BKLA Issues

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Economic benefits of public libraries

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BKLA Issues

  1. 1. Issues in measuring the value of libraries Building Knowledge for Library Advocacy Stage 1 December 2008
  2. 2. Project overview <ul><li>Objective </li></ul><ul><li>To scope and develop a Brief for carrying out an Economic Benefit Study of Victorian Public Libraries. </li></ul><ul><li>Scope </li></ul><ul><li>Literature Review </li></ul><ul><li>Consultation with library practitioners and stakeholders </li></ul><ul><li>Timeframe </li></ul><ul><li>Nov-Dec Literature Review </li></ul><ul><li>Dec Consultation </li></ul><ul><li>Jan Literature Review and Brief </li></ul>Living library
  3. 3. A complex undertaking <ul><li>Public libraries are a hybrid organisation in economic terms, providing a mix of public and private goods and services. Further, they generate a mix of direct and indirect, tangible and intangible benefits for both the individual user and for society, both today and into the future. </li></ul><ul><li>Jennifer Berryman </li></ul>
  4. 4. Economic concepts <ul><li>Economic Benefit </li></ul><ul><li>The economic benefit of an action is the value that society, as a whole, derives from that action. </li></ul><ul><li>Benefits may be market or non-market goods and services. Market goods and services are those that can be supplied by markets, for example books can be bought new or second hand. Non-market goods and services are those for which no market exists, for example the value of the library as a safe public space. </li></ul><ul><li>Benefits can be consider to be tangible or intangible . </li></ul><ul><li>Tangible benefits are those that can be quantified (e.g. number of users), whereas intangible benefits are hard to quantify (e.g. social cohesion). </li></ul><ul><li>Both market and non-market benefits can be measured using ‘willingness-to-pay’ methodology. </li></ul>
  5. 5. Economic concepts <ul><li>Economic Impact </li></ul><ul><li>An economic impact is defined as a net change in economic activity within a defined geographic area when compared with some form of no-action baseline. </li></ul><ul><li>A direct economic impact is defined as the initial shift in demand for a good or service, for example an expanded convention centre would attract more attendees which would generate new demand for hotels, restaurants, etc. New demand in these industries would create ripple effects ( indirect and induced impacts) in the economy. </li></ul><ul><li>“ Typically, public libraries generate great economic benefits for a city (i.e. they provide many services that residents value), but they do not generate large economic impacts —at least not directly. </li></ul><ul><li>In other words, to the extent that providing library services is one of many ways a region can spend its money, increased activity by a library does not directly introduce new demand for the goods and services that the region produces.” </li></ul><ul><li>Providing for Knowledge, Growth and Prosperity. </li></ul>Mill Park Library
  6. 6. Economic concepts <ul><li>Externalities </li></ul><ul><li>For many transactions, the buyer is the person who receives the benefits and the seller is the one who bears the costs of production. </li></ul><ul><li>Externalities occur when someone other than the buyer or seller experiences a cost or benefit. </li></ul><ul><li>A common negative externality is pollution. If the seller does not have to pay the cost, it will be paid by the community or future generations. </li></ul><ul><li>Avoided social costs </li></ul><ul><li>Social costs refer to negative events that affect society as a whole. </li></ul><ul><li>For example, smokers impose costs on the medical system. Campaigns to reduce smoking can reduce the cost to the medical system and avoid this social cost. </li></ul>
  7. 7. Economic concepts <ul><li>Use and non-use </li></ul><ul><li>Economics-based methods are based on two core assumptions of economic theory: that people behave rationally and that their actions are driven by self interest. </li></ul><ul><li>Behavioural economics suggests new models that incorporate irrational elements and broader motivations. </li></ul><ul><li>Use and non-use benefits should be included when measuring the benefits of libraries. </li></ul>Eltham Library
  8. 8. Measures <ul><li>Cost benefit analysis </li></ul><ul><li>This analysis puts dollar values on costs and benefits to indicate whether benefits outweigh costs. </li></ul><ul><li>This allows different projects to be compared. </li></ul><ul><li>Return on investment </li></ul><ul><li>This is a comparison of the money earned on an investment versus the amount invested. </li></ul><ul><li>Some library studies have shown a return on investment of about $6 for every dollar invested. </li></ul><ul><li>Costs are relatively easy to determine, but the benefits, especially the indirect or intangible benefits, are complex and inter-related. </li></ul>
  9. 9. Measures <ul><li>Contingent Valuation Method </li></ul><ul><li>CVM is a survey-based technique frequently used when valuing non-market resources in which use and non-use values can be estimated. </li></ul><ul><li>Respondents to survey questions are presented with a hypothetical scenario and are asked to state their willingness to pay in dollars for a change in amenity. </li></ul><ul><li>Problems with CV analyses stem from strategic and information biases. </li></ul><ul><li>Strategic bias occurs when respondents use their response to support an ideological position. </li></ul><ul><li>Information bias occurs because survey respondents nominate values based on what they know about a service. With libraries, respondents are likely to be familiar with books and can put a dollar value on them, however they are less likely to be aware of indirect and intangible benefits such as social cohesion and empowerment. </li></ul>
  10. 10. Measures <ul><li>CVM – use and non-use </li></ul><ul><li>CVM valuation for libraries should use definitions which include motivations beyond narrow individual self-interest. This allows the value that derives from both use and non-use of the public library to be recognised and measured. </li></ul><ul><li>CVM valuation must acknowledge the “mere presence” of public libraries recognising that people are motivated by more than direct self interest. </li></ul><ul><li>Researchers have found non-use value represents an “important component” of the total value of public libraries. </li></ul><ul><li>Jennifer Berryman </li></ul>
  11. 11. Measures <ul><li>CVM and Stated Preference Method </li></ul><ul><li>The Stated Preference Method is similar to Contingent Valuation in that it asks people their willingness to pay for a product or service. However, Stated Preference offers alternative bundles of product/service attributes and this allows the research to determine the most valued aspects of the product or service. </li></ul>Wodonga Library
  12. 12. Quantitative vs qualitative <ul><li>Quantitative data supplies numeric information, e.g. numbers of users and uses, and dollar values. </li></ul><ul><li>Qualitative data supplies descriptive information in the form of words, images, diagrams, etc, that describe the nature and scope of effects, along with their linkages and relationships. This may refer to the whole, to parts or to individuals. </li></ul><ul><li>To account for the economic benefits of complex places like public libraries, the most effective measures will incorporate both quantitative and qualitative data. </li></ul>
  13. 13. Issues <ul><li>Persuasive data </li></ul><ul><li>Base data gives ‘comfort’ that public money is not wasted, and that the service provides the same kinds of economic benefits as other services. </li></ul><ul><li>Powerful data gives impetus for support because of the particular values of the service. </li></ul><ul><li>Libraries offer unique services (information, education and healthy lifestyle) that are essential in modern economies. </li></ul><ul><li>System vs individual benefit </li></ul><ul><li>The Australian HECS-HELP system acknowledges that higher education benefits an individual by giving access to well-paid work. It also benefits the society as a whole by providing a pool of highly trained professionals. </li></ul><ul><li>Similarly, libraries benefit both individuals and the society they live in. Public funding is justified because of the benefit to society as a whole. </li></ul>
  14. 14. References <ul><li>Providing for Knowledge, Growth and Prosperity , 2007. San Fransisco Public Library. </li></ul><ul><li>Sustaining Communities: Measuring the Value of Public Libraries , 2005. Jennifer Berryman, State Library of NSW </li></ul>
  15. 15. <ul><li>Contact </li></ul><ul><li>Gillian Savage </li></ul><ul><li>Environmetrics </li></ul><ul><li>Locked Bag 2116 </li></ul><ul><li>North Sydney </li></ul><ul><li>NSW 2059 </li></ul><ul><li>PH 02 9954 0455 </li></ul><ul><li>E [email_address] </li></ul><ul><li>Project website </li></ul><ul><li>www.environmetrics.com.au/bkla/bkvla.html </li></ul>

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