The Outbreak of the Cost Disease: Baumol and Bowen's Case for Public Support of the Arts
Duke Economics Working Paper No. 03-06
23 Pages Posted: 4 Dec 2003
Date Written: October 2, 2003
William Baumol and William Bowen's work on the economics of the arts in the 1960's laid the foundation for a new field and provided arguments for public support. This paper discusses influences on their work, the nature of their analysis, and their impact on the development of the field. Perhaps surprisingly, Baumol and Bowen did not perform a welfare analysis. They relied on Anne and Tibor Scitovsky's cost disease model to show that the quantity of the performing arts would decline over time in the absence of subvention, but without considering that the income effects of productivity growth might increase demand for the arts. Nor did they establish why the quantity of the arts should not be allowed to decline, relying instead on an exceptionalism never made explicit.
Keywords: economics of the arts, cost disease, public support of the arts
JEL Classification: H1, Z11
Suggested Citation: Suggested Citation