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Economic Impact Methodologies for the museums, libraries and archives sector: What works and what doesn’t

Publications:
Main Document 0.69 MB

Jura Consultants

2008

Intended purpose and/or audience:

Policy makers, practitioners

This study provides guidance on how the sector can effectively demonstrate the economic contribution it creates. The study considered the following:

• Can effective economic impact appraisals be undertaken within the MLA sector and do they provide robust assessments of impact?
• Should the sector focus on demonstrating the value it provides in economic or financial terms?
• Can the sector construct compelling arguments based on economic rationale that are powerful for the purpose of communication strategies?
• Should the sector focus on non-economic arguments to demonstrate its value and impact to strategic stakeholders?


The literature review indicates that there have been few economic impact methodologies applied to the MLA sector. The most commonly applied methodology being multiplier analysis which demonstrates the employment impact in the local, regional and national economy of the existence and activities of museums, libraries or archives. Multipliers are effective at illustrating the trickle down effect of spending in an economy, however it is subjective in that users can define their own multiplier and in some cases visitor expenditure per head. In addition, multipliers fail to capture the broad range of additional social, cultural and educational benefits which the sector can deliver.

Stated preference techniques place the user centre stage and assess value through asking the users and non-users of a service to place a value or price on the services delivered via the concepts of willingness to pay (WTP) for a free service, or willingness to accept (WTA) the loss of a service in the form of compensation. The contingent valuation technique can be used to assess the value of services delivered, however there are serious concerns with respect to including non-users in the value calculation and values obtained through existence and in some cases option values. Contingent valuation does not demonstrate impact in terms of expenditure and employment, but it illustrates value and it can be used to present a value for money argument.

Return on Investment (ROI) was also reviewed as part of the literature review process. This technique has been applied to many State library services in the US. The technique includes a combination of multiplier and stated preference techniques to create a range of indicators of impact and value. Social Return on Investment (SROI) approaches were identified as having many potential benefits for the sector. SROI captures the social value created by a project by translating social benefits into financial measures.


Consultation with the sector indicated that economic impact and valuation methodologies must consider more than the income, expenditure and employment impacts of the services and must take into account wider social and economic impacts. Therefore it was reported that multiplier analysis was considered to be ineffective at capturing the real value of the services. Contingent valuation was considered to be more effective at capturing the value and impact, however there was some concern with respect to the application of the contingent valuation methodology, particularly related to issues associated with user and non-user values, option and existence value.

For stakeholders (those groups not of the sector but interested in it), gross value added impacts, which are identified via multiplier analysis were considered to be of greatest interest and value. There was little interest in the outcomes of stated preference studies, which includes contingent evaluation, etc, as this does not calculate an economic impact.

With respect to preferred economic impact methodologies, the report concludes that:

• Although widely applied, multiplier analysis is ineffective at demonstrating the economic impact or the value of the MLA sector. Multiplier analysis is however of most interest to stakeholders
• The sector does not support the use of multipliers as it does not represent the full value of the sector. Techniques such as contingent valuation have some support although there is concern about how it can be applied and how results may be interpreted.
• Return on Investment offers the flexibility to capture data and undertake analysis to meet the needs of both stakeholders and the sector.

Capacity of the Sector
There are fundamental data collection issues with respect to terminology and reporting which will constrain the application of any methodology. Inconsistency in terms of the meaning and reporting of users / visitors will mean that the application of any methodology will produce results which reflect what is counted rather than actual ‘user’ numbers.

Publisher


MLA Council

Year published


2008

Commissioned by


MLA Council and MLA South East

Authors


Jura Consultants

Domains


Museums
Libraries
Historic environment
Archives

Geographical coverage


South East England
England
UK
Europe
International

Other keywords


social return on investment
multiplier analysis
contingent valuation
outcomes

Programmes


Cultural Hubs

Social groups


Lower socio-economic groups
Children and young people

Social outcomes


Tourism
Local infrastructure & regeneration
Health & well-being
Learning & skills
Economic Impact
Community cohesion & inclusion