by Daniel Fujiwara
Economist Daniel Fujiwara tells us it’s possible to put a figure on social value generated through arts and cultural investment….
Before we start to talk about the social value of the arts we need a definition for the term ‘social value’, and that’s no easy task. How we define social value, particularly in reference to the arts is an interesting area of research, and something I have discussed at length with people from the cultural sector including artists, curators, museum directors and audience members.
The crux of it is that we need a normative (philosophical) foundation for defining social value that can be used to help us measure it in a practical way. Ultimately, when measuring social value we are concerned with the things of intrinsic value to individuals that make up society, and we can use this approach to measure the success or worthiness of an intervention or action. These are issues in normative ethics (a branch of philosophy concerned with criteria of what is morally right and wrong) and we can use normative theories to guide us here.
The practical application of social value measurement has been dominated by economists (certainly in the area of public policy at least). The normative approach to social value measurement that economics offers, through methods such as cost-benefit analysis (CBA) and cost-effectiveness analysis (CEA), is consequentialist welfarism. In short, this means that the social value of an act should be measured in terms of its consequences and the ultimate consequence that matters to the success of the policy is the impact on human welfare or wellbeing. This is very distinct to other approaches to defining the morality of an action, which are concerned instead with, for example, the intentions of the person/organisation or whether some acts are intrinsically good/bad regardless of their outcomes. In this post we will focus on the approach used by economists since, despite its criticisms (and note that any approach will have its detractors), it is still the dominant form of social value measurement used by most governments today and it forms the basis of newer methods of measuring social value such as Social Return on Investment (SROI).
So economics tells us to measure social value in terms of implications for human welfare and economists have traditionally done this by assessing the extent to which our preferences are satisfied. This is based on the notion that what we want is what is good for us. Recently, however, some economists (me included!) have been turning to self-reported measures of wellbeing. Subjective wellbeing (SWB) measures a person’s quality of life by asking them their levels of, for example, happiness and life satisfaction and whether the things they do in life are worthwhile. In the UK and Australia this type of data has been collected for a number of years from the general public and it means that we can use statistical methods to estimate how different interventions and activities impact on our wellbeing.
In 2011 we wrote a set of guidelines for the UK Government on how wellbeing data should be used in social value measurement (Fujiwara and Campbell, 2011) and many of these recommendations have since been adopted by the Organisation for Economic Co-operation and Development (the OECD) . The guidance shows how estimated impacts on SWB can be converted into a monetary equivalent amount to be used in CBA and other related methods like SROI.
This method, known as wellbeing valuation, has been the focus of great interest from cultural organisations in the UK. Last year we published research on the social value of museums with the Happy Museum project and this year we published a study on the social value of a range of arts and cultural activities for the Department for Culture Media and Sport. We have also just completed a similar study for heritage sites for English Heritage and we are currently working on a large project funded by the Arts and Humanities Research Council (AHRC) looking at the social value of the Natural History Museum and the Tate. And in Australia we are working with the Australian Council for the Arts looking at the social value of cultural activities in Australia.
Our research at SImetrica has found, for example, that the social value of (i) participating in sports is about £1,127 (GBP) per year per person; (ii) being a regular audience member to the arts is about £935 per person per year; (iii) visiting libraries regularly is about £1,359 per person per year; and (iv) regular dance is about £1,671 per person per year.
As with any new approach parts of the wellbeing valuation method are still in development. Despite this, however, the method is being increasingly used by a wide variety of organisations. Many of the government departments in the UK, for example, have used the approach and we have used it to assess the impact of social projects funded by Danone and we have developed the methodology for the United Nations to help them assess their development related programmes. The method is also being increasingly published in top economics journals. It is now becoming an established part of the policy analyst’s toolkit.
For arts and cultural practitioners thinking of measuring the social value of their activities and programmes it is important to, first and foremost, clearly define what it is that you want to measure in a philosophical sense. Economics offers one particular approach and as I have argued elsewhere I think it is hard to argue against the notion or value of human welfare. And even for those that believe there are other things of importance independently of human wellbeing, the economics approach is still of value because it is ultimately very much the language of policy makers and funders. An important contribution that cultural organisations can make going forward is to collect more data on the wellbeing of their audience members and participants. We have the tools to use this data in a way that we can learn more about the social value of the arts.
For more information about the methods discussed here and SImetrica’s approach to social impact measurement please visit www.simetrica.co.uk
Daniel Fujiwara is Director of Simetrica, a research consultancy specialising in policy evaluation, and he is also a member of the wellbeing programme at the Centre for Economic Performance (London School of Economics). Daniel is an economist specialising in policy evaluation and social impact measurement and has over 10 years of experience working in government and in international organisations. Previously, Daniel was head of cost-benefit analysis at the Department for Work and Pensions (UK) and has held senior economist positions at the Cabinet Office (UK), the Ministry of Defence (UK) and the Ministry of Finance (Tanzania) and research positions at the United Nations. He was a lead adviser on valuation techniques for non-market goods in the UK Government and in 2012 he was awarded the John Hoy Memorial Prize in Economics for his contribution to policy evaluation in the UK Government. Daniel’s research focuses on philosophy, microeconomic theory, econometrics, non-market valuation and behavioural science as applied to policy evaluation and social impact measurement. He has published widely in the area of social impact measurement and is a referee for a number of academic journals.