The Recent Revolution in Cultural Economics

February 5, 2009 - 3:30pm to 5:00pm

Harris School of Public Policy Studies, 1155 E. 60th Street 
Main Lecture Hall - Room 142

The internet has changed how we produce and consume literature, visual art and performances of all kinds. How should cultural economists be modeling the market for cultural goods? What are the policy implications of choosing one model over another? How can these tools be used to advocate for artists and art-lovers?

Listen to Cowen's talk

Tyler Cowen is Professor of Economics at George Mason University, where he is the Holbert C. Harris Chair of Economics and General Director of the Mercatus Center and the James M. Buchanan Center for Political Economy. He has written extensively on globalism, culture and economics. Recent publications include Good & Plenty: The Creative Successes of American Arts Funding (Princeton University Press, 2006), Discover Your Inner Economist: Use Incentives to Fall in Love, Survive Your Next Meeting, and Motivate Your Dentist (Penguin/Dutton 2007). He blogs regularly at The Marginal Revolution, and his columns have appeared in The New York Times and Slate, and he is a regular guest commentator for National Public Radio.

Harris School feature story

By Elizabeth Vivirito

Culture, traditionally defined, used to be the symphony orchestra, the opera, and live theater. According to Tyler Cowen, "This old definition has changed dramatically in the last 10 to 15 years, and when it comes to delivering cultural content, it's changed even more."

Cowen, addressing a Harris School audience as part of a February workshop session sponsored by Cultural Policy Center, made the argument that the Internet has altered the consumption and production of cultural goods. A professor at George Mason University, Cowen studies globalism, culture, and economics. His work focuses on finding better tools with which to define and measure culture so that policymaking in this realm can be more effective.

"Part of the policy problem today is that the [answers to the] question 'What is culture?' are not as well defined," he said. "Is YouTube culture? Are blogs culture?" With the Internet, Cowen continued, consumers are now using new technologies to substitute for older forms of culture. Instead of going out to the opera, people may watch a short aria online. Said Cowen, "You see more activities that fit on the fringe of culture."

Such a definition is important because it is the first step to protecting and regulating the cultural sphere, where there are numerous complex policy issues. Examples include managing payment collection for intellectual property (like online music) and monitoring Web monopolies (like Google, Wikipedia, Amazon, and eBay). "While the Internet is amazingly diverse in some ways, there is something about it that leads to these extraordinary concentration of attention to certain products," remarked Cowen.

Policymakers must also consider the externalities-an understudied area-of these institutions. "Cultural economics has not kept up with new technologies," Cowen argued, which new theories must incorporate. The old cultural model focused on long, expensive, and prepackaged events, like the opera. The new model is short, small, inexpensive, and quick, like new downloads for an iPod.

Cowen predicts that ultimately culture will become increasingly diversified and specialized, and that traditional cultural canons will disappear. Consumers will benefit from lower costs and greater accessibility, and producers will have to work harder to meet the needs of the market-a shift facilitated in part by the shrinking traditional arts sector. Print journalism, for instance, is diminishing rapidly as free content is increasingly available online.

New "gateway" business models may come to dominate the new cultural economics Cowen suggests, pointing to Google and eBay as examples. Both "load their sites with as much information as possible to make it attractive for consumers," he explained. Amazon's decision to offer used books online, next to brand new ones, was loathed by major book publishers, but Amazon realized that the gains lay in lower prices, not higher ones.

Ultimately, the key public policy issue is identifying these new cultural trends and deciding what to do about them. While consumers may benefit from access to low-cost, contemporary cultural items, it may come at the sacrifice of older forms. "You can't compete with free," Cowen said. But if Americans believe that newspapers, operas, and artists, create "better" art than what is on the Web, policymakers will have to design appropriate policies to protect traditional arts.


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