Why invest in Culture?

The answer seems obvious: an educated and cultured society understands, respects and coexists better.  We might even say that culture is the path to a healthy, well-adjusted and happy society. If we take a closer look at music, the benefits shoot up. Not only does music stimulate the brain, isolate stress and strengthen one’s health, but it also helps to work at a full capacity, sleep better and be optimistic, working as an emotional medicine. Should these advantages not be enough to convince someone about the importance of investing in culture, lets take a look at the economic benefits.

cerebro_musica

Based on the French notion of the Parable of the Tuileries, there are three economic principles we should know about and understand.

The first is the concept of Positive Externalities, meaning a benefit that results from an activity and that affects an otherwise uninvolved party who did not choose to incur that benefit. There are activities which basically affect others in a positive way, so the benefit to the individual or firm is less than the benefit to society. An example would be France’s cultural image and how it is perceived by the world. This causes a call-effect of investment from other parts of the world, as well as tourists who are attracted and keep consuming more. Although things in Spain are changing due to economic cutbacks, the amount of music festivals Spain has to offer can still be taken as an example of positive externality.

The second principle is the multiplier effect of culture-based investment. Investing in music obviously benefits musicians, technicians, venues, record labels and many other players in the music business. However, if we take a step further we’ll notice how other industries are also taking advantage of these investments.  Just imagine a Friday night: You take a cab to go to a concert, but first dinner at your favourite restaurant. You arrive and buy the concert ticket but before entering the venue you have a beer or two. When the concert’s over, you’re so excited you buy the band’s t-shirt and album, have the last drink at another bar and take another cab home. Next morning you wake up, run to the drugstore and buy some Ibuprofen. Music has just generated benefits for different sectors which at first, had nothing to do with the music industry.

diminishing_marginal_utility

Last but not least, there is an inspiring and unique principle known as  Diminishing Marginal Utility. What does this actually mean? Lets start by explaining each term. Utility is what consumers obtain –value– when consuming products or services, and by marginal we understand the gain from the last unit. Marginal Utility is therefore what the consumer gains when consuming the last unit. A Diminishing Marginal Utility should now start making sense.  The first unit of consumption of a good or service yields more utility, more satisfaction than the second and subsequent units, with a continuing reduction for greater amounts. Consumers normally get a positive utility when they purchase and consume a good or service, although this satisfying feeling decreases each time as the consumer becomes bored of the product.

diminishing-marginal-utility

You’ll probably understand it better with a real life example. Imagine if you eat paella –or something you really like– every single day: on the first day your level of satisfaction would be really high, and so would the second and third. Now imagine how you would feel ten days later, ten days eating just paella. You would probably still like the good (paella) whereas the level of satisfaction decreased. You wouldn’t enjoy it as much, would you? Now think about a whole year eating paella… The level of satisfaction might even become negative!

marginal_utility

Nowadays, this theory can be applied to almost every product. Remember, almost! All forms of culture, and specially music, have the magic quality of generating the opposite effect.  The more you listen to music you like, the greater the pleasure, generating a desire to consume other types of music and leading to a never-ending cycle. We’ll be more passionate about music each time, broadening our music preferences.

Debussy’s Clair de Lune has been playing in my parents house since I can remember. Probably, the first time I heard it I didn’t pay much attention, or none at all! But after listening to it several times and seeing my mum perform it, I really started appreciating its value. Now, each time I listen to it I get goose bumps. In other words, Clair de Lune provides me with more satisfaction each time I consume it.

Maybe now we understand why the main affected by cultural cuts is, in fact, society.

Just in case you still don’t understand why investing in culture is important, take a look at this video about the Parable of the Tuileries.

Parable of the Tuileries

By the way, tell me about your song, the one which will move you more each time you listen to it!

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