Abstract This article studies the socioeconomics of government public expenditure for the arts and the normative foundations of state intervention in the arts. I pose two interrelated research questions: (a) what is the relationship between the public funding of the arts and their consumption? and (b) what mode of justification and what perception of the place of art in society is reflected in this relationship? Based on the philosophical work of Alan Badiou, I develop a novel conceptual framework to delineate three types of normative justifications for the public funding of arts organizations: romantic, didactic and classical. Using data from the public funding of 92 orchestras, theaters and dance troupes in Israel between 1999 and 2011, I estimate a cross-lagged panel data model to study how arts funding both affects and is affected by the levels of consumption of the organizations’ productions. The results of the study show a complex pattern of different relationships between funding and consumption that accord with the three types of normative justifications for public arts funding. 1. Introduction This article contributes to the study of two important issues related to arts policy: the normative justifications for public arts funding and the link between public funding and arts consumption. The first issue has received a considerable amount of scholarly attention, while the latter remains understudied. However, these issues have never been linked together in a single study, even though there is a direct, logical line that goes from the justifications and rationales for state support of arts organizations to the consequences of this funding for the recipient organizations. State intervention in the form of public funding of the arts has been justified and advocated on several grounds, some of them economic and rational, and others social and humanistic. These normative justifications are arguments for the legitimacy and appropriateness of these governmental actions. In this article, I test these justifications empirically to determine their validity in the case of the state funding of the performing arts in Israel. To do so, I examine the relationship between arts funding and arts consumption. First, I present a general theoretical framework to differentiate among three central modes of normative justification for state intervention in the arts and analyze their implications for the funding–consumption nexus. Then, I present the empirical case of performing arts in Israel and compare these predicted implications with empirical evidence that stems from a longitudinal analysis of data about the funding and consumption of Israeli performing arts organizations. Finally, I discuss the implications of these results for the study of public arts funding rationales. 2. Justifications and rationales for arts funding State intervention in and public support of art are common phenomena in almost all modern Western countries of the world. However, the apparent disassociation between the esthetic world of art and the political realm of governance prompted the question of the reasons for governments to intervene in the field of art. Beginning with the pioneering work of Baumol and Bowen (1966), the question of the justification for public arts funding has spurred scholars from various disciplines to write about the rationales for the involvement of the state in the field of art (Baumol and Bowen, 1966; Cwi, 1980; Dworkin, 1985; Fullerton, 1991; O’Hagan, 1998; Heilbrun and Gray, 2001; Rushton, 2002; Blaug, 2003; Ratiu, 2005; Zuidervaart, 2011). However, most of this literature stems from the field of economics and, based on economic premises, aims to ‘… describe the logic on which such a [public funding] decision … should be based if it is to satisfy the criterion of rationality’ (Baumol and Bowen, 1966, p. 378). In consequence, the discussion about arts funding rationales tends to take the form of a theoretical study and is implicitly based on normative perceptions that take the reality of arts support for granted and rarely question it (Mazza, 2003; Zuidervaart, 2011). The literature divides the rationales for public arts funding into two broad categories: economic justifications that are based on issues of maximizing economic efficiency and ancillary, noneconomic justifications that are beyond considerations of economic efficiency but still are usually put in economic terms. The first category of economic justifications relies on the concept of ‘market failure’ that stems from the conjunction of two economic characteristics attributed to the arts: positive externalities and a public good. Market failure describes the situation in which the economic behavior of producers and consumers of arts leads them to an equilibrium point that is economically inefficient. There is a desire for more art to be produced and consumed, but market conditions do not allow this to happen, because there are many nonconsumers who benefit from the art’s positive ‘spillover’ effect without paying for it. The topic of ‘spillover’ effects is important especially for the study of the economics of urban development (Glaeser et al., 1992). The literature notes several main external benefits of such support: stimulating the economy, conveying educational values, building a national identity, enhancing the country’s cultural reputation, providing a legacy for future generations and the option value of its existence. These positive externalities are linked to the ‘public good’ characteristic of the arts. Conceiving of the arts as a public good means that it benefits both those who consume it and those in the broader society who do not. Furthermore, there is no limit on the number of beneficiaries. As such, the arts require public support because the private production of public goods cannot create the optimal amount of art (Heilbrun and Gray, 2001). In addition to the justifications that are based on economic efficiency, the literature also provides justifications rooted in the notion that art has a positive value in and of itself regardless of the direct benefit for its consumers or indirect positive externalities. However, these justifications are usually cast in economic terminology too. Some scholars suggest the idea of a ‘merit good’, a good that is socially desirable even if individuals do not demand it, in connection with the arts (Blaug, 2003; Zuidervaart, 2011). Other justifications are based on considerations about access to the arts and equality in distributing funding to beneficiaries. These justifications suggest that it is not the market that fails to supply enough quantity of art, but rather the potential audience that fails to consume art whether due to barriers or disinterest. Indeed, some of these justifications, such as the ‘merit good’ justification reject the principle of consumer sovereignty in the case of art (Throsby, 2001). However, there is no complete agreement among scholars as to which of the justifications should be regarded as market based and which not. For example, the ‘option value’ rationale that Frey (2003a) considers a market failure argument is regarded by Blaug (2003) as only a ‘supplemental’ noneconomic argument. Moreover, the distinction between economic and noneconomic justifications is not only equivocal but also technical. It reduces art to a kind of ‘good’ and focuses on its supply and demand. In consequence, it ignores its idiosyncratic characteristics as a unique kind of human activity and overlooks the cultural values and perceptions of art that underlie these normative imperatives. Nonetheless, the dominance of economic reasoning in the study of the justification for public arts funding has created a kind of ‘epistemic community’ that has informed policymakers’ thinking about these issues (Hirschman and Berman, 2014). Given this situation, I present an alternative typology of justifications for arts funding that is based on variations in cultural values and perceptions of art’s place in society. This typology borrows its format and terminology from the philosophical work of Badiou (2005) on arts and politics, and is based on the consideration of the perception of art and its place and role in society. In his book ‘Handbook of Inaesthetics’ (Badiou, 2005) Badiou discusses the relationship between art and philosophy, and distinguishes among three archetypical perceptions of art that he calls romantic, didactic and classical schemata. Although his discussion is quintessentially philosophical, Badiou himself underscores the implications of these schemas for political agendas about the art and even public arts funding. I extend Badiou’s line of thought and distinguish among three modes of normative justification for funding the arts: Romantic justifications. Justifications that conceive of art as having a value of its own and sees the merit of its existence in the artistic expression itself. These justifications glorify artistic creation and maintain that the evaluation of art should be made on the basis of artistic criteria alone. Romantic justifications do not assign the arts any value that depends on the external effects or impact that art makes. An example of a romantic justification is the often cited claim that arts funding is meant to help develop artistic excellence (Throsby, 2010; O’Brien, 2013). Didactic justifications. Justifications that conceive of the arts as an instrument that the state could and should use. This instrumental view of the arts puts the focus of its evaluation not on the artwork itself but on the objective of the artistic expression, which is the public use of art as an ‘ideological state apparatus’ (Althusser, 1971). The didactic perception is very different from the romantic view because the former is embedded in a specific social context where ‘… the ‘good’ essence of art is conveyed in its public effect, and not in the artwork itself’ (Badiou, 2005, p. 3). An example of a didactic justification is the justification for arts funding on the grounds of its role in building a national identity (Mulcahy, 2000; Binkiewicz, 2004). Although didactic justifications are sometimes identified with oppressive authoritarian regimes, this is not necessarily the case. A didactic approach to art may also be the basis of perceptions that regard art as having a positive social influence. One example is using art to promote peace (O'Connell and Castelo-Branco, 2010;,Bornstein, 2015). Classical justifications. Justifications that conceive of the arts as a kind of amusement or leisure time activity. According to the classical scheme of justification, art brings enjoyment to its audience, ‘catharsis’ in the words of Badiou (2005, p. 4), or ‘benefit’ or ‘utility’ in economic terminology. Art consumption is regarded as a leisure activity that is nonetheless a basic social activity (Hirschle, 2011). Given that the only purpose that art has and can ever have is the entertainment of people, the only scale for measuring its value is the enjoyment and approval of the audience. In that sense, this justification is in line with the consumer sovereignty principle. An example of a classical justification is the view of arts funding as a social service that is part of a general social welfare policy (Feder and Katz-Gerro, 2012; Zuidervaart, 2011). These distinctions have several advantages over previous formulations of the different types of arts funding justifications. First, they are based on the recognition of the social meaning that is attributed to art and on the perceptions of its social role rather than reducing it to a commodity and focusing on the economic logic of its support. Economic justifications are of prime importance in contemporary society but they fail to explain the core question—why does the state fund the arts? Economic justifications that refer to the positive externalities of the arts are limited because they cannot explain why art is considered an effective option for achieving external goals. For example, one of the externalities of art that is often mentioned is the fact that artistic performances attract customers to other businesses such as taxis and restaurants (Frey, 2003b). However, this argument is an insufficient justification for supporting the arts, because when we compare such an investment to its effect on the economy, it is clear that the public money spent on art could be used more effectively and directly for stimulating the economy in other ways. Similarly, economic justifications that stress other types of market failures as a justification for supporting the arts are also flawed because they imply that the government regards art as beneficial for the population, without explaining what this benefit is. Without such an explanation, the question of why the state funds the arts remains unanswered. Second, the three different types of justifications have distinct implications for the link between arts funding and arts consumption, allowing us to test the applicability of these justifications in different settings empirically. This approach offers us an opportunity to indirectly learn about the grounds on which arts funding is based and reveal its hidden roots. We can study policy justifications empirically using content analysis or surveys (for example, Hutton and Evans, 2009). However, the option to study policy justifications from their method of operation that I present here is especially important in situations where these ideas are veiled in political discourse or a lack of policy transparency, as is often the case (Imbeau, 2009). The next section surveys the literature regarding arts funding and arts consumption, and explains how different relationships between funding and consumption are linked to the three types of justifications presented here. 2.1 Arts funding and its relation to production and consumption Asking what are the normative justifications for the public funding of the arts is analogous to asking what is the purpose or the intended effect of arts funding, because any policy action is meant to achieve a certain policy goal. In the case of arts funding, and especially in the case of the performing arts that will be studied here, the effect of a policy may be evident either in the activity of the funded organizations that produce art or in the patterns of the consumption of the art produced. However, the empirical examination of the consequences of these justifications and the general effects of arts funding have largely been neglected. Even though one might expect that the trend of evidence-based policy making would have resulted in studies evaluating the effect of arts funding, in fact, problems arising from the scarcity, poor quality and lack of uniformity of the data have impeded the development of such a body of literature (Madden, 2005; O’Hagan, 2016). Research using quantitative analysis to study the impact of arts subsidies on the production and consumption of arts is either limited in application and outdated (Netzer, 1978; Throsby and Withers, 1979) or focused on the production side (O’Hagan and Neligan, 2005; Neligan, 2006; Madden, 2011). In 1990, Bonato et al. predicted that, ‘Empirical research on consumers’ behavior and the efficiency of public expenditure in the performing arts is likely to expand … in the near future …’ (p. 41). However, but more than a decade later Schuster (2002) concluded that, ‘It is not so much the shortage of data that should command one's attention; rather, it is the lack of use of those data that needs to be addressed’ (p. 19). Research on the demand for and consumption of the arts tends to neglect the issue of public funding. For example, Seaman (2006) presents a comprehensive review of research on the demand for the performing arts, but none of these studies takes into account the influence of state funding. Research on the demand for art has usually tackled the issue within the standard view of the arts as a general good and without treating them as a distinct form of human experience or product (Lévy-Garboua and Montmarquette, 2003). The research on the demand for the performing arts has focused mainly on the price of art and of its possible substitute entertainment activities, on the income of the consumer, and the quality of the performance (Throsby, 1994). Most scholars have investigated issues of price and income elasticities. The empirical evidence shows negative price elasticities and positive income elasticities that vary depending on the artistic genres and arts organizations (Lévy-Garboua and Montmarquette, 2003). These findings suggest that public funding that helps arts organizations be less dependent on income they generate themselves may enable them to reduce prices and increase demand. The study of the supply of performing arts sees the arts as part of the creative industries and concentrates on issues of creativity, entrepreneurship, the structure of arts organizations and the art market, with a particular focus on the cost of production and transaction costs (Towse, 2010). An important theory regarding the cost of production in the performing arts is the cost disease that was diagnosed by Baumol and Bowen (1966). According to this theory, the cost of producing a performing arts presentation is constantly rising without a parallel increase in efficiency. The main implication of this theory is that performing arts organizations will be evermore and increasingly dependent on external sources of income such as public funding. The question of the effect of arts funding on art consumption is especially important in the case of the performing arts such as theater and dance because such works are by definition meant to be realized in front of an audience. There are several possible relationships between the funding and consumption of the arts. The first possibility is that art funding affects the level of arts consumption, for example, by encouraging more productions or reducing ticket prices. The direction of the relationship might also be the other way around, in which case the level of consumption affects decisions about the level of funding allocated to arts organizations. In such cases, decision makers would tend to favor organizations that enjoy popularity and success. Finally, it is also possible, as some critics claim, that arts funding and arts consumption are not related in any way and do not affect each other. These three possible answers to the question of the relationship between arts funding and arts consumption can be mapped to the three types of arts funding justifications presented in the previous section. The romantic justifications emphasize the preeminence of the artistic creation and claim that art is an end in itself. Hence, according to this mode of justification, there is no required link between the funding and consumption of art, because funding is justified just for enabling the mere existence of art. In contrast, didactic justifications focus not on the intrinsic qualities of art but on its external effect. In the case of the performing arts, the effect can occur only when the art is performed in front of an audience. Hence, according to this mode of justification, the funding of art is expected to have a positive effect on the consumption of art, because without being consumed, art cannot have the didactic effect that is its ultimate goal. Finally, according to the classical mode of justification the funding of the arts is expected to have a positive link to its consumption because, as a public service, it is responding to a demand (Getzner, 2002). However, the direction of the link is opposite to that implied in the didactic justification because here it is the level of the audience’s approval manifested in consumption and demand that justifies the funding. Hence, in this case, consumption is expected to have a positive effect on arts funding. Since there are distinct empirical implications for each of the three justifications modes, we can try to apply this model to a specific empirical setting and ask two interrelated research questions: (a) what is the direction of the relationship between the public funding of the arts and their consumption? and (b) what mode of justification and what perception of the place of art in society are reflected in this relationship? To investigate these research questions, I use data from the public funding of the performing arts in Israel. Israel is a relatively young country with a large number of performing arts organizations that are funded by the government. However, Israeli politicians rarely discuss the arts policy publicly, and it is not the center of public interest. Hence, due to the vagueness of the intentions and priorities that guide decisions about public funding of the arts, we can gain some insight into them by studying their consequences as manifested in the patterns of funding and consumption. 3. Public funding of the performing arts in Israel The government department that allocates direct funding to Israeli arts organizations is called the Culture Administration (Minhal Hatarbut). It was created as a department in the Ministry of Education and Culture and since 1993 has resided in different ministries depending on various organizational and political configurations (currently it is part of the Ministry of Culture and Sports). The Public Council for Culture and Arts (Hamoatza Hatsiburit Le'tarbut Ve'omanut), which is composed of public figures and artists, operates parallel to the Culture Administration and advises it on matters of the assessment of the artistic quality of the funded organizations. Except on rare occasions, the recommendation of the council is a necessary condition for receiving state support. However, the allocation of funds to support art and culture and its final amount is determined by the Culture Administration according to criteria that change relatively often. Thus, the Ministry of Culture clearly enjoys a considerable amount of freedom and discretion in its decisions. There are separate departments for each type of art so that different personnel make the decisions regarding the funding of organizations that promote different types of art. In addition to the government, there are several other bodies that support culture and the arts financially. Subsidies are provided by local authorities (Ruskin, 1998), the public lottery (Mifal Hapais), private donors and nongovernmental organizations (Katz and Sella, 1999). However, government funding is still the main source of external funding for performing arts organizations in Israel. The other funding bodies do not support arts organizations as extensively as the Ministry of Culture. Local authorities support only local institutions and nonprofessional activities. In addition, they usually provide smaller allocations than the national government does. The national lottery funds only specific projects in one-time allocations that, unlike the government allocations, are not renewed annually. Contrary to the situation in the USA, private donations are scarce in Israel. Hence, we cannot study nongovernmental allocations in the same way that we can government allocations provided by a central agency in a continuous manner. It should be noted that none of the performing arts organizations that receive funding from the Israeli government are private groups. They are all public, nonprofit organizations. Arts organizations in Israel are registered as ‘amutot’ (singular, ‘amuta’)—a form of a nonprofit association headed by a voluntary board but one that can hire salaried employees. This board itself has a very limited effect on the operation of the arts organizations, which are actually run by artistic managers and administrative staff. There are only a few studies of Israel's cultural policy. Two main studies (Katz and Sella, 1999; Shavit, 2000) describe and discuss the main features of cultural policy in Israel in the broad sense and focus on articulating a policy vision. Michman (1973) presents an account of the first years of arts funding in Israel. Ruskin (1998) analyzes the size of the cultural budget during 1989–1998 and describes a mixed trend. Recently, Feder and Katz-Gerro (2012, 2015) studied the factors that are linked to changes in the public funding of the performing arts in Israel and funding patterns between 1960 and 2007, and the distribution of the cultural budgets among different types of arts organizations. 3.1 Performing arts in Israel Theater The history of the Israeli theater began with the founding of the Habima Theater in Moscow in 1913. This prominent theater emigrated to Israel in 1928 to join other smaller theater companies that operated in Israel and later became the national theater of Israel. The theater in Israel was originally ideologically committed to the Jewish national movement and was regarded as an important element in the revival of the Hebrew language. Early on, most of the large theaters were publicly supported by the state, and those that were not began receiving funding when they faced economic difficulties. As part of a gradual process of political awakening, self-criticism and esthetic development, beginning in the 1970s and 1980s, theater production in Israel became more vibrant, socially aware and even involved in several censorship scandals due to critical and nonconsensual messages (Ben-Ami, 1996). However, in the last decade of the twentieth century, Israeli theater underwent another transformation. One aspect of this transformation was the disappearance of private theater enterprises in Israel. While in 1990 almost half of theater productions in Israel were produced by private theaters, in 1998 as much as 88% of theater productions were produced by public theaters (Katz and Sella, 1999). At the same time, public theater began to shy away from controversial themes and became more and more entertainment oriented. Israeli theater researcher Shosh Weitz (1996) concluded that, ‘The Israeli theater in the 1990 s is a form of entertainment that is both popular and respectable. It displays no desire to educate or elevate its audience and makes few demands on it in terms of either cognitive or intellectual effort or political awareness’ (p. 114). It seems that this commercial tendency that continues to this day is responsible for the relatively high theater consumption rate in Israel (Haas, 1999). The view of the theater in Israel as a form of entertainment is compatible with the logic of the classical justification presented above that regards arts funding as a public service. Theaters that draw more visitors may be able to solicit and receive more public funding than arts organizations that fail to attract a similar size audience. In this scenario, the state is responding to the demand created by the audience. Hence, I hypothesize that I will find that the level of the consumption of theater will affect its funding level. Classical orchestras Unlike theater, the popular music market in Israel is private, large and active. However, classical concert music is publicly funded and supported by the state to a large extent. The Israeli Opera and the Israeli Philharmonic Orchestra are among the major funding recipients. In 2013 they received two of the three largest grants from the Ministry of Culture. Orchestras in Israel have long concentrated on playing a Western musical repertoire. This is also true today, with only two orchestras performing non-Western musical repertoires. The Western orientation of the orchestras, coupled with the fact that around half of the Israeli population is not of Western origin, characterizes the consumption of orchestral music in Israel as highbrow, elitist and linked to the Ashkenazi group in the Israeli population (Feder and Katz-Gerro, 2012, 2015). Ashkenazi Jews are those whose origins are in Europe. In Israel, historically they have occupied the upper echelons of society. This elitist characteristic might have led to the marginalization of orchestral music in Israeli culture. However, beginning in the 1990s, a wave of over 1 million immigrants from the former Soviet Union started to flow into Israel. They brought with them a large number of classical musicians who filled the existing orchestras and even contributed to the emergence of new ones (Remennick, 2002). The public funding of orchestras in Israel has been the focus of controversy that echoes the social power struggles between the Western Ashkenazi and the non-Western Mizrachi groups in Israel. The latter claim that the funding of classical music is part of an attempt to preserve an Ashkenazi cultural hegemony. A recent study of trends in arts funding in Israel found evidence supporting this claim (Feder and Katz-Gerro 2012). The view of orchestras as a tool in the reproduction and preservation of an Ashkenazi cultural hegemony in Israel is compatible with logic of the didactic justification for arts funding. According to this argument, art has a social impact, thereby justifying its funding. In this scenario, the state is interested in increasing the consumption of the art produced by the organizations it chooses to subsidize. To achieve this goal, the funding can be used to increase the number of productions, reduce ticket prices or support touring programs. Hence, I hypothesize that I will find that the level of the funding of orchestras will affect their consumption level. Dance Artistic dance in Israel has always been very modern and up-to-date. In its beginning it was influenced by the most recent development in concert dance in Europe (Aldor, 2003). Later, in the 1950s it was influenced by contemporary American dance and especially by Martha Graham’s method. This tendency toward modern American dance was reinforced with the foundation of the Batsheva Dance Company, which became the most prominent Israeli dance company (Eshel, 2003). The field of Israeli dance today is innovative, creative and influenced by contemporary trends in the wider dance world. It is the least popular of the performing arts in Israel and its consumption is regarded as elitist. Unlike classical music, which is more heteronomous and consecrated in Bourdieusian terms, contemporary dance in Israel has a very limited audience and little visibility in the media. The innovative and modern characteristics of contemporary dance in Israel, coupled with its low popularity does not make it a candidate for exerting a social impact nor for being regarded as a public service that the population demands. Accordingly, I hypothesize, following the logic of the romantic mode of justification that regards art funding as supporting the creation of artistic value, that the government Israel funds dance companies without any consideration of its level of consumption. Hence, I hypothesize that the levels of funding and consumption of dance in Israel will not be linked in any way. 4. Analysis 4.1 Data The data used in this study come from a database of 182 performing arts organizations (orchestras, dance companies and theaters) in Israel that received public funding between 1999 and 2011. The information was obtained from public reports published by the PILAT Institute that were commissioned by the Ministry of Culture. These reports detail the funding of the arts organization from different sources and levels (e.g. state, municipal and private funding), the volume of artistic activity and the level of consumption. I excluded public funding recipients that were festivals or art centers, because they operate differently from regular arts organizations. I also excluded arts organizations that received funding for less than 5 years as well as five organizations that were included in the reports but did not receive regular state funding. As a result, the study’s sample consisted of 92 organizations that constituted an unbalanced panel with a mean of 9.2 years per unit. The panel is unbalanced due to the fact that some of the organizations do not have data for certain periods of time. The absence of data stems from one of two possible reasons: either the arts organization did not exist at all because it was not established yet or had been shut down, or it did not receive public funding and hence the information pertaining to it does not exist. This missing data does not have an effect on the results because in these periods, the constant zero funding variable cannot contribute to explaining the changing visits variable, and vice versa. My data pertain to 25 orchestras, 30 theaters and 37 dance groups. The number of arts organizations in each artistic domain is relatively small because the art scene in Israel, which has only eight million inhabitants, is quite small. It should be noted that the use of a relatively small number of arts organizations in studies that explore arts organizations is not uncommon. Previous studies from the USA and England have used data from a number of arts organizations similar (and even smaller in proportion to the size of the population) to the number of arts organizations used here. For example, O’Hagan and Neligan (2005) studied 40 theaters in England while Pompe et al. (2011) and Tamburri et al. (2015) used data from 64 orchestras and 47 orchestras in the USA, respectively. The curious fact that dance companies constitute a larger group than theaters and orchestras can be explained by the fact that dance groups in Israel are considerably smaller in size than orchestras. Therefore, the cost per organization for dance groups is much smaller compared to theaters and orchestras. This difference is evident in the smaller number of employees (both artistic and administrative) in the largest dance group in Israel (Bat-Sheva), which employed 72 employees in 2015. Comparing that number to the 159 employees in the largest orchestra in the country (The Israeli Philharmonic) and to the 414 employees in the largest theater in the country (Hacameri) proves this point. 4.2 Variables Public funding I used funding at the state level as the indicator variable for public funding of the arts. State public funding is direct funding allocated to arts organizations by the Culture Administration within the Israeli Ministry of Culture. In this variable, I included only regular funding and excluded windfall sums allocated for exceptional purposes such as building renovations or special projects. This variable is recorded each year for each arts organization and is expressed in thousands of NIS (New Israeli Shekel, equal to about $.25). The model estimates each year’s influence on the following year. Since the time span is relatively short, the price level does not change much from year to year, and the budgetary changes are incremental (Hayes, 1992; Lindblom and Woodhouse, 1993), I opted to use the nominal level of funding. Arts consumption The variable I used as the indicator of arts consumption in the models presented below is the number of paid visits to the arts organizations. This variable is a count of the number of regular visits paid for by the audience and is recorded each year for each arts organization. Nonpaid visits that consist of visits by journalists, performing art critics, guests, etc., were not counted, both for their small number in comparison to the paid tickets and due to the fact that they do not represent the standard type of audience of the arts organizations’ productions. I maintain that different kinds of justifications for arts funding stem from different perceptions of the relationship between art and society. Hence, they differ in the pattern of association they imply between funding and the operation of the funded performing arts organization. Performing arts are by their very nature social. Unlike books and paintings, theater, dance shows and classical music concerts are realized and materialize only in front of an audience. Arts funding is supposed to support the realization of art. My goal is to study the link between funding and the realization of the works of performing arts. The suitable indicator for their realization is the size of the audience they reach, which is best captured by the paid visits variable. Table 1 presents the descriptive statistics for the funding and consumption variables. Table 1 Arts funding variables—mean values per arts organization N Mean Std. Dev. Min Max State public funding (in 1000 ILS) 92 1682.1 3318.5 6.2 19535.4 Paid visits 92 45895.9 131403.9 845.1 790155.4 N Mean Std. Dev. Min Max State public funding (in 1000 ILS) 92 1682.1 3318.5 6.2 19535.4 Paid visits 92 45895.9 131403.9 845.1 790155.4 Table 1 Arts funding variables—mean values per arts organization N Mean Std. Dev. Min Max State public funding (in 1000 ILS) 92 1682.1 3318.5 6.2 19535.4 Paid visits 92 45895.9 131403.9 845.1 790155.4 N Mean Std. Dev. Min Max State public funding (in 1000 ILS) 92 1682.1 3318.5 6.2 19535.4 Paid visits 92 45895.9 131403.9 845.1 790155.4 4.3 Hypotheses Following the theoretical exposition presented above, I formulated three hypotheses that I tested using the data. H0: The level of government funding and the number of paid visits to the organization’s productions have no effect on each other. H1a: The level of government funding will have a positive effect on the number of paid visits to the organization’s productions. H1b: The number of paid visits to the organization’s productions will have a positive effect on the level of government funding given to the arts organization. It is important to note that hypotheses H1a and H1b predict different directions of the mechanism that links funding and consumption. Therefore, they are not mutually exclusive and potentially could be both either confirmed or rejected. The cross-lagged panel model that I use is suitable for testing these hypotheses because it enables the measurement of not only the size, but also the direction of the effect that funding and consumption might have on each other. 4.4 Method of analysis I analyzed the data using a cross-lagged panel regression model with two-way fixed effects (Allison, 2005; Selig and Little, 2012). This model is suitable for estimating a bilateral relationship between two variables, provided that these variables are measured repeatedly over a span of time. Given my longitudinal data structure, I can estimate both the effect of funding on visits and the effect of visits on funding simultaneously. These effects are estimated in a 1 year lagged form, because the number of visits to the performance organizations can affect only the level of funding given in the next fiscal year, and the level of funding can affect only the consumption in the year after it is allocated. I accounted for the problem of the autocorrelation of the variables across time by including a control for the effect of the previous year’s funding and the number of visits on the following year’s funding and the number of visits, respectively. Figure 1 presents the structure of the cross-lagged panel model. The four effects estimated in the model are represented by dark arrows. Figure 1 View largeDownload slide An illustration of a cross-lagged panel model. Note that four main effects are estimated: (a) Fundingt−1 → Visitst (as predicted by H1a); (b) Visitst−1 → Fundingt (as predicted by H1b); (c) Fundingt−1 → Fundingt and (d) Visitst−1 → Visitst. Figure 1 View largeDownload slide An illustration of a cross-lagged panel model. Note that four main effects are estimated: (a) Fundingt−1 → Visitst (as predicted by H1a); (b) Visitst−1 → Fundingt (as predicted by H1b); (c) Fundingt−1 → Fundingt and (d) Visitst−1 → Visitst. I also included two-way (organization and time) fixed effects in the model to ensure that: (a) every individual property of the arts organizations that is fixed across time is controlled for in the model and that (b) any impact of a specific year that affects the level of funding or the number visits of all the organizations at once is controlled for in the model. To accomplish this goal, I used a ‘within transformation’ to obtain individual (arts organization) fixed effects (Allison, 2009) and a set of dummy variables to calculate year fixed effects. Using individual dummy variables instead of a transformation yielded equivalent results. The two-way fixed effects control in the model reduces the likelihood that the estimated coefficients in the models are biased by omitted variables. I carried out the simultaneous estimation of the equations in the model that tested hypotheses H1a and H1b using a three-stage estimation method. I estimated a model for all of the organizations together and separate models for the three types of arts organizations included in the data–orchestras, theaters and dance troupes. As the previous sections of this article demonstrate, in Israel these three fields of art are quite different from one another, so studying them in different models makes more sense. 4.5 Results Table 2 presents the results of the cross-lagged panel model with two-way fixed effects estimating the bilateral impact of paid visits and state funding. For the clarity of presentation, I omitted the estimated coefficients of the time fixed effects and the constant from the table, because they do not affect the interpretation of the results. I will focus only on the three models for the distinctive types of art. Table 2 Estimation results of cross-lagged panel model of paid visits and regular state funding All Orchestras Theaters Dance Dependent variable: Paid visitst Paid visitst−1 0.701*** 0.428*** 0.752*** 0.279*** (0.028) (0.063) (0.054) (0.061) State fundingt−1 3.083* 7.110** 2.665 −1.442 (1.372) (2.168) (3.037) (1.658) Dependent variable: State fundingt State fundingt−1 0.684*** 0.569*** 0.769*** 0.343*** (0.027) (0.061) (0.044) (0.058) Paid visitst−1 0.002*** 0.003 0.002* 0.002 (0.001) (0.002) (0.001) (0.002) N 92 25 30 37 AIC 25686.57 8627.93 7581.36 8854.66 BIC 25813.56 8724.8 7660.04 8947.03 All Orchestras Theaters Dance Dependent variable: Paid visitst Paid visitst−1 0.701*** 0.428*** 0.752*** 0.279*** (0.028) (0.063) (0.054) (0.061) State fundingt−1 3.083* 7.110** 2.665 −1.442 (1.372) (2.168) (3.037) (1.658) Dependent variable: State fundingt State fundingt−1 0.684*** 0.569*** 0.769*** 0.343*** (0.027) (0.061) (0.044) (0.058) Paid visitst−1 0.002*** 0.003 0.002* 0.002 (0.001) (0.002) (0.001) (0.002) N 92 25 30 37 AIC 25686.57 8627.93 7581.36 8854.66 BIC 25813.56 8724.8 7660.04 8947.03 Year fixed effects and constant output omitted. * P < 0.05 ** P < 0.01 *** P < 0.001. Standard errors in brackets. Time fixed effects and constant are not shown in the table. Table 2 Estimation results of cross-lagged panel model of paid visits and regular state funding All Orchestras Theaters Dance Dependent variable: Paid visitst Paid visitst−1 0.701*** 0.428*** 0.752*** 0.279*** (0.028) (0.063) (0.054) (0.061) State fundingt−1 3.083* 7.110** 2.665 −1.442 (1.372) (2.168) (3.037) (1.658) Dependent variable: State fundingt State fundingt−1 0.684*** 0.569*** 0.769*** 0.343*** (0.027) (0.061) (0.044) (0.058) Paid visitst−1 0.002*** 0.003 0.002* 0.002 (0.001) (0.002) (0.001) (0.002) N 92 25 30 37 AIC 25686.57 8627.93 7581.36 8854.66 BIC 25813.56 8724.8 7660.04 8947.03 All Orchestras Theaters Dance Dependent variable: Paid visitst Paid visitst−1 0.701*** 0.428*** 0.752*** 0.279*** (0.028) (0.063) (0.054) (0.061) State fundingt−1 3.083* 7.110** 2.665 −1.442 (1.372) (2.168) (3.037) (1.658) Dependent variable: State fundingt State fundingt−1 0.684*** 0.569*** 0.769*** 0.343*** (0.027) (0.061) (0.044) (0.058) Paid visitst−1 0.002*** 0.003 0.002* 0.002 (0.001) (0.002) (0.001) (0.002) N 92 25 30 37 AIC 25686.57 8627.93 7581.36 8854.66 BIC 25813.56 8724.8 7660.04 8947.03 Year fixed effects and constant output omitted. * P < 0.05 ** P < 0.01 *** P < 0.001. Standard errors in brackets. Time fixed effects and constant are not shown in the table. The results show that (a) the previous year’s number of paid visits has a positive impact on the number of paid visits in the following year and that (b) the previous year’s level of state funding has a positive impact on the level of state funding in the following year. These findings hold for all four models. They also underscore that both funding and consumption exhibit a certain level of stability across time. This is generally the case with regard to public funding and arts funding in Israel in particular, because funding is generally not cut or increased dramatically from year to year (Feder and Katz-Gerro, 2015). The rest of the results that pertain to the relationship between funding and consumption depict a completely different picture for each of the types of art studied. State funding for orchestras has a positive effect on the number of paid visits. The coefficient (b = 7.110; SE = 2.168) indicates that every additional sum of 1000 NIS (approximately US $250) increases the number of visits to the theater by an average of seven visits. When looking at this coefficient, we should keep in mind that this is an average effect and that there is certainly a difference in the effect on large and small theaters. In the case of orchestras, the model’s results show no significant effect of the number of visits on the level of funding. Hence, we reject hypothesis H0 in the case of orchestras and accept the alternative hypothesis H1a. In the case of theaters, there was no significant effect of funding on the number of visits. However, the number of visits did have a significant impact on the level of funding (b = 0.002; SE = 0.001). This coefficient indicates that for every 1000 visits, the theater is ‘rewarded’ with an additional 2000 NIS of state funding in the subsequent year. Again, we should note that this is an average effect across all theaters. Based on these results, in the case of theaters, we reject the null hypothesis H0 and accept the alternative hypothesis H1b that predicts an effect of visits on funding. Finally, in the case of dance troupes, there were no significant effects either of funding on visits or of visits on funding. Accordingly, in this case we failed to reject the null hypothesis H0. 5. Discussion Despite the lack of a clear set of arts policy directives set by the government regarding the justification for public arts funding, I was able to detect three different modes of practiced justifications by analyzing the bilateral impact of public funding on arts consumption and of consumption on public funding of theater, music and dance in Israel. The significant differences between the results obtained for different types of arts echo the different historical trajectories of these art types and their different characteristics and positions in the current cultural field in Israel. They also reflect the fact that separate departments in the Ministry of Culture, led by different personnel, decide upon the allocation of funding to these three performing arts types. Hence, without a predominant policy agenda, it is likely that bureaucratic differentiation also results in discrepancies in the operation of the arts policy (Ben-Ami, 1996). The results show that the state funding of orchestras has a positive impact on the number of paid visits, thus confirming hypothesis H1a. It seems that funding is provided to increase attendance regardless of the popularity of the orchestras or even despite their lack of popularity. In this case, the arts funding pattern is compatible with the logic of the didactic justification described above, where the goal is to use art as a didactic device (e.g. educating citizens and building a national identity), and funding is viewed as a mechanism for disseminating the art and encouraging attendance. The appearance of didactic logic here is related to the status of orchestral music and its place in the Israeli field of cultural production. Classical orchestral music still occupies a high status position that is homologous to the long-established elitist social position of the Ashkenazi group (Bourdieu, 1983). In a social environment that is increasingly dominated by Mizrachi Jews who challenge the control of Ashkenazi Jews, classical orchestras are the last outpost of elitist, highbrow, Western culture. Despite their relentless pursuit of wider audiences, orchestras have made few compromises in their repertoire and have found it difficult to commercialize their offerings. Hence, classical music remains emblematic of highbrow Western culture in a social environment that is gradually drifting away from these values. Feder and Katz-Gerro (2012, 2015) have suggested that public support of Western art in Israel is part of the symbolic struggle for cultural hegemony. In that sense, the funding of classical orchestras can be seen as serving the elite groups in their struggle to express and preserve their cultural capital and hegemonic position. Such an instrumental view of arts funding is compatible with the didactic justification for funding the arts. In the case of theaters, state funding did not have a significant impact on the number of theater visits. However, the number of visits had a positive impact on the level of state funding, thus confirming hypothesis H1b. In other words, although public funding does not seem to affect attendance at theatrical productions, theater organizations are ‘rewarded’ by higher levels of state funding if they can attract a larger audience. These findings are compatible with the classical justification that sees arts funding as a public service, similar to other cultural public services such as public service broadcasting (Turner and Lourenço, 2012). This pattern of funding provides an incentive for theaters to increase their popularity and attract more attendees. And indeed, theater is the most popular form of the publicly funded types of art in Israel (Katz et al., 2000). Unlike the music field, where most of the productive activity comes from private, for-profit, commercial organizations, public theaters in Israel have almost no private, for-profit counterparts. There is no clear dividing line between popular theater and highbrow theater. Indeed, contemporary theater in Israel seems to regard itself as a leisure activity and caters to the popular taste (Weitz, 1996). The tendency to use TV stars in the Israeli theater and the ongoing attempt to create popular theatrical productions that will attract a wide audience provide evidence for this point. In that sense, it is reasonable that the state funding of theaters would be based on the classical logic that regards support for the theater as a sort of public service for a wide swath of the population. Finally, unlike in the cases of orchestras and theaters, the models that pertained to dance troupes did not show either an impact of funding on visits or an impact of visits on funding. The results indicating that the funding of dance seems to bear no relationship to attendance is compatible with the logic of romantic justifications that warrant the public funding on the grounds of the intrinsic value of the art itself without subjecting it to any other authority, whether of the state or the public. In Israel, dance is the least popular performing art form. Unlike theater, it is not regarded as a mainstream, popular form of entertainment. Unlike classical music, which is identified with the Western Ashkenazi cultural hegemony, contemporary dance in Israel is characterized as avant-garde and innovative and is not ethnically marked (Aldor, 2003). Hence, it is understandable that the public funding of dance is justified on the basis of the romantic rationale that justifies supporting creativity and innovation for its own sake. An immediate question that arises is the reason for the correspondence between the artistic context and the funding rationales. There are several possible explanations for the relationship between the justifications and the different types of art studied here: (a) differences in the governance and bureaucratic mechanism of artistic support; (b) the general esthetic content of the type of art in itself; (c) the specific role and content of the type of art in the Israeli context; and (d) the organizational structure of the type of art. I maintain that the combination of the latter two explanations accounts for this relationship. First, there are no differences in the bureaucratic mechanisms of art support among the different types of art other than the different personnel who run them. Second, the esthetic content of the type of art in itself does not have a distinctive one-to-one correspondence with the different types of art. If such a correspondence existed, we would expect to find that our results were reproduced in other societies and periods as well. However, we know that this is not the case. For example, the theater, which I found to be linked with the classical justification, is not always and everywhere a form of popular entertainment. Indeed, the Chinese Communist Party in the 1920s and 1930s used the theater as an educational tool to promote its revolution, which corresponds with the didactic justification (Mackerras, 1983). We also know that besides the classical orchestras that are publicly funded in Israel in a manner that is compatible with the didactic mode of justification, there is a vibrant popular music scene that is not funded by the government and fits with the classical mode of justification that regards art as entertainment. Hence, it must be that the link between the types of art and the justifications for funding them stems from the specific esthetic content in its specific social context and the cross-sectoral diversity in the different artistic domains both in content and organizational characteristics. Basically, there is a synchronous process whereby perceptions about the place and role of art in society infiltrate into the policy process and the operation of arts organizations. We see that in the past decades, Israeli theater has attempted to gain popularity and as a result, its attendance rate is quite high—a study of the Jewish population found that it was as high as that of cinema (Haas, 1999). The general public, which shares the perception of theater as a form of entertainment, regards public support of it as a warranted public service and approves its public funding even more than state funding for sports (Haas, 1999). Private theaters are almost extinct in the contemporary theater scene in Israel, and the audience turns to the public theaters. The patterns of theater funding demonstrate that the arts policymakers in Israel also share this perception of the theater as entertainment. Thus, funding for theaters follows demand, just as would be expected from a public service (Getzner, 2002). Cultural fields are known to reflect social struggles (Bourdieu, 1993). More than any other cultural area, the field of music in Israel reflects the Ashkenazi-Mizrahi ethnic conflict in Israeli society. The social conflict between Ashkenazi Jews who come from Europe and Mizrahi Jews who originate in the Middle East is based on economic inequalities and political and religious differences. This conflict is played out in the field of music in the form of a struggle over the relative positions of Western and Eastern music styles in the hierarchy of esthetic quality (Regev and Serrousi, 2004; Shoshana, 2013). In this specific context, the public funding of music that worldwide is usually directed toward large arts organizations such as classical orchestras and operas, takes side in that conflict almost inevitably. State funding of a certain type of art also imbues it with exceptional value (Warde, 2016). Given that in Israel funding for music is allocated almost solely to classical orchestras that play a Western repertoire, the implication is that Eastern musical styles are worth less. The preferential status that is given to Western music despite its limited and declining popularity implies that there is special merit in its consumption. As I determined in this study, this assumption is manifested in the relationship between funding and attendance at classical orchestra performances that follows the logic of didactic justification. The public funding of music in Israel catalyzes attendance at classical musical performances, thus promoting a music genre that is regarded as superior to other musical styles. At the same time, such funding displays symbolically the allegedly superior social status of the Ashkenazi ethnic group. It is clear from this account that any explanation of Israeli arts policy that pertains only to the economic aspect of its supply and demand is insufficient. Finally, dance groups in Israel function in a different cultural environment than theaters and orchestras. They are much more connected to the international dance scene—they are influenced by modern trends in the international dance scene and perform abroad significantly more than theaters and classical orchestras, partly due to their lack of popularity at home. Dance groups in Israel are smaller organizations that require fewer resources and receive less funding than theaters and orchestras. Their lack of popularity and relatively esoteric status make it impossible to regard public support of dance as a public service, nor as an educational or ideological tool. However, the limited financial requirements of dance groups make the support of dance a low-cost expense. Hence, as the empirical results corroborate, dance groups are supported in Israel in relatively high numbers. However, the justification for this support relies on a romantic notion of art for art’s sake that entails no specific relationship between funding and attendance. 6. Conclusion The question of the reasons for state support of the arts is one of the fundamental questions of art policy research and concerns scholars, politicians, policymakers and artists both on the theoretical and practical level. This study contributes to the literature on the socioeconomics of cultural policy and cultural consumption in several ways. It presents a new typology of arts funding rationales based on conceptions of the place of art in society, one that calls for a fresh look at the seemingly overwritten issue of the justification for arts funding. This typology is based on the way perceptions of the place of art in society form the basis for state intervention in the arts and puts the focus on the cultural rather than the economic value of art. I demonstrate the advantage of the cultural explanations for support of the arts over the economic explanations. While funding for the arts may be a reasonable economic choice, it cannot answer the basic question of why the state chooses to actively support the arts. It is difficult to judge these justifications as bad or good since different stakeholders will evaluate those justifications differently dependent on their interests. The didactic approach is probably the one that benefits arts organizations and artists the most since the government is directly interested in promoting artistic activity and financing it. However, its downside is that it restricts the freedom of artists since public funding is based on the specific social impact of art which is desired by the state. This utilitarian approach might cause the art which is supported by the state to be regarded derogatorily as ‘state approved art’. In the same vein, art which does not carry the desired effect will not be supported, and in case of a change in the political agenda of the government, some forms of supported art might experience a fall from grace and be defunded or even censored. In contrast, the classical approach grants arts organization a maximal level of artistic freedom and is compatible with the ‘autonomous art’ ideal. This approach is supposed to be favored by most arts organizations and artists since it regards public arts funding as justified without demanding anything from it. However, this approach subjects art organizations to a judgment which is related to their artistic value and since the artistic value is impossible to assess objectively, art organizations and artists might find themselves competing with each other for legitimacy and artistic capital which form the basis for their entitlement to public support. Finally, the classical approach might be regarded as problematic by artists and organizations since it benefits those who are already successful and are enjoying commercial success. In the classical approach, the public support goes hand in hand with the market forces and thus it strengthens market rather than balancing it as state intervention usually is expected to do. These three types of funding justifications can also serve as the basis for distinguishing among different ideal types of arts policy regimes. The literature on arts policy has made several attempts to construct a typology of arts policy regimes, especially with regard to arts funding (Hillman-Chartrand and McCaughey, 1989; Mulcahy, 2000; Dalle Nogare and Bertacchini, 2015). These typologies are based on distinctions between administrative structures and funding mechanisms, and do not devote enough attention to the special characteristics of art. The three types I present in this study have some resemblance to the patron, engineer and architect types of Hillman-Chartrand and McCaughey. However, their formulation is based on a study of the arm’s length funding mechanism and its alternatives. Therefore, they make a one-to-one correspondence between specific funding mechanisms, policy roles and policy objectives. Conversely, the typology I suggest here can be applied to different types of art. Hence, I am able to show that different policy types operate side by side at the same time and under a single funding mechanism. Furthermore, I also demonstrate how this new typology can make the question of funding rationales an empirical, not a merely theoretical, question by studying the relationship between funding and consumption that is implied by different justifications. Adopting this approach allows me to determine the assumptions behind arts policy regimes, even when such assumptions are only implied or hidden behind political rhetoric, as is often the case. This study has also implications for artists, art managers and art advocates. My theoretical approach underscores that advocacy for support of the arts would do better if it dealt first and foremost with the art itself and not its impact. The empirical application of the distinction between justification types that was used here to reveal the different justifications that operate in the case of Israeli arts policy can be used in other countries too to provide artists and art managers with a better understanding of the arts policy context in which they operate. I believe that most artists would favor the romantic justification for funding art and perceive their work in such terms. However, society may regard art differently, and artists and managers could benefit from understanding how their art fits within the priorities of policymakers. Finally, policymakers themselves can use the theoretical framework and empirical method presented here to rethink their policy objectives and tools to avoid arbitrariness and increase transparency in arts funding. They can use the different types of justifications for policy papers that make their artistic perceptions and goals explicit, especially for the consumers of art—the citizens to whom they are responsible. To extend this study and strengthen the validity of its conclusions, future research should attempt to validate the evidence for the causal relationship between funding and consumption using additional indicators of both and with additional methodological tools. As Rogosa (1985) suggested, measures of the strength and duration of the link are also required. Scholars can also extend the models presented here by studying additional sources of funding and looking at the relationship between funding and other measures that pertain to the production of art such as the number of productions and their size. Other methods such as interviews, surveys of policymakers and observations in policy meetings can also shed light on the intentions of policymakers. 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Socio-Economic Review – Oxford University Press
Published: Jan 18, 2018
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