nep-cul New Economics Papers
on Cultural Economics
Issue of 2015‒04‒25
twelve papers chosen by
Roberto Zanola
Università degli Studi del Piemonte Orientale “Amedeo Avogadro”

  1. How Diverse can Spatial Measures of Cultural Diversity be? Results from Monte Carlo Simulations on an Agent-Based Model By Daniel Arribas-Bel; Peter Nijkamp; Jacques Poot
  2. The Spatial Distribution of Creative Industries and Cultural Heritage in The Netherlands By Karima Kourtit; Jan Möhlmann; Peter Nijkamp; Jan Rouwendal
  3. Art Collections and Taste in the Spanish Siglo de Oro By Federico Etro; Elena Stepanova
  4. Does it pay to invest in Art? A Selection-corrected Returns Perspective By Arthur Korteweg; Roman Kräussl; Patrick Verwijmeren
  5. The Industrial Organisation of the Dance Industry in the Netherlands: a Transaction Cost Perspective on Hybrid Forms of Organisation By Frank A.G. den Butter; Jelle Joustra
  6. Fiscal and Economic Aspects of Book Consumption in the European Union By Borowiecki, Karol J.; Navarrete, Trilce
  7. Cultural Heritage and the Attractiveness of Cities: Evidence from Recreation Trips By Ruben van Loon; Tom Gosens; Jan Rouwendal
  8. Residents’ Appreciation of Cultural Heritage in Tourist Centres - A Micro-simulation Modelling Approach to Amsterdam By Eveline van Leeuwen; Karima Kourtit; Peter Nijkamp
  9. Historic Amenities and Housing Externalities: Evidence from The Netherlands By Hans R.A. Koster; Jan Rouwendal
  10. Transformations of Industrial Heritage: Insights into External Effects on House Prices By Mark van Duijn; Jan Rouwendal; Richard Boersema
  11. The Impact of Fractionalization on Cultural Distance Measures By John M Luiz
  12. Cultural Diversity and Cultural Distance as Choice Determinants of Migration Destination By Zhiling Wang; Thomas de Graaff; Peter Nijkamp

  1. By: Daniel Arribas-Bel (VU University Amsterdam); Peter Nijkamp (VU University Amsterdam); Jacques Poot (The University of Waikato, New Zealand)
    Abstract: Cultural diversity is a complex and multi-faceted concept. Commonly used quantitative measures of the spatial distribution of culturally-defined groups 'such as segregation, isolation or concentration indexes' are often only capable of identifying just one aspect of this distribution. The strengths or weaknesses of any measure can only be comprehensively assessed empirically. This paper provides evidence on the empirical properties of various spatial measures of cultural diversity by using Monte Carlo replications of agent-based modeling (MC-ABM) simulations with synthetic data assigned to a realistic and detailed geographical context of the city of Amsterdam. Schelling's classical segregation model is used as the theoretical engine to generate patterns of spatial clustering. The data inputs include the initial population, the number and shares of various cultural groups, and their preferences with respect to co-location. Our MC-ABM data generating process generates output maps that enable us to assess the performance of various spatial measures of cultural diversity under a range of demographic compositions and preferences. We find that, as our simulated city becomes more diverse, stable residential location equilibria are only possible when particularly minorities become more tolerant. We test whether observed measures can be interpreted as revealing unobserved preferences for co-location of individuals with their own group and find that the segregation and isolation measures of spatial diversity are shown to be non-decreasing in increasing preference for within-group co-location, but the Gini coefficient and concentration measures are not.
    Keywords: cultural diversity, spatial segregation, agent-based model, Monte Carlo simulation
    JEL: C63 J15 R23 Z13
    Date: 2014–07–03
  2. By: Karima Kourtit (VU University Amsterdam); Jan Möhlmann (VU University Amsterdam); Peter Nijkamp (VU University Amsterdam); Jan Rouwendal (VU University Amsterdam)
    Abstract: This paper aims to investigate whether the spatial pattern of creative industries in the Netherlands has a relationship with the presence of cultural heritage or, in a more general sense, cultural capital. It first shows how the creative sector developed between 1994 – 2009 in relation to other Dutch sectors. Additionally, it analyses the urban dimension of the creative industry by focussing on the four large urban agglomerations in the Netherlands. And finally, it addresses the question whether a relationship exists between the share of the creative industry and the stock of cultural heritage at the level of municipalities. The results show a positive correlation between local cultural heritage and the presence of the creative industry at the municipality level.
    Keywords: creative industries, cultural heritage, cultural industry
    JEL: R1 R12
    Date: 2013–12–09
  3. By: Federico Etro; Elena Stepanova
    Abstract: We analyze art pricing in a unique dataset on Madrid inventories between 1600 and 1750. Hedonic regressions reveal a number of interesting facts about the taste of Baroque Spanish collectors and the imports of foreign paintings. The hedonic price index shows an impressive increase in the price of paintings (relative to the cost of living) during the XVII century, in line with the Lopez hypothesis for which investment in art increases in wealthy societies without new productive investment opportunities. We examine price differentials between domestic and imported paintings: at the beginning of the century local works were priced substantially below imported paintings, but the price gap is gradually reduced during the century, with an increasing contribution of the younger painters. This is in line with a Schumpeterian hypothesis for which increasing demand induced increasing domestic quality, as priced by the market, and created the conditions for what is known as the Siglo de Oro of Spanish art.
    Keywords: Hedonic price index, Lopez hypothesis, Schumpeterian hypothesis
    Date: 2015–04–20
  4. By: Arthur Korteweg (Stanford Graduate School of Business, Stanford, California, United States of America); Roman Kräussl (Luxembourg School of Finance and the Center for Alternative Investments at Goizueta Business School, Emory University); Patrick Verwijmeren (Erasmus University Rotterdam, Duisenberg School of Finance,The Netherlands; University of Melbourne; University of Glasgow)
    Abstract: This paper shows the importance of correcting for sample selection when investing in illiquid assets with endogenous trading. Using a large sample of 20,538 paintings that were sold repeatedly at auction between 1972 and 2010, we find that paintings with higher price appreciation are more likely to trade. This strongly biases estimates of returns. The selection-corrected average annual index return is 7 percent, down from 11 percent for traditional uncorrected repeat-sales regressions, and Sharpe Ratios drop from 0.4 to 0.1. From a pure financial perspective, passive index investing in paintings is not a viable investment strategy, once selection bias is accounted for. Our results have important implications for other illiquid asset classes that trade endogenously.
    Keywords: Art investing, Selection bias, Asset allocation
    JEL: D44 G1 Z11
    Date: 2013–10–03
  5. By: Frank A.G. den Butter (VU University Amsterdam); Jelle Joustra (VU University Amsterdam, the Netherlands)
    Abstract: The organization of Electronic Dance Music (EDM) events has become a major export product in the Netherlands. In order to respond quickly to the new trends and needs, innovative forms of cooperation between producers are to be set up for the organization of exciting new events. A case study on how these EDM events are actually organised in the Netherlands shows that the best way to do it is through hybrid forms of organisation, which combine horizontal forms of organisation through the market and vertical forms through the hierarchy. As EDM events are characterised by much asset specificity, the perspective of transaction cost economics indicates why this industry relies on hybrid forms of organisation. Trust between the collaborating partners, intrinsic motivation to be professional in the design and creation of new, ground-breaking music sensations and an extensiv e use of social media play a key role in lowering the transaction costs in the dance industry.
    Keywords: Industrial organization, coordination costs, transaction cost economics, resource based view, cooperation in hybrid organizations, Electronic Dance Music (EDM) events, trust, use of social media
    JEL: D23 D85 E23 L23 L24 L82 O31 P13
    Date: 2014–07–24
  6. By: Borowiecki, Karol J. (Department of Business and Economics); Navarrete, Trilce (Department of Business and Economics)
    Abstract: One of the available and yet underappreciated tools in cultural policy at the national level is the reduction of VAT rates for cultural goods and services. We document the standard and reduced VAT rates in EU-28 countries in the period from 1993 to 2013 and explore the underlying determinants. We further introduce a simple theoretical framework to explain how reduced fiscal rates are expected to decrease prices and increase quantities of the consumed cultural goods and services. We then estimate quantitatively that a decrease in the VAT rate for books by one percentage point is associated with an economically significant drop in the price by 2.6 percent. Finally, we show the positive effect of a fiscal rate reduction on the book expenditure of well-off households, where a one percentage point decrease in the VAT rate for books leads to an increase in expenditure by 2.7 percent.
    Keywords: Cultural consumption; book markets; cultural policy; value added tax; fiscal policy
    JEL: H21 H31 I30 K34 Z11
    Date: 2015–04–15
  7. By: Ruben van Loon (VU University Amsterdam); Tom Gosens (VU University Amsterdam); Jan Rouwendal (VU University Amsterdam)
    Abstract: Many cities are trying to attract tourists by investing in urban amenities. Cultural heritage is an important example and substantial investments are needed to keep ancient inner cities and characteristic monumental buildings in good shape. The costs of these policies are usually clear, the benefits are often much more difficult to assess. This paper attempts to fill part of this gap by studying the destination choices of urban recreation trips that have urban recreation as the main travel motive. We estimate a discrete choice model for destination choice that takes into account the potential importance of unobserved characteristics. The model allows us to compute the marginal willingness to travel for destinations offering more cultural heritage, which we measure as the area of the inner city that has a protected status because of the cultural heritage that is present there.
    Keywords: Cultural heritage, recreation, city marketing
    JEL: C31 D12 R12 R22 L83
    Date: 2014–04–28
  8. By: Eveline van Leeuwen (VU University Amsterdam); Karima Kourtit (VU University Amsterdam); Peter Nijkamp (VU University Amsterdam)
    Abstract: This paper addresses the question of the value attached by residents of tourist places to the wealth of cultural heritage in their city. Particular attention is given to the impact of various types of information (ranging from traditional to advanced ICT sources) on the residents’ valuation of cultural heritage. Based on an extensive survey among inhabitants of Amsterdam, a two-stage analytical approach is adopted: (i) an econometric (ordered logit) modelling approach to identify the most prominent vectors of the residents’ appreciation of cultural heritage; (ii) a micro-simulation modelling approach to generate a comprehensive picture of the value set of inhabitants regarding the cultural heritage in their city. This information may also serve as a basis for urban strategies on tourism policy, cultural heritage planning and information services management.
    Keywords: Cultural Heritage, Residents, Tourism, Ordered Logit Model, Microsimulation, ICT, Amsterdam
    JEL: L83
    Date: 2013–08–01
  9. By: Hans R.A. Koster (VU University Amsterdam, the Netherlands); Jan Rouwendal (VU University Amsterdam, the Netherlands)
    Abstract: It has been argued that the growth of cities is increasingly determined by the presence of amenities. We study the economic effects of large scale subsidised investments in historic amenities, by looking at their impact on house prices. We aim to distinguish between the direct and indirect effect of investments. The latter implies a change in the behaviour of neighbours via changes in the level of maintenance of the house. We use a large nationwide dataset with housing transactions from 1985-2011 and data on investments in cultural heritage. To control for the fact that these investments are non-randomly distributed over space we use repeat sales. Furthermore, we construct an instrument based on yearly fluctuations in the size of national subsidy programmes to maintain cultural heritage. We show that a one million euro per square kilometre increase in investments in cultural heritage leads to a price increase of 1.5-3.0 percent of non-targeted buildings. We do not find evidence that the maintenance state of properties that are not eligible for subsidies are improved, suggesting that any price effect due to investments in cultural heritage is a direct effect of investments.
    Keywords: cultural heritage; historic amenities; housing externalities; hedonic pricing
    JEL: R30 R33
    Date: 2015–02–12
  10. By: Mark van Duijn (VU University Amsterdam, and University of Groningen, the Netherlands); Jan Rouwendal (VU University Amsterdam, the Netherlands); Richard Boersema (Colliers International, Amsterdam)
    Abstract: Local policy makers seek ways to deal with abandoned industrial heritage in their jurisdictions. Much is demolished, but in some cases considerable investments are made to preserve the cultural aspects of industrial sites. The renewal plans are usually designed to stimulate urban renewal in the vicinity of these sites. Little seems to be known about the effectiveness of these policies and in this paper, we study whether the redevelopment of five industrial heritage sites caused positive external effects by investigating the development of house prices in nearby residential areas. We use a quasi‐experimental design by comparing quality‐adjusted house prices before the start, between the start and the completion and after the completion of the transformation. We find substantial effects of one site, which is the best-known example of renovated industrial heritage i n the Netherlands, but much smaller or no effects for the other sites. We also model the decay of these effects over time and space. We find different decay effects for each case. We conclude that industrial heritage sites do not necessarily cause negative external effects. If there are negative external effects present they disappear at the start of the transformation of the industrial heritage site, suggesting anticipation effects. Also, positive external effects on house prices after the redevelopment of industrial heritage are not necessarily present. The details of the transformation project (e.g. location, size of the site, size of the investment, focus on interior or exterior investments) seem to be important determinants that may cause the existence of positive external effects.
    Keywords: Industrial heritage, redevelopment, urban revitalization, external effects, hedonic prices
    JEL: C21 D62 H43 R0
    Date: 2014–09–12
  11. By: John M Luiz
    Abstract: We examine the impact of ethno-linguistic fractionalization (ELF) on existing cultural measures employed in various social sciences. Not only do high levels of fractionalization affect the use of statistical means to account for cultural distance, we show that it is not constant and therefore the dynamics of change need to be addressed. This provides us with an opportunity to bridge the cultural distance and institutional distance literature as institutions impact upon culture and MNEs, and institutional development is, in turn, affected by these. We call for a more realistic assessment of what is being captured in cultural measures and for recognition of the complexity of the notion of identity formation and its dynamics. Countries may have different underlying cultural schisms, including ELF, and its introduction will allow for a richer exploration of distance and diversity in the social sciences.
    Keywords: Cultural distance, entho-linguistic fractionalization, cultural measures
    JEL: Z10 M16 O10
    Date: 2015
  12. By: Zhiling Wang; Thomas de Graaff; Peter Nijkamp (VU University Amsterdam)
    Abstract: This study analyses the impact of cultural composition on regional attractiveness from the perspective of migrant sorting behaviour. We use an attitudinal survey to quantify cultural distances between natives and immigrants in the area concerned, and estimate the migrants’ varying preferences for both cultural diversity and cultural distance. To account for regional unobserved heterogeneity, our econometric analysis employs artificial instrumental variables, as developed by Bayer et al. (2004). The main conclusions are twofold. On the one hand, cultural diversity increases regional attractiveness. On the other hand, average cultural distance greatly weakens regional attractiveness, even when the presence of network effect is controlled for.
    Keywords: migration, cultural diversity, cultural distance, destination choice, sorting
    JEL: R2 Z1
    Date: 2014–06–02

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