Cultural Economics

From qualitative to quantitive
Looking at key concepts

Video: The Parable Of The Tuileries produced by David Castello Lopes and Léonard Cohen


The economic and social value of heritage

Cultural capital

David Throsby (1999, pp. 3-4) was the first who proposed the ‘cultural capital’ to address the role of heritage as a capital asset. He had previously proposed a connection between culture and economics through culturally sustainable development, the latter including progress in “quality of life” (Throsby, 1995, pp. 201-202). Experts consider heritage as a cultural capital (Rizzo & Throsby, 2006, p. 986) and it is now established that its rehabilitation is a genuine investment with a socio-economic impact (EUROMED, 2010, p.9). Amongst other elements, heritage includes national assets with a “great historic, artistic, scientific and cultural value” that serve as “features of people’s identity down through the generations”, while they are “of interest in terms of economics“ (Bedate, Herrero, & Sanz, 2004, p. 101).

Values of cultural heritage

Heritage assets have values that can be distinguished as aesthetic, spiritual, social, historical, symbolic and authenticity values (Throsby, 2001; pp. 28-29). An asset may be associated with non-market values such as the option, existence, bequest, prestige, and educational values (Frey, 1997, p. 233). These are also referred to as non-use values which, like use values (valuations on directly used goods and services; Throsby, 2001, p.78), may be expressed monetarily (Bedate et al., 2004, p. 102).

Measuring values

The cultural value of a heritage asset can generate and increase its economic value (Throsby, 2001, p. 47). But how can this be measured? The economic aspects of culture have been considered since the 1990s (Frey, 1997, p.232) but the effect of an entity such as a museum on the economy of a city is hard to determine (Frey, 2009, p. 20). However, there are different approaches to making such economic estimates, for example the hedonic market and travel cost methods (Frey, 1997, p.234). The latter involves the consideration of the cost of travelling to reach the heritage entity. There are also the stated preference methods, namely contingent valuation (CV), the predominant method in the field, and choice modelling (CM) that is used to a much smaller extent (Choi, Ritchie, Papandrea, & Bennett, 2010, p. 213). Both involve collecting people’s opinions about their willingness to pay (WTP) to receive a cultural benefit (Rizzo & Throsby, 2006, p. 997), but CV is widely accepted by policy makers and academics as “a versatile method for demand estimation” (Mourato, Ozdemiroglu, Hett, & Atkinson, 2004, p. 102). That is not to say that CV does not have weaknesses, for example its result might be skewed by ‘strategic behaviour’ given it examines a hypothetical question (Peacock & Rizzo, 2008, pp. 132-135). Willingness to pay is defined as the maximum amount that a person would pay for a good or service (Plaza, 2010, p. 156). It is possible to estimate the public’s acceptability to pay a fee for a cultural good/service under the present or hypothetical conditions.


Bedate, A., Herrero, L. C., & Sanz, J. Á. (2004). Economic valuation of the cultural heritage: application to four case studies in Spain. Journal of Cultural Heritage, 5, 101–111.

Choi, A. S., Ritchie, B. W., Papandrea, F., & Bennett, J. (2010). Economic valuation of cultural heritage sites: A choice modeling approach. Tourism Management, 31, 213–220.

EUROMED. (2010). Workshop: Heritage Economics and Conservation Funding (EN only). Euromed Heritage. Damascus: EUROMED and Ministry of Culture – Syria.

Frey, B. S. (1997). Evaluating Cultural Property: The Economic Approach. International Journal of Cultural Property, 6(2), 231–246.

Frey, B. S. (2009). Cultural Economics (pp. 20–25).

Mourato, S., Ozdemiroglu, E., Hett, T., & Atkinson, G. (2004). Pricing Cultural Heritage: A new approach to managing ancient resources. World Economics, 5(3), 95–114.

Peacock, A., & Rizzo, I. (2008). The Heritage Game: Economics, Policy, and Practice. New York: Oxford University Press.

Plaza, B. (2010). Valuing museums as economic engines: Willingness to pay or discounting of cash-flows? Journal of Cultural Heritage, 11, 155–162.

Rizzo, I., & Throsby, D. (2006). Cultural Heritage: Economic Analysis and Public Policy. Handbook of the Economics of Art and Culture, Volume 1 (pp. 984–1016). Elsevier B.V.

Throsby, D. (1995). Culture, Economics and Sustainability. Journal of Cultural Economics, 19, 199–206.

Throsby, D. (1999). Cultural Capital. Journal of Cultural Economics, 23, 3–12.

Throsby, D. (2001). Economics and Culture. Cambridge: Cambridge University Press.


This excerpt is part of Nikolaos Chatziandreou’s Master of Arts thesis ‘The Economics of the Acropolis Sculptures‘ (awarded a Distinction by University College London, 2012).