Utilizing the Discrete Choice Experiment Approach for Designing a Socially Efficient Cultural Policy: The case of municipal theaters in Warsaw

While public support for culture, and performing arts in particular has become a less self-evident privilege all over Europe than in the past, the economic evidence for benefits a society gains from those goods has become essential for both of the following: scientific research in the area of cultural economics and cultural policy. Although the non-market valuation has been employed as a tool for measuring social benefits generated by cultural resources, the budget constraint has not been considered in most studies regarding the performing arts. Due to that constraint, the crucial question that decision-makers have to answer is then not “whether to finance” or “how big the support should be”, but rather “how to allocate scarce resources”. The aim of our study is to investigate socially preferred ways of allocating public resources in the context of the types of performances offered by municipal theaters in Warsaw. The problem investigated is a current issue for local policy-making, but in a broader sense, it illustrates how state-of-the-art stated preference methods could be employed to support cultural policy. We find that inhabitants of Warsaw assign positive value to the broader accessibility of municipal theaters, and their willingness to pay for making the theaters a truly public good (by introducing a program of highly discounted tickets) exceeds the costs of such a policy. However, we also find that the cost-benefit relationship varies across theaters with different types of plays in their repertories. Our results imply a different level of socially efficient support for experimental, drama, children’s and entertainment theaters.