Measuring economic impact
There are a number of methodologies through we can assess the economic impact of activities relating to (digital) cultural heritage.
Intended Learning outcomes
This page is designed to help you:
Understand the different types of economic impact assessment methodologies available, as well as their pros and cons
Understand how economic impact assessment can be meaningfully applied in the cultural sector
Research from the UK in 2020 has shown that economic impact assessment is most likely to inform external decision-making in the cultural sector, as opposed to internal decision-making. This highlights its importance in advocacy for sustained funding as well as broader reflections on the impact being created through the arts and culture (see for example, Dave O’Brien’s 2012 report on how the cultural sector should use standard economic methods, set out in the UK government’s main policy evaluation guide, to assess their value).
This page is not designed to be used as a guide to conducting economic research. Rather, it outlines pros and cons of the many types of methodological approaches that can be taken. It is up to you to evaluate if you have the skills and experience, as well as the right context, to apply them, or if you need to choose other methods or get outside help.
What is economic impact?
‘A state in which the activities deliver economic benefits to society, stakeholders or to the organisation’. Europeana Impact Playbook.
Measuring economic impact in the cultural sector
Assessing the economic impact of cultural activity has its opportunities and challenges, and consequently, its supporters and detractors. As rhetoric has shifted from the funding or subsidy of culture to ‘investment’, so too has the perspective on its economic impact.
There are few more deeply contested relationships in cultural policy than that between economics and cultural value…failing to adequately value cultural benefits risks an underappreciation of the social value of cultural investments. The challenge is, therefore, to capture the non-market benefits of culture in a way that takes into account the range of values it offers both to ‘users’ and the public as a whole.
Measuring Economic Value in Cultural Institutions. Hasan Bakhshi, Daniel Fujiwara, Ricky Lawton, Susana Mourato and Paul Dolan (2015)
Economic impact occurs when our activities create a positive economic effect, or an economic return on investment, or when an effect can be measured (through the application of a range of methodologies) in monetary terms. In many cases, economic impact is not the main driver of cultural activity. That does not mean that it is not relevant to consider. Economic impact is one of the Impact Playbook’s strategic perspectives.
the cultural sector has generally been hesitant towards traditional economic approaches to valuation. There are valid questions about whether monetary values should ever be applied to culture. However, as discussed, the benefit of attaching monetary value to non-market goods, like culture, is that it increases the likelihood that these values will be considered in economic decision-making.
Measuring Economic Value in Cultural Institutions. Hasan Bakhshi, Daniel Fujiwara, Ricky Lawton, Susana Mourato and Paul Dolan (2015)
Opportunities
Economic / statistical information is considered to be easily understood by policy-makers and the general public
Methods such as social return on investment (see above) can give a more socially-oriented perspective to economic impact
Economic impact can include cost savings (efficiency) as well as income generated
Economic impact assessments can build on qualitative, case study approaches (like in the case of the Natural History Museum in the UK - see our Europeana Pro interview below)
Challenges
Most cultural activity is publicly-funded for the public good, with economic impact often not being the core driver
Economic impact assessment is challenging methodologically and requires investment into expertise
Economic impact can’t give a holistic perspective of impact created. What about the other strategic perspectives of organisational, social and educational impact?
Inspiration
Economic impact methods: a quick overview
Below we list some methods that are commonly used in the cultural sector. Each has its plusses and minuses, which are outlined in brief. Before deciding to use the methodology, we recommend that you find more information. Remember, you may also have to get the support of an external expert.
Economic impact assessment (EIA)
Social return on investment (SROI)
Return on investment (ROI)
Cost-benefit analysis (CBA)
Contingent valuation (CV)
Contingent valuation (CV) methods make it possible to calculate the use value (including the option to use something) as well as non-use. Two methods, willingness to pay and willingness to accept, are often used in the cultural sector.
Willingness to pay (WTP)
Willingness to accept (WTA)
See more
For more about using contingent evaluation in the cultural sector, this report might be valuable:
Next steps
Check out the Standardised Question Bank to find some ideas about how you might assess your direct economic impact, or if you are interested in understanding the economic impact of taking an open approach to publishing your data https://docs.google.com/document/d/11TpWjtjU5it0SlClPqdT5ZTF23dZc0VKV42lknrQ_D0/edit?usp=sharing