Thursday, 03. May 2018

Falling Cultural Expenditures Harm Cities

In overall terms and per-capita outlays, the City of Koblenz has trimmed its cultural expenditures considerably since 2011. In this regard, Koblenz has positioned itself against the trend of the regional centers of Rhineland-Palatinate state, and against the German trend as well. In North Rhine-Westphalia, for instance, cultural expenditures have gone up by around 3 percent per year, and by 13 percent per year in Cologne alone. In a current study, researchers at WHU now warn against a progression in this trend in Koblenz. Falling cultural spending reduces the city’s attractiveness, particularly to the so-called “members of the educated classes” who typically also have higher disposable incomes, and to young families as well.

Funded by Sparkasse Koblenz and conducted by WHU Dean Professor Dr. Markus Rudolf and Dr. Katrin Baedorf, Director of the Center of Asset and Wealth Management at WHU, the study examines whether, in Germany’s regional centers such as Koblenz, higher purchasing power or a higher income goes hand in hand with higher municipal subsidies in the cultural sector – in other words, whether a connection exists between local prosperity and municipal cultural expenditures. To examine these relationships, the researchers compiled a record consisting of 44 regional centers, in 8 of the German states, that are comparable to Koblenz.

In the past, a variety of studies have already shown that more prosperous people tend to make greater use of cultural offerings, and spend more money on these, than do people with lower incomes. It can thus be assumed that municipal cultural subsidies improve the quality of life while at the same time attracting people with a particular interest in culture. The researchers found that net per-capita cultural expenditures in Koblenz were a relatively low 119 Euros. If the price of admission and donations are added to the equation, however, then Koblenz ranks in the top quarter, with 213 Euros per capita. Cost coverage of cultural offerings by viewers and visitors is thus extremely high in Koblenz, with a significant portion of this amount covered by donations. By far the greatest share of cultural expenditures in Koblenz – around 62 percent – devolves to the theater. This figure is significantly higher than the German average.

Koblenz belongs to a small group of 10 regional centers in Germany that have significantly cut municipal spending on cultural offerings since 2011. The researchers found no correlation between increases in a region’s cultural expenditures, on the one hand, and increases in regional income figures on the other. There was, in fact, a positive correlation between cultural expenditures by a regional center and per-capita income indicators. Within Rhineland-Palatinate, then, Koblenz has a significantly lower level of GDP per capita than, say, Ludwigshafen, and lower wages and lower purchasing power than Mainz.

While data on these correlations are naturally not entirely unequivocal, it can be considered a relatively certainty that an attractive cultural scene attracts households and families with higher incomes in the medium term. It is clear that the cuts in cultural spending make the City of Koblenz less attractive for younger families. It is also clear that this restrictive approach to cultural expenditures owes to the tense financial situation of Koblenz. Compared to 2011, net cultural expenditures have been scaled back by around 2.2 million Euros, and gross expenditures by 1.4 million Euros. According to the researchers, one way to return cultural spending at least to its 2011 level in spite of the tense budgetary situation is to explore options for co-financing. They also plead for making discretionary budgetary amounts increasingly available to the cultural sector as a strategic investment in the development of the region.