The Production and Consumption of the Arts: A View of Cultural Economics

Abstract

BY MOST CRITERIA the arts comprise a significant area of economic activity. In 1990, American consumers spent $5 billion on admissions to theater, opera, galleries, and other nonprofit arts events (more than on admissions to spectator sports), $4.1 billion on movie admissions, and $17.6 billion on books. Because of difficulties in defining boundaries around the arts industry, statistics on its contribution to GDP are problematical, but available data suggest that the arts (theater, music, opera, dance, visual arts, crafts, literature, community, and folk arts) account for a little under one percent of the United States GDP and a little over one percent of the civilian labor force. If the net is cast somewhat wider, defining the cultural industries as including the arts, motion pictures, radio and television, and printing and publishing, an aggregate value of output can be measured for 1988 of about $130 billion or 2.5 percent of GDP (National Endowment for the Arts 1992). Likewise, support for the arts and culture in the U. S. through government and voluntary contributions amounts to a significant annual commitment of funds. Combined federal, state, and local government expenditure on the arts and museums in 1987 amounted to about $0.8 billion, and in 1990, 6.4 percent of charitable giving was channeled to arts, culture, and the humanities, yielding a total level of voluntary contributions in these areas of $7.9 billion in that year. Private markets in the arts, too, are of significant size. Looking at the international art trade, for example, we can note that the worldwide net sales of the two major art auction houses (Christie's and Sotheby's) amounted to $6.6 billion in 1989-90.1 Yet, despite the fact that production and consumption of art have been elements of human activity for longer than most of the phenomena that have en-