frequently asked questions
How were the 156 participating communities and regions selected?
In 2005, Americans for the Arts published a Call for Participants for communities interested in participating in the Arts & Economic Prosperity III study. Of the more than 200 participants that expressed interest, 156 agreed to participate and complete four participation criteria: (1) identify and code the universe of nonprofit arts and culture organizations in their study region; (2) disseminate, collect, and review for accuracy expenditure surveys from those organizations; (3) conduct audience-intercept surveys at a minimum of 15 diverse arts events; and (4) pay a modest cost-sharing fee (no community was refused participation for an inability to pay).
How were the eligible nonprofit arts organizations in each community selected?
Local partners attempted to identify their universe of nonprofit arts and culture organizations using the Urban Institute’s National Taxonomy of Exempt Entity codes as a guideline. Eligible organizations included those whose primary purpose is to promote appreciation for and understanding of the visual, performing, folk, and media arts. Public arts councils, public presenting facilities or institutions, and embedded organizations that have their own budget were also included if they play a substantial role in the cultural life of the community.
What type of economic analysis was done to determine the study results?
An input-output analysis model was customized for each of the participating communities and regions to determine the local economic impact of their nonprofit arts and culture organizations and arts audiences. Americans for the Arts, which conducted the research, worked with a highly regarded economist to design the input-output model used for this study.
What other information was collected in addition to the arts surveys?
In addition to detailed expenditure data provided by the surveyed organizations, extensive wage, labor, tax, and commerce data were collected from local, state, and federal governments for use in the input-output model.
Why doesn’t this study use a multiplier?
When many people hear about an economic impact study, they expect the result to be quantified in what is often called a multiplier or an economic activity multiplier. The economic activity multiplier is an estimate of the number of times a dollar changes hands within the community (e.g., a theater pays its actor, the actor spends money at the grocery store, the grocery store pays the cashier, and so on). It is quantified as one number by which expenditures are multiplied. The convenience of the multiplier is that it is a simple number. Users rarely note, however, that the multiplier is developed by making gross estimates of the industries within the local economy and does not allow for differences in the characteristics of those industries. Using an economic activity multiplier usually results in an overestimation of the economic impact and therefore lacks reliability.
How is the economic impact of arts and culture organizations different from other industries?
Any time money changes hands there is a measurable economic impact. Social service organizations, libraries, and all entities that spend money have an economic impact. What makes the economic impact of arts and culture organizations unique is that, unlike most other industries, they induce large amounts of related spending by their audiences. For example, when patrons attend a performing arts event, they may purchase dinner at a restaurant, eat dessert after the show, and return home and pay the baby-sitter. All of these expenditures have a positive and measurable impact on the economy.
Will my local legislators believe these results?
Yes, this study makes a strong argument to legislators, but you may need to provide them with some extra help. It will be up to the user of this report to educate the public about economic impact studies in general and the results of this study in particular. The user may need to explain (1) the study methodology used; (2) that economists created an input-output model for each community and region in the study; and (3) the difference between input-output analysis and a multiplier. The good news is that as the number of economic impact studies completed by arts organizations and other special interest areas increases, so does the sophistication of community leaders whose influence these studies are meant to affect. Today, most decision makers want to know what methodology is being used, and how and where the data were gathered.
You can be confident that the input-output analysis used in this study is a highly regarded model in the field of economics (the basis of two Nobel Prizes in economics). However, as in any professional field, there is disagreement about procedures, jargon, and the best way to determine results. Ask 12 artists to define art and you will get 24 answers; expect the same of economists. You may meet an economist who believes that these studies should be done differently.
How can a community not participating in the Arts & Economic Prosperity III study apply these results?
Because of the variety of communities studied and the rigor with which the Arts & Economic Prosperity III study was conducted, nonprofit arts and culture organizations located in communities that were not part of the study can estimate their local economic impact. Estimates can be derived by using the Arts & Economic Prosperity III Calculator. Additionally, users will find sample PowerPoint presentations, press releases, Op-Ed, and other strategies for proper application of their estimated economic impact data.