Wednesday, December 1, 2010

A Time for Thanksgiving

A couple of weeks ago, policy analyst and man-who-would-be-auditor Doug Hoffer issued a four-page report on the Economic Footprint of the Arts in Vermont to Melinda Moulton, the Burlington entrepreneur and developer who commissioned it. I have known Melinda for a few years and had many rich conversations with her about the relationship between healthy communities and the arts and whenever the conversation has turned to a discussion about the “economic impact of the Arts in Vermont” we have argued about the benefit of doing such a study.

In my 35 years in the arts I have read hundreds of such studies, all of which have been commissioned by a local, state, or regional arts commission or arts advocacy group. With great anticipation, and usually at great cost, organizers of these studies have spent months articulating exactly what they hope to achieve, more months gathering data (most of the time in the form of questionnaires and surveys), and even more months crafting and publishing their reports which, with very few exceptions, prove only that the arts matter to a lot of people—a fact that I consider self-evident.

Most of them claim things like “every dollar spent on the arts has a seven to 13-dollar impact on the community where it’s spent;” or “studies prove that if your child studies a sequential program of art in school he/she will score 30-50 points higher on standardized tests, including college entrance exams.”

The problem with such claims is that policy-makers (legislators in particular) are very smart people and have access to even smarter people to advise them on how to interpret such claims. It turns out that while it may be true that a dollar spent at the Flynn may circulate throughout the Burlington economy, changing hands seven to 13 times before it finds itself in the wallet of a Jet Blue passenger to Fort Lauderdale—that is not economic impact, that’s just economic activity.

Also, while it might be true that kids that study the arts do have higher scores, on average, than those who don’t, there is nothing that says the relationship is causal. A far likelier reason might be that schools that have sequential arts programs for all their students are probably in wealthier communities. Wealth and parental educational achievement is a far likelier reason a kid does well in both the arts AND on standardized tests. The relationship between arts study and test scores is therefore, at best, correlative—not causal.

Sorry to burst your bubbles.

So why am I thankful? Because for the first time an independent policy analyst who, it turns out, is probably even more skeptical than I am about these types of studies, has been commissioned by a local businessperson who is anxious to prove that it IS possible to derive important, “impactful” conclusions about the arts in Vermont. Even more important, the cost of deriving these conclusions was a small fraction of what such studies usually cost. If I understand correctly, Doug looked at a variety of data, all readily available from sources like the Bureau of Labor Statistics, the Census, and Vermont’s Dept. of Labor, and examined them through an “arts prism.”

Full disclosure: yes, I had a couple of preliminary conversations with Doug last spring after he was first approached by Melinda. In both cases, however, rather than extolling the virtues of previous studies and recommending them to him as examples of how to do his own work, I spent virtually all of our time on the phone sharing my own deeply-held suspicions, my frustration at how conclusions tended to be exaggerated and therefore unsupportable, and my concerns that very little would come of his work that would be helpful.

I like to believe that my attitude may have helped Doug to achieve the nearly-impossible.

First, Doug ignored “the Creative Economy” since studies about it include for-profit organizations whose work is based on “creative outputs.” Thus, Doug's study isn’t larded up with movie theaters, book stores, gaming studios, and other such enterprises which largely serve as a distraction to what most people are trying to focus on when they think of an “arts impact analysis.”

Second, he focused the bulk of his own analysis on hard data (not surveys) that other sectors use when reporting on their own impact, and he kept it simple, focusing, it appears, only on employment, compensation, and tax data, which are standard data sets and very easy to defend.

Third, his methodology, using IMPLAN analysis, is a standard tool used by almost all policy analysts/economists to help understand or at least gauge the scope of operations that a particular sector encompasses. When economists tell a governor, for example, that it is “a good investment” to offer $5 million in tax breaks to a high-tech manufacturing company as an inducement for them to locate here in Vermont, there is a strong likelihood that someone, somewhere has used IMPLAN to help make the case.

Finally, Doug does not allow himself to render an opinion about “impact” related to the arts and community livability, student engagement, interpersonal and intercultural relationships, health, social capital, and so on. He shares a chart with some of the findings from a group at Princeton and leaves it to the reader to agree or disagree with those findings. Instead, his only statement about impact relates to the income to state and local governments from taxes collected as a result of all the activity in Vermont that is related to the Vermont arts sector.

The bottom line for me is this: we finally have a number…a defensible number derived by a certified skeptic not in the arts and not commissioned by an arts organization, derived using a standard and widely accepted methodology, to reveal what many of us have long suspected: “the state and local tax impact (emphasis mine) of the arts in Vermont is $19,438,480.”

How about that?!!

Like a good skeptic, I had to find out what that meant in ROI terms. Sure, $19.5 million might be the income, but what is the total investment?

I am aware of only a few cities and towns that invest local tax dollars directly in the arts, and a phone call to a couple dozen of Vermont’s best known “art towns” indicates that the aggregate local investment is less than $500,000.* This figure, combined with the State’s investment in the arts (including appropriations from the General and Capital Funds, and line items for the Vermont Symphony, Humanities Council, and Historical Society, results in a total State/Local investment of less than $2.5 million.

Thus, the total ROI for state/local funds invested is just under 800%. And this is not a return over time, this is a return every year. It is also a return that takes place even though the most significant public relations engine in state government (the Dept. of Tourism and Marketing) until very recently (like maybe yesterday) has not considered the arts to be a factor in the Vermont Brand, and that with the notable exception of Vermont Life Magazine, the state has done very little to publicize the arts in Vermont.

To me the policy implications of this report are not only big, but they are important. And it all is something to be profoundly thankful for!

*Burlington leads all towns and municipalities with direct grants and services to arts organizations and activities totaling about $350,000. Coming in a surprising, though very distant second, is Killington whose local arts investment is about $27,500. Jericho is third at $10,000. Most Vermont municipalities and towns have no direct support for the arts, and of those that do, the investment is usually manifested through the Recreation department budget and ranges between a few hundred dollars and $2,500. --ALA


Cecile said...

Alex, this is great! Thank you for sharing it and for being part of making it happen. Do we have any indication of how many people are employed in arts-related professions? Here's my long-held-suspicion (of which I would love some validation,) we need to support arts in our schools because millions of people are employed in arts-related industries. Anything that requires a sense of visual or aural design requires some familiarity with arts - and in the information age, that's a lot. Thank you for a thought-provoking post!

Alex Aldrich said...

Thanks Cecile, depending on how you define "arts-related" and "employed" the figure is between 6,000 and 10s of thousands. The reason for this range is some studies include creative jobs in non-arts professions (in-house graphic designers for manufacturing firms) and others include all self-employed artists. I usually use 8,000 when talking about people who make a living in Vermont as artists or arts professionals. Nationally, the "arts sector" employs about 4% of the workforce, according to research done by Americans for the Arts and the National Endowment for the Arts using Dun & Bradstreet and Bureau of Labor statistics. Hope this helps!

judith said...

Hi Alex,
Please pass this information along to Lawrence Miller, who will be our new Secy of Commerce. I'm sure as CEO of Danforth Pewter he will be interested to see these results.
Thanks to Melinda Moulton for funding this study.

Best regards,
Judith Rey Versweyveld

Alex Aldrich said...

Will do, Judith. You may depend on it!