CONSUMPTION CAPITAL: THEORETICAL MODEL AND EMPIRICAL ESTIMATION

1
CONSUMPTION CAPITAL THEORETICAL MODEL AND
EMPIRICAL ESTIMATION
EHU-UPV, June 2005

• Victoria M. Ateca Amestoy
• Universidad de Málaga IESA - CSIC

2
INTRODUCTION
ON CULTURAL GOODS DEMAND AND VALUATION ISSUES
3
GENERAL PURPOSE
INTRODUCTION

• Cultural goods demand
• The role of tastes.
• Determinants of demand
• Effect on different periods.
• Methodologically
• How can we characterize diverse behavior?

4
SPECIFIC AIMS
INTRODUCTION

• 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.

5
ASSUMPTIONS
INTRODUCTION

• CULTURAL CAPITAL AND HOUSEHOLD PRODUCTION
  FUNCTIONS.
• basic need cultural appreciation
• demanded good cultural good
• RACIONAL ADDICTION.
• temporal dimension
• SOCIAL DIMENSION OF CULTURAL CONSUMPTION

6
THEORETICAL APPROACH RATIONAL ADDICTION Cultur
al Capital and Demand
7
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

8
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.

9
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
10
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.
11
RESULTS VITAL PATH FOR CULTURAL CONSUMPTION
THEORETICAL APPROACH
SHADOWED demand for cultural goods is greater on
the second period 45º demand path would be
constant if cultural good were not addictive

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

12
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
13
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

14
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.

15
A Model of theater participation
16
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

17
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

• Hypothesis derived form the theoretical model
  relevance of cultural capital
• Hypothesis related to time (productive factor)
• Regularities reported in the literature

18
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)

19
ESTIMATION RESULTS
THEATER DEMAND
20
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
21
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.

22
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.

23
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.

24
(No Transcript)
25
VARIABLES TEATRO
apéndices
26
RESULTADOS TEATRO
apéndices
27
RESULTADOS TEATRO (CONT)
apéndices