UPDATE: Is it Actually Possible to put a Dollar Figure on your Organization’s Public Value?
An update by John H. Falk, Ph.D.
Executive Director, Institute for Learning Innovation
Last July I wrote a blog proposing that it might be possible to actually put a dollar figure on the value created by cultural experiences. Here’s a quick recap of that original blog and an update on where this effort currently stands.
Recap – Cultural Institutions Have a Problem
The issue of demonstrating, let alone establishing the value cultural institutions create has long been essential; but never more so than today. With institutions closing down due to the Covid-19 pandemic and funding drying up, institutional leaders and their boards of directors are scrambling to find answers.
The sector has argued that they are essential organizations, that they deliver genuine value to their communities. Despite numerous efforts aimed at making this case, the evidence would suggest that current approaches have not been terribly persuasive. For better or worse, these days most political decisions related to value/worth ultimately revolve around, or more accurately devolve, into issues of money. Specifically, policy makers want to know whether the benefits that accrue from the existence/use of an institution are truly worth the cost required to maintain and run it.
When framing issues in monetary terms it is important to appreciate that what is important, ultimately, is not the actual dollar figure but the sense of value that dollar figure represents. Money enables people to quickly and reliably compare the worth of commodities, even wildly disparate goods and services such as a basket of apples, a haircut or a visit to a museum. What I proposed a half a year ago – you can read the entire blog here – was that institutions like museums, historic sites, operas, symphonies, arts festivals, natural area parks and preserves have long understood the need to demonstrate that they make a significant monetary contribution to their community but historically have not been able to agree on what the nature of that contribution is, let alone what it is worth. I argue that community policy makers and the public actually already believe that these institutions are “good,” in fact, they intuitively understand that these types of institutions measurably enhance the overall WELL-BEING1 of the individuals who engage with them. What is currently lacking, though, is the ability of cultural institutions to make this value both explicit and tangible.
In other words, the real question becomes how to define, measure and monetize enhanced well-being.
Recap – Defining and Monetizing Well-Being is the Solution
Step one is defining this idea of “well-being.” Importantly, I do NOT define well-being in the same way as most currently do, that is from a purely psychological perspective, or as it has become popularly thought of as a synonym for happiness. Rather, I define well-being from an evolutionary perspective.2 Biologically speaking, well-being refers to the on-going and never-ending effort every human engages in to achieve personal, intellectual, social and physical balance in their life. Research has shown, that attaining these types of well-being-related outcomes are ultimately what allow a person to feel like they have lived a satisfying and successful life.4 For further details, I again would refer you back to my initial blog, or if you really want the full details, you can read my 2018 book Born to Choose: Evolution, Self and Well-Being.2
From this perspective, achieving well-being is a fundamental goal of life, and thus the reason people utilize cultural institutions is that they perceive that these experiences enhance their sense of life-balance; specifically, their personal, intellectual, social and physical well-being. People say things like “museums relax and recharge me,“ or “I came away inspired,” or “I learned more about myself,” or “I built stronger bonds with my loved ones.“ Statements such as these describe the various ways in which these experiences enhance people’s well-being and my research, and that of others has shown that users of cultural institutions do indeed consistently report having these kinds of enhanced well-being outcomes.3
Thus, if as I have argued, enhanced well-being is both fundamental to human survival and fitness and it is an outcome that cultural institutions deliver, then it follows that if it was possible to both measure and monetize these outcomes, it should be possible to show that cultural experiences generate significant monetary value.
Six months ago, I suggested that I believed I had come up with a way to both validly and reliably measure and monetize these kinds of enhanced well-being-related outcomes. Which in turn would make it possible for cultural sector leaders to more persuasively argue the case for the importance of their institutions. I also honestly stated at the time, that this “solution” was only a solution in theory. I needed to actually test my ideas. I needed to run a pilot study, collect real data from real users, and analyze that data to see if it was indeed possible to measure and monetize the value of cultural experiences. I ended my blog with a request for volunteers. Happily, a half dozen institutions were willing to take a flier on this idea; all from the museum sector.
I have now conducted a pilot study of the value of museum experiences, collecting data from six types of museums across three countries – a natural history/science museum (U.S.), a virtual art and cultural museum (Canada), a living history museum (U.S.), a state historical museum (U.S.), a zoo (Canada) and an interactive science museum (Finland). Though the findings are preliminary, and some of the data is still coming in as I write this blog, I can now report initial estimates of the monetary value museum experiences deliver.
As suggested above, in theory achieving a sense of heightened well-being, particularly the enhanced personal intellectual, social and physical well-being that museums and other types of cultural experiences afford, should be very important to people. It was reassuring to discover that my data showed that people do indeed value these types of enhanced well-being outcomes. Consistently across both institution type and across multiple countries, people indicated that achieving these outcomes were worth a considerable amount of money, with the actual value increasing as a function of their duration. In other words, even a short-term and ephemeral increase in personal, intellectual, social or physical well-being was valuable, but the longer that benefit lasted, the more it was worth. Importantly, even the lowest assigned dollar values to any one of these possible outcomes was significant, typically exceeding by a factor of 2 to 4 times the $10 average cost of a museum admission.5
However, this preliminary research showed that a typical museum experience rarely engendered only a single well-being outcome. Most users reported multiple types of well-being-related benefits from their museum experience and most of these benefits persisted for days, and often weeks. Thus, the perceived dollar value6 of a museum experience ranged from a minimum value of around $200 dollars per person, per experience to in excess of $1,200 or more per person, per experience, with an average museum experience being assessed as being worth between $700 and $800 per person.7 Given the historic popularity of museum experiences, with use numbers for most museums being on the order of several hundred thousand individual uses per year, the annual value to the public generated by these experiences are in the neighborhood of hundreds of millions of dollars – representing in most cases, an order of magnitude greater financial benefit to the community than what it cost to produce those benefits. These are significant figures, an indication of just how considerable is the value of museum, and by extension, other comparable cultural experiences.
This is an On-Going Story …
I do not want to imply that calculating the dollar value of cultural institution/organization experiences is easy, but I can now say it is possible. Obviously, this effort has just begun and will require additional testing, but the initial proof of concept involving several hundred museum users from across six institutions and three countries provides initial evidence for the inherent validity and reliability of this approach.
I am guardedly optimistic that this new approach will make it possible to define and measure the financial benefit of a wide range of cultural experiences. Making it possible for sector professionals, as well as the public and policymakers, to compare the value of cultural institution experiences to other goods and services, both those delivered by the for-profit sector as well those delivered by the non-profit sector. Finally, as suggested above, it should also make it possible to directly assess the value of cultural experiences generated to the costs associated with creating those experiences; known in economics as “return on investment” (ROI). Although this approach is clearly still in its infancy, I envision this methodology, or one like it, eventually becoming standard practice across the field.
Although my colleagues and I continue to collect and analyze the data from this initial pilot study, it is not too soon to begin thinking about the full-scale implementation of this research approach. If you think your institution might be interested in being among the first to systematically calculate the financial value of the experiences you provide, please contact me at email@example.com . Otherwise, stay tuned, as I plan to share additional results in a future blog as well as in my forthcoming book The Value of the Museum Experience: Enhanced Well-Being (Rowman-Littlefield).
 In my original blog, I introduced a new term Equipoise to describe the phenomenon I was focused on, rather than using the more familiar, and apt term Well-Being. At the time, I naively thought it would be easier to just start with a new term rather than deal with all the pop-psychology baggage that currently surrounds the term well-being. I was wrong. Admitting my tactical error, I have gone back to using the term Well-Being, and of course, doing my best to deal with the linguistic baggage that surrounds this term.
2 Falk, J. H. (2018). Born to choose: Evolution, self, and well-being. New York: Routledge.
3 cf., Falk, J. H. (in press). The Value of the Museum Experience: Enhanced well-being. Lanham, MD: Rowman-Littlefield.
4 for review of the data, see Falk, J. H. (2018). Born to choose: Evolution, self, and well-being. New York: Routledge.
5 Based on average museum adult admission charge of about $10.
cf., Smithsonian Institution (2007). Going free? Cooper-Hewitt National Design Museum and general admission fees. Technical Report. Washington, DC: Smithsonian Institution Office of Policy and Analysis. https://www.si.edu/Content/opanda/docs/Rpts2007/07.04.Admissions.Final.pdf Retrieved January 3, 2021.
Grant, D. (2019). How much is too much? On the difficulty of calculating museum admission prices. New Criterion.com. https://newcriterion.com/blogs/dispatch/how-much-is-too-much Retrieved January 3, 2021.
6 Since values did not significantly vary between countries, for convenience all values were converted to U.S. dollars.
7 Falk, J.H. & Meier, D. (in prep.). Monetizing the value of museum experiences: A preliminary study. Museum Management and Curatorship.
Posted Feb 12, 2021