The creative arts and a broader definition of economic value

James Coe takes a look at whether there is a better way to measure the value of creative arts programmes

James Coe is Associate Editor for research and innovation at Wonkhe, and a partner at Counterculture

This debate between Polly Mackenzie and Tim Leunig got me thinking about whether we are using the right approaches to measure the value of creative arts programmes.

I’m not making an argument whether assessing the financial value of creative programmes is in itself too narrow. Personally, I believe that there is value in training people in the skills to produce arts, media, fashion, and run the museums and galleries in which the works that make life worth living can be stored and enjoyed. But as well as being a higher education fan I am an English graduate and sometimes arts consultant, so it is entirely predictable that I believe these things.

Instead, I’m interested in whether the economic measures we use to evaluate creative programmes are too narrow on their own terms.

The night watch

Back in 2020 the IFS produced a report on private and taxpayer financial returns split by different kinds of degrees.

The research by IFS suggested that the average lifetime returns for male students studying creative arts are negative. This is to say that these students would be financially better off had they not gone to university at all. Of course, there is no way of measuring what those students might have done had they studied something else, there is a high proportion of self-employed people in the creative arts which makes their contribution harder to measure, and LEO data generally has some wrinkles.

Leunig’s conclusion on this data is that an obvious policy response would be to constrain demand for creative arts programmes and direct more resources toward fewer students. His argument is that this would both save money and raise the quality of programmes overall.

However, the limitation of wage data is that it doesn’t capture wider economic contributions. The UK’s own creative industries strategy notes that:

From 2010 to 2019 they grew more than one and a half times faster than the wider economy and in 2021 they generated £108bn in economic value. In 2021, they employed 2.3 million people, a 49 per cent increase since 2011. Their impact reaches beyond their borders to other sectors, with advertising, marketing and creative digital innovation supporting sectors across our economy.

The House of Lords report into the contribution of arts to society and the economy demonstrates that even when accounting for the narrower cultural sector (this excludes IT) the real terms GVA growth of the cultural sector is faster than the economy as a whole. We also know that a plurality of creative arts graduates make up the graduate creative arts workforce. The fact they are often not well remunerated for this work is a function of the labour market not the contribution of their programmes to the wider economy.

Work by Metro Dynamics shines a further light on this work by suggesting the spill-overs from creative industries directly contribute to the success of other industries. They cite the interlinkages between computer games and the automotive sector, digital platforms and the fashion industry, and the healthcare sector and virtual reality, as some illustrative spillovers.

The starry night

In a piece for HEPI Mackenzie has made the case that “You can’t control what education systems produce and you can’t know where the next breakthroughs will come.” Mackenzie is correct in that innovation often emerges from unexpected places. For example, the work of the Pandemic Institute in Liverpool which aims to predict and prevent future pandemic emerged off the back of research into foot and mouth disease in the early 00s. The wider productivity challenges of the UK are in part because of a lack of capital investment, joined up thinking, and incentives for higher earnings.

In this light, and in taking Mackenzie’s points further, a collective investment in the human capital of the creative industries is a kind of shared insurance policy against a turbulent employment market. It is a deliberate choice to address chronic underinvestment in human capital to take advantage of growth industries. Video games, for example, sit in the intersections between technologies and creative arts while also being a valuable and growing part of the economy.

Calculating spillover benefits and potential future income are difficult measurements on which to decide the collective investment we all contribute toward in higher education. It is worthwhile but perhaps even more challenging to assess business creation and IP through the creative arts. For that we return to our old friend HE-BCI.

Grey fireworks

University Arts London had the single highest number of student-startups created in 2022-23. At 567 this is more than twice as many as second place Kingston at 214, followed by Royal College of Art at 200. A 2020 study by UAL combining HESA data with Linkedin data suggests that “19.85 per cent of UAL graduates went onto lead businesses and almost one in ten (9.21 per cent) used their degrees to form their own start-ups.” Initiatives like UAL’s Not Just a Shop has returned 350k to students and alumni since its founding in 2017.

It isn’t  unreasonable to use wages to measure return on investment but it is unwise to use it as the sole measure. Economic value is broadly realised and needs a combination of measures to understand it.

As long as the value of creative arts is not solely economic and the creative industries contains jobs that are not exclusively creative, measuring its value will escape easy definition. If value is to be about economic contribution it should be a rounded economic contribution that considers return to individuals as part of considerations of returns to the country, returns to the wider economy, and returns in the future.

One response to “The creative arts and a broader definition of economic value

  1. There are deeper, more philosophical reasons for the phenomenon of low wages in the creative industries which means it is just nonsensical to use graduate earning power as a proxy for value. As specialists in visual culture and semiotics, arts graduates are adept at critiquing the dominant culture and seeing alternative ways of being. How else would they make something new? Lower earnings may well represent graduates who value satisfaction, the stimulation of risk and an adventurous life rather than chasing the status of a higher salary.

    In his 2002 book ‘Why Are Artists Poor?’, the artist and economist Hans Abbing picks this phenomenon apart in detail including a fascinating analysis of the motivating effects of a ‘winner takes all’ market in the fine art world. Large numbers of young artists are happy to work for little reward in the hope of reaching big rewards to be found at the top. But they are also much happier with risk and have a stronger orientation towards non-monetary rewards such as social capital and the esteem of their peers. Abbing describes how most artists will work in order to earn enough to pay their bills, but will then actively turn down additional work in order to protect their time in the studio. They keep their monetary earnings artificially low simply because they measure value in other ways.

    I’ll say that again in case you missed it: artists will actively turn down paid employment in order to protect their creative time, and this is a perfectly sensible economic decision based on the high value they place on time to be creative.

    I’d put money on this being true beyond the art world too. Anyone who is more interested in their own satisfaction than wealth, who values their time and would protect it in order to pursue their own intellectual interests, would likely behave in a similar fashion. And let’s not forget that graduates who have studied history, politics, cultural studies or some kind of critical theory will have their own perspective on the supposed benefits of capitalism anyway.

    Instrumentalising higher education tends too often to boil down to a brutal calculation about the bottom line. Is it “worth it” for the individual student, or “worth it” for society at large. Sometimes the awkward truth is that no, it isn’t worth it in purely financially terms. The individuals may end up poorer, but it is society at large that becomes richer as a result of their endeavours.

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