CONSUMPTION CAPITAL: THEORETICAL MODEL AND EMPIRICAL

ESTIMATION

Victoria M. Ateca Amestoy

Universidad de Málaga & IESA - CSIC

EHU-UPV, June 2005

INTRODUCTION

ON CULTURAL GOODSDEMAND AND VALUATION ISSUES

GENERAL PURPOSE

• Cultural goods demand:

The role of tastes.

• Determinants of demand

Effect on different periods.

• Methodologically:

How can we characterize diverse behavior?

INTRODUCTION

SPECIFIC AIMS

Study the determinants of the production and consumption of

cultural appreciation and of the demand of cultural goods.

– Explain differences on the observed market behavior.

– Present methods to estimate such models.

– Analyze the influence of public intervention on the

consumption of cultural goods.

INTRODUCTION

ASSUMPTIONS

• CULTURAL CAPITAL AND HOUSEHOLD PRODUCTION FUNCTIONS.

– basic need: cultural appreciation

– demanded good: cultural good

• RACIONAL ADDICTION.

– temporal dimension

• SOCIAL DIMENSION OF CULTURAL CONSUMPTION

INTRODUCTION

THEORETICAL APPROACH RATIONAL ADDICTION

“Cultural Capital and Demand”

RATIONAL ADDICTION AND TASTE FORMATION

THEORETICAL APPROACH

Literature

– Rational addiction: Stigler y Becker, JPE 1977

– Learning-by-consuming: Lévy-Garboua y Montmarquette, JCE

1996 y HCE 2001.

Our approach

– Cultural appreciation: argument of utility function

– Cultural goods: objects of choice

– The relevance of cultural capital to satisfy cultural need

– Individual cultural capital accumulation function

MODEL AND FOCUS

THEORETICAL APPROACH

Model

What are we looking for?

• Who do the determinants of demand operate in each period.

• The relationship between consumption on two periods.

• The influence of early consumption on subsequent cultural demand

• Effect of different cultural policies.

RESULTS: DETERMINANTS OF DEMAND

THEORETICAL APPROACH

Specific effects of addiction: the role of cultural capital

High level of initial cultural capital endowment: the agent is more productive to satisfy her cultural need by means of the production and consumption of appreciation

RESULTS: EFFECT OF PAST DEMAND ON PRESENT DEMAND

THEORETICAL APPROACH

Model fits an empirical regularity: the consumption on the adult period

depends positively on young consumption.

RESULTS: VITAL PATH FOR CULTURAL CONSUMPTION

THEORETICAL APPROACH

Cultural good on the first period:• consumption good• investment good

SHADOWED: demand for cultural goods is greater on the second period

45º: demand path would be constant if cultural good were not addictive

RESULTS: THE ROLE OF CULTURAL POLICIES

THEORETICAL APPROACH

Effects of an increase on the endowment of cultural capital:

• consumers: individual demand

– falls in the first period

– rises in the second

– effect over vital demand is negative

• if the government increases s providing young consumers with

cultural goods: positive effect for the productive sector.

Transfers: gift – units of cultural goods

positive for supplier

Government: demands cultural good that transfer to the consumer

Above what is individually demanded: merit goods

RESULTS: ON THE ROLE OF CULTURAL POLICIES

THEORETICAL APPROACH

Overlapping Generations. Dynamic effects of changes on

initial endowment:

• Adult consumption = initial capital endowment for her child

Result

• There exists a stationary point that does not depend on cultural

parameters

The effectiveness of cultural policy measures:• Only on the short run• Stationary point that depends on price and income

CONCLUSIONS

THEORETICAL APPROACH

The conclusions derived the theoretical model on cultural need satisfaction and demand of

cultural goods are the following:

• Cultural capital parameters. Efficiency on the production and consumption of cultural

appreciation experiences.

• Demand for adult agent is increasing on the cultural demand of the first period (although

decreasing paths are more common).

• Demand in the first period: double purpose (consumption good and investment good).

• Active cultural policy (if Government demands cultural goods and redistribute them)

beneficial effects for cultural goods suppliers.

• This policy only effective in the short run: dynamic system has a stationary point.

However, it can also influence the level of the point.

“A Model of theater participation”

THEATER PARTICIPATION

What we study

Analysis of the demand of a cultural good:

• Market good

• Intangible, integrated into cultural capital by a process of mere memory.

Why do individuals participate and which are the determinants of the intensity of

demand

Literature on “participation in the arts”

– Demand models

– Cultural capital models

– Others

SETUP & OBJECTIVES OF THE MODEL

THEATER DEMAND

Survey of Public Participation in the Arts 2002 USA

We explain theater attendance in terms of variables

Test econometrically

• Cultural capital• Cultural preferences• Social capital• Participation by other cultural goods• Socio-economics• Socio-demographics

1. Hypothesis derived form the theoretical model: relevance of cultural capital2. Hypothesis related to time (productive factor)3. Regularities reported in the literature

METHODOLOGICAL CONTRIBUTION

THEATER DEMAND

ZERO INFLATED NEGATIVE BINOMIAL MODEL

Sobredispersion and zeros in the dependent variable

distribution:

Implications

How can we interpret excess of zeros for the dependent variable?Behavior of two distincts subpopulations• Those who never go• Those who may go

Constraint maximization. Interpretation:• corner solutions (some agents consume zero units because of some restriction)• other ones reach their unconstrained maximum at zero (do not consider the good to satisfy their need)

ESTIMATION RESULTS

THEATER DEMAND

Never go Go more times

Demographic Age (+)

Sex (+)

Age (+)

Sex (+)

Socio-Economic resource availability

Income (-)

Occupation (-)

Household composition Household size (-)

Family participation Other go (+) Other go (+)

Habitat Central (-) All (+)

Cultural capital initial endowment own past investment

Education (-)

Parents education (-)

Education (+)

Other types of participation relation with other goods

Consumption of other supports (-)

Acting (-)

Go more (-)

Adult classes (-)

Consumption of other supports (+)

Go more (+)

Adult classes (*)

ESTIMATION RESULTS

THEATER DEMAND

The relevance of variables that determine cultural capital

• influence more on the binary decision of participation, that on

the intensity.

• examples: parents education, values of the coefficients of

participation under other goods.

Implications

We can disentangle the effects of different policies:Some policies for increasing participation will just make that hose who already

participated would consume more units;

whereas other policies will change the behavior of non-goers

CONCLUSIONS

THEATER DEMAND

The conclusion that we have obtained for this participation behavior

model have been:

• Jointly estimate the market behavior of two subpopulations.

• Zero Inflated Negative Binomial Model

– probability that an agent never goes, and

– probability of going a given number of times.

• Some variables are deterrence variables for participation.

• Socio-cultural variables accommodating individual cultural capital play a key

role.

• Phenomenon such as feminization and urban characteristics.

• The participation of closest people influences intensity, but not binary

participation.

OVERALL RESULTS

FROM THE THEORETICAL ANALYSIS

•How the determinants of demand operate in each period.

•The effect of public intervention on the initial cultural capital stock.

•A justification for public intervention; demand and transfer.

•The effectiveness of cultural policies on capital.

OVERALL RESULTS

FROM THE EMPIRICAL ANALYSIS

• The relevance of supply-side variables: constraints.

• The relevance of cultural and social capital.

• Suitability of proposed methodology to estimate differentiated behavior.

VARIABLES TEATRO

apéndices

50

tabl a 3.1: var iabl es incl uidas en el anál isis

var iabl es def inición

y número de representaciones teatrales a lo largo del último año

S vector de variables de capital cultural

nivel deeducación formal de la madre

nivel deeducación formal del padre

nivel deeducación formal propia

clases de interpretación (diferenciada por edad decomienzo)

actúa

P vector de preferencias

¶ ir más si no tuviera restricciones

O participación en teatro vía otros bienes culturales

teatro no en vivo / activo (video, DVD)

teatro no en vivo / pasivo (TV, radio)

lectura deteatro

Sc vector de capital social

participación dealgún miembro de la familia

H vector de variables de composición del hogar

número depersonas en el hogar

estado civil

S vector de variables socio-económicas

ingreso del hogar

ocupación

D vector de variables demográ…cas

edad

sexo

raza

E vector de variables del entorno

CMSA: codi…cación del Bureau of the Census

áreas estadísticas metropolitanas consolidadas

tipo de hábitat

RESULTADOS TEATRO

apéndices

71

tabl a 3.3: r esul tados de l a est imacion ZINB

Siempr e cero Model o de recuent o

var iabl e ̂ p-value ̂ ̂ p-value ̂

age ¡ 000150 0128 09985 ¡ 008663 0003 09170

age2 000001 0033 10000 000198 0038 10020

age3 045013 0000 15685 ¡ 000001 0121 10000

hombre 067583¤ 0000 19657 ¡ 014172¤¤ 0041 08679

negro ¡ 099418 0235 03700 028428¤¤ 0044 13288

indio 007422 0632 10770 ¡ 065652¤¤ 0039 05187

islas ¡ 038723 0082 06789 ¡ 005386 0851 09476

ing2 ¡ 056736¤ 0000 05670 003375 0632 10343

ing3 ¡ 078865¤ 0000 04545 017934¤ 0011 11964

ing4 ¡ 040183 0144 06691 031410 0188 13690

ing99 ¡ 006239 0767 09395 026764 0221 13069

tiempo parcial ¡ 052630¤ 0000 05908 006728 0418 10696

desempleado 037137 0163 14497 ¡ 034491¤ 0001 07083

retirado 011367 0230 11204 010779 0211 11138

no_ activo ¡ 057637¤ 0011 05619 008407¤¤ 0039 10877

tamaño hogar ¡ 058172¤ 0023 05589 ¡ 002849 0693 09719

viudo ¡ 027928 0307 07563 ¡ 008681 0507 09168

soltero ¡ 067334¤ 0001 05100 036779¤ 0000 14445

divorciado ¡ 026631 0351 07662 ¡ 006679 0477 09354

familia va 020292¤ 0000 12250 017363¤¤ 0028 11896

central ¡ 011116¤ 0000 08948 0455555¤ 0000 15770

intermedio 004348 0221 10444 011448¤¤ 0055 11213

otro habitat 225565 0127 95415 009282¤¤ 0073 10973

Nota: ̂ :coe…cienteestimado; ̂ : factor decambioen laprobabilidad (odds) paraincremento

unitario de ; ̂ :coe…ciente estimado; ̂ : factor de cambio en el recuento esperado para

incremento unitario de

RESULTADOS TEATRO (CONT)

apéndices

72

tabl a 3.3 (cont.)

Siempr e cero Model o Count s

var iabl e ̂ p-value ̂ ̂ p-value ̂

edu1 ¡ 059669¤ 0000 05506 ¡ 099695¤ 0000 03690

edu3 ¡ 063959¤ 0000 05275 ¡ 003860 0697 09621

edu4 ¡ 092931¤ 0000 03948 025538¤ 0000 12910

edu5 011323 0219 11199 050686¤ 0000 16601

padre_ edu1 ¡ 013340 0719 08751 ¡ 019304 0331 08244

padre_ edu3 ¡ 044618¤ 0010 06401 ¡ 015042 0464 08603

padre_ edu4 ¡ 080822¤ 0000 04457 ¡ 012420 0463 08832

padre_ edu5 091225¤ 0000 24899 ¡ 011028 0687 08956

padre_ edu99 033916¤ 0013 14038 077984¤ 0000 21811

madre_ edu1 ¡ 009049 0341 09135 032326¤ 0024 13816

madre_ edu3 ¡ 032305¤ 0050 07239 00392 0684 10401

madre_ edu4 ¡ 028790 0186 07498 001469 0933 10148

madre_ edu5 ¡ 042490¤ 0000 06538 010195 0621 11073

madre_ edu99 ¡ 051399 0000 05981 ¡ 067554¤ 0000 05089

theatro lectura ¡ 101301¤ 0000 03631 075561¤ 0000 21289

medios pasivos ¡ 142370¤ 0002 02408 023444¤¤ 0056 12642

medios activos ¡ 267922¤ 0000 00686 ¡ 000042 0997 09996

actúa ¡ 115885¤ 0000 03138 022223 0371 12489

ir más ¡ 038540¤ 0059 06802 034236¤ 0001 14083

clase18 ¡ 046542 0259 06279 005960 0631 10614

clase19 ¡ 316351¤ 0000 00423 044146¤ 0000 15550

Tamaño muestral = 16659 lnalpha 009217

Log-verosimilitud ¡ 9032 + 11 alpha 109656

Pseudo-R2 0198 SE(alpha) 011723

Categorías omitidas: mujer, blanco, ing1, tiempo completo, casado, no metropolitano, edu2,

padre-edu2, madre_ edu2, noactúa, no iría más, no tomó clases deteatro, familia no va.