Cultural capital as an intangible asset

Programme:

Beyond GDP and inclusive wealth

Topic:

Productivity

Summary

Cultural capital refers to various assets with cultural value, such as noteworthy buildings, monuments, historic artefacts, and so forth. The unique characteristics of these assets, such as the potential for their value to rise over time, makes their measurement difficult in theory and in practice.

This project is exploring these challenges in the context of national accounting. We are drawing on existing literature on valuing cultural capital and will build a framework for measuring cultural capital in the national accounting context. We will also run a survey to collect new data, to explore practical challenges in measuring cultural capital.

Overview

The National Accounts recognises various types of capital assets, such as buildings and structures, machinery and equipment, and software and databases. Investments are typically valued at the price paid by the investor, or the costs of production where the asset is not bought. All asset types are assumed to deteriorate in value over time due to physical wear and tear and obsolescence.

A unique type of assets is cultural capital. This group comprises various assets of cultural value, such as noteworthy buildings, monuments, historic artefacts, and so forth. Their value today may be far disconnected from their costs of production in the past, even accounting for general inflation. Further, their value may not fall over time, but rather rise as their cultural status increases. These unique features pose interesting challenges for economic measurement.

In this project we are considering the conceptual and practical issues of measuring cultural capital. We are considering definitions, boundaries and overlaps with other types of capital assets, considering if and when cultural capital can be distinguished from existing assets. We are researching appropriate discounting and depreciation treatments. We will also be collecting new data on the valuation of cultural capital and analysing it.

Methods

The first part of the project considers conceptual issues. For this we are reviewing existing literature on cultural and heritage capital, the valuation of non-market goods and services, and National Accounting rules and guidance. The experience of measuring natural capital offers a helpful example, so we will be drawing on that. We will draw on the heritage science research to inform depreciation (or appreciation) rates of different cultural assets.

The second part of the project will focus on measurement and will draw on existing literation on valuation of non-market goods and services. We will consider the pros and cons of different measurement approaches in the case of cultural capital. We will then collect new data via survey, informed by our research, and analyse it.

The project is ongoing and the methods will be informed by the research as it unfolds.

Findings

The project is ongoing so there are more findings to come. The project will build on the findings of a scoping study commissioned by the Arts and Heritage Research Council (AHRC) and Department for Culture Media and Sport (DCMS), which Diane Coyle and Ricky Lawton are also involved with. More details of that study can be found here.

Impact

The project will advance understanding of the measurement of cultural capital – a topic that is not well recognised in national accounting rules. Our work will support ONS in improving its capital stocks measures and contribute to the global debate on future national accounting guidance.

It will also contribute to the “Beyond GDP” agenda, since measurement of cultural capital will remain outside of the formal National Accounts for some time to come. Cultural capital likely contributes to well-being as well as economic activity and could thus be included in a welfare measure. ONS have a range of work on measuring economic welfare, which this project will feed into.

There is also considerable policy interest in measuring cultural capital, led by the Department of Culture Media and Sport (DCMS). This project will contribute to the growing evidence on the valuation of cultural capital, such that it can be better reflected in government decision making.