15 May 2013 // Thoughts

The Business of Culture Conclusion: Museums, Robots and the Economy

And there you have it.

Over the past six weeks, we’ve analyzed the impact of museums and other cultural assets on economic development in communities around the world. We began by examining whether arts institutions leave a positive mark on residential property values. We continued by visiting a boutique hotel that channeled its passion for visual art into a core business strategy. We then explored how creative placemaking has transformed urban planning from New York to Manila. Next, we reviewed Richard Florida’s Creative Class Revisited and the theory that the arts attract talent, which then attracts businesses, investment and capital. And last week, we studied the arts’ contribution to regional and national tourism dollars (and pounds and euro), and how destination-marketing organizations are leveraging these cultural institutions to their full advantage.

Assuming these positive correlations are solid (and we’ll debate that point below), external forces such as decreased government funding, continued overall economic stagnation and increased job automation could impede upon these advantageous economic relationships. Elizabeth Merritt, Founding Director of the Center for the Future of Museums, investigates the technology angle in her article, “Will You Lose Your Museum Job to a Robot?” She bases her February 2013 post on the Associated Press’ IMPACT report, which forecasted the effect of technology on employment. The authors’ thesis is that, while technology is creating jobs, it’s rendering more and more positions irrelevant; therefore, the millions of jobs (including museum jobs) that evaporated in 2008 are unlikely to return. Merritt quotes author Martin Ford, who says in the report that “there’s no sector of the economy that’s going to get a pass. It’s everywhere.” If Ford’s theory is correct, museum staff such as docents, ticket agents, collections managers and even food service workers could become obsolete. While Merritt concludes by saying she does not see museums laying off staff because of technology, she does concede that as the economy recovers, museums may choose to invest in hardware and software instead of in their workforce.

When I asked Philip M. Katz, Assistant Director for Research at the American Alliance of Museums, what he felt is having the biggest impact on museum’s economic health, he de-emphasized technology and instead focused on the slow post-recession recovery and the steady decrease in government support over the past few years. “Museum staffing has certainly felt the pinch of the economy,” said Dr. Katz. “For several straight years, museums have been downsizing (or at least freezing) their staffs. But very little of this, I think, can be attributed to increases in technology. If some technologies (such as CRM software) are replacing museum workers, other technologies (such as app development and web content creation) are creating new employment opportunities.” He referenced a rejoinder to Merritt’s post written by Nik Honeysett, head of administration at the J. Paul Getty Museum. In the response, Honeysett counters that the cost of providing the kind of technological infrastructure that would replace museum staff would most likely outweigh the benefits of human-based customer service.

Dr. Philip M. Katz

Katz then pointed me toward AAM’s most recent “Annual Condition of Museums and the Economy” report. To compile this report, AAM surveyed its institutional members, including zoos and aquariums. The results were mixed. Museums as a whole served more visitors between 2009-2012 even as their budgets were level or declining. While they showed some financial improvement in 2012, any growth was small and uneven. Only 52% of museums reported an increase in annual attendance, while 28% reported audience decline. Sixty percent of museums reported some level of economic stress. While this is a sizable percentage, it is the lowest one since the survey began in 2009. Nevertheless, museum directors said that “fundraising continues to be difficult” and that “corporate support cannot be planned or anticipated with any accuracy.

While governments that support the arts see an average return on investment of over $7 in taxes for every $1 they appropriate (not an AAM calculation, Katz points out), the arts and culture continue to find themselves on the governmental chopping block. Only 14% of museums surveyed saw increases in government funding, and 31% saw funding declines (and that’s on top of declines suffered in the previous three years). While museums are inching toward sustainability, one director said, “we had a balanced budget in 2012 but only because of reductions in pay or benefits for staff and reductions in programming for the public.” Reductions in staff, salaries and programming could all result in a diminished impact for museums on their surrounding communities.

Perhaps a bigger question than what might adversely affect the arts’ future impact on economic development, however, is whether these cultural institutions have any real direct impact on property values, employment or tourism now. If there is a causal connection, couldn’t it just be a chicken and egg relationship? Are the arts really a catalyst for economic growth, or just a byproduct of it? At a 2012 National Endowment for the Arts/Brookings Institute panel entitled “The Arts, New Growth Theory, and Economic Development”, Dr. Stephen Sheppard, who has provided research fodder for several posts in this series, asserted, “there is a pervasive causal connection between per capita culture production and per capita GDP in US metropolitan economies.” In other words, positive shocks to culture production create positive shocks to GDP. Harvard Professor Edward Glaeser disagreed with Sheppard’s definitive line of thought, countering, “it’s a mistake for arts to try to sell itself as an economic development policy,” and adding that most research on the subject was inconclusive. As a non-academe, I cannot even begin to offer my econometric philosophies on the subject, so I turned again to someone who lives this type of research on a daily basis. Dr. Katz generally agreed with Glaeser that there were no clear positions on the subject and that additional research was needed to provide definitive answers. “But perhaps it’s enough,” he said, “that we’re finally asking the right questions.”

With that in mind, I’ll conclude this series with a quote from Dr. Glaeser, which I believe best sums up the debate over the impact of culture on economic development:

We do nobody a service by claiming we know all the answers, but we do everyone a service if we argue for proper scientific evaluation, because I think we, all of us, should be confident enough in the value of the arts to be confident that those studies will show, in a convincing manner, the impact that the arts can have on our lives.

So let’s keep the dialogue going.