion paper
Back in 1998 I wrote this paper under contract to Creative New Zealand, New Zealand’s arts council. It stayed online until the Council re-jigged its website. Creative New Zealand has kindly allowed me to reproduce the  paper on this blog. The usual disclaimers apply – that the opinions are my own and don’t reflect Creative New Zealand policy etc etc.