Studying “Sponsored Goods” in Cultural Sector Symptoms and Consequences of Baumol’s Cost Disease

Abstract

The present research is the first part of econometric study of the so called sponsored goods and looks at one of the most common types of such goods namely art products created by theaters, concert organizations and museums. The aim of the paper is to analyse the performance of Russian art organizations to find out to what extend the conditions of their functioning in post Soviet times under the development of market economy, democratization of leisure and changes in consumer preferences influence their economic results. Could Russian theaters, museums and concert organizations be self-sufficient in market economy established in Russian in 1991-2010?The set up task determined the object of the study and the statistical data to be used-40 years time series performance indicators that include equal time intervals-1971-1990 for performing arts organizations and 1991-2010-for theaters, concert organizations and museums. The specifics of calculations presented in the article result from the very approach to the testing of cost disease. Its essence is to reveal the symptoms of this disease in art organizations taken as an element of economy as a whole rather than only as a part of cultural activities. Accordingly a new method of diagnostics of the cost disease is suggested that is based on development of specific indexes measuring the lag of labor productivity, advancing dynamics of wages and priority growth in prices for tickets in relation to the corresponding indexes of macroeconomic dynamics as well as determination of cost disease consequences-the deficit of income of providers of cultural (art) goods. The implementation of such an approach allowed to construct three-dimensional space which coordinates describe the dynamics of performance results of art organizations.

Theoretical Regulations and Institutional Features of Financing Arts

“…This mechanism entails a rapid increase of the production costs of cultural goods relative to the increase in the price of the final product. The consequence of this economic effect, confirmed by empirical studies [4][5][6][7][8] is an objective unprofitability of cultural organizations. However, in some sources [9], the authors suggest that such mechanisms of economic modeling and productivity optimization as marketing and management, as well as the development and creation of a new paradigm of culture can overcome the "disease of inefficiency" and "cure" any "cost disease".…”

Tomorrow 3.0: Transaction Costs and the Sharing Economy (an excerpt)

“…* Уже более 50 лет наука и практика располагают знанием экономической закономерности, получившей название «болезнь цен» или «болезнь Баумоля», в соответствии с которой доходы театров от основной деятельности объективно не могут компенсировать их затраты, формируя тем самым соответствующий дефицит дохода [Baumol, Bowen 1966;Rubinstein 2012;. 2010 2011 2012 2013 2014 2015 2016 2017 2018 Центральный 20,4 11,8 18,0 20,5 26,7 40,5 40,7 43,2 52,4 Северо-Западный 47,1 51,9 53,3 48,7 47,8 56,9 55,1 58,7 63,5 Южный 40,4 25,6 27,3 38,9 37,9 45,9 53,6 50,7 39,3 Северо-Кавказский 38,2 39,3 41,4 36,8 22,7 34,7 37,8 29,8 -36,2 Приволжский 40,4 38,6 32,7 33,3 38,3 45,5 50,9 42,3 34,7 Уральский 46,9 38,4 36,9 25,1 40,7 53,9 50,2 39,8 35,5 Сибирский 31,3 30,0 36,4 36,4 29,6 38,3 51,9 43,9 34,8 Дальневосточный 48,8 44,9 45,1 31,0 23,2 33,1 46,8 24,6 -1,4 Российская Федерация в целом 32,8 28,7 32,7 31,7 34,1 44,4 47,9 47,6 47,7 Источник: расчёты автора.…”

Models for Arts and Culture Financial Support

“…Within the framework of "economic sociodynamics" theory, one of the key theses to justify the state support for culture is the need to compensate for cost disease in arts and culture, a phenomenon studied in the works of W. Baumol and W. Bowen boils down to the fact that the production costs in the performing arts always grow faster than revenue (Baumol & Bowen, 1966). This phenomenon was examined and confirmed in the course of the empirical study of all Russian theatres, concert organizations, and museums for the period of 1990-2010 (Rubinstein, 2012).…”