Designing a socially efficient cultural policy: the case of municipal theaters in Warsaw

While public support for culture has become a less self-evident privilege than in the past, the economic evidence for benefits a society gains from these goods has become essential for both cultural economics and cultural policy. The aim of our study is to investigate socially preferred ways of allocating scarce public resources among municipal theaters in Warsaw. The problem investigated is a current issue for local policy-making, but in a broader sense, it illustrates how state-of-the-art stated preference methods can be employed to support cultural policy. We find that inhabitants of Warsaw assign a positive value to the broader accessibility of the theaters, and their willingness to pay for making them a truly public good (by introducing a program of highly discounted tickets) exceeds the costs of such a policy. However, we also find that the cost-benefit relationship varies across theaters with different types of plays in their repertories. Our results imply a different level of socially efficient support for experimental, drama, children’s and entertainment theaters.