A brief discussion of the economics of cultural awards

What is an Oscar worth?

Accessing the value of an award constitutes a rather challenging task, as its manufacturing price is often inconsequential when set side by side with prestige and recognition features of the prizes, that translate into added opportunities and career breakthroughs. In fact, it is important to acknowledge that a cultural prize cannot be simply reduced to its monetary component or even the prospect of it. It entails the recognition of an artists’ reputational capital, the ability to enhance both their own prestige and that of their founders or sponsors and the effect on preserving or diminishing the artistic merit of a work, sometimes diverging from its commercial appeal.

Arts and culture are, to a certain extent, a public good, much like fire. One cannot be excluded from the appreciation of an art piece and multiple individuals can enjoy it simultaneously. On the other hand, there are mechanisms that can be set up to make art rivalrous or excludable (Potts, 2014). This balance between the public and private sphere creates the necessity to address efficiency concerns through appropriate public policy, that both acknowledges the necessity for public support and the market viability of art.

Furthermore, artwork can be categorized into what is considered an “experience good”, that can be defined as a type of good to which individuals are only able to designate value after consumption. Consumers of literature, music, cinema, or paintings are highly uncertain of their quality prior to reading, hearing, or viewing them. In such a scenario, markets may fail if they don’t convey enough information about the products: As quality is uncertain and demand is established before knowing whether one will like a certain product, consumers may choose to abstain from purchase. (English, 2014)

On this basis, cultural awards emerge as signaling devices in industries characterized by quality uncertainty issues, such that consumers may rely on quality signals to augment the probability of taking part in stimulating cultural experiences.

It is also crucial to state that prizes should not be reduced to their simple commercial logic. There is a fundamental aspect of cultural awards that is captured by a symbolic dimension, in a way that they function as tangible assets, or rather reputational assets. In this sense, James F. English also wrote about the distribution of prestige, with the prize as its principal currency design.

But does all this work in practice? Do cultural awards really influence decision making, and do they properly entail the merit of an art piece?

In fact, it was studied that prizes that are awarded in a short time span relative to the production of the piece are correlated with its economic success – possibly even influencing it/predicting it. However, these often constitute deficient predictors of “of true aesthetic quality or survival of the work” (Ginsburgh, 2003). Particularly, Ginsburgh also found that musical prizes and critics most probably have an impact on success. This is not the case for books, and films are established in a middle ground. Even today, these results make sense, as we see much more conversation surrounding the Oscars and the Grammys than The Booker Prize, for example.

One could also reflect on the role of media in conveying the merit of art pieces, as of now, the public not only relies on experts to do so, but on itself. Apps like Letterboxd or Goodreads provide a platform for a more general audience to access and disclose the quality of pieces. However, one could also think about the way in which influencers may be distorting these quality signals by advertising art for publicity, rather than pure aesthetic merit.

At the end of the day, prizes and awards deserve space, so as they add up to the cultural conversation, serving society by sparking discussions and filling the silence with ideas. One must acknowledge that; besides the economic efficiency pursuit, the power of literary prizes also lies in society's need for them to convene and share in intellectual discourse.

Potts, Jason. 2014. “Are the arts & culture a public good?”. The Conversation. Accessed October 20, 2024. https://theconversation.com/are-the-arts-and-culture-a-public-good-29939

English, James F. 2014. “The Economy of Prestige: Prizes, Awards, and the Circulation of Cultural Value”. In Handbook of the Economics of Art and Culture: Volume 2, edited by Victor A. Ginsburgh, David Throsby: 119-143. Elsevier. https://doi.org/10.1016/B978-0-444-53776-8.00006-4.

Ginsburgh, Victor. 2003. "Awards, Success and Aesthetic Quality in the Arts." Journal of Economic Perspectives, 17 (2): 99–111. https://doi.org/10.1257/089533003765888458