Social and Cultural Cost-Benefit Analysis of Approval of Cultural Amenities

Abstract

Consumer and producer approval of a product is essential in today’s marketplace. When a consumer approves of a product, he or she is satisfied with the result received from said product and becomes a loyal customer. When a producer produces a product if it is not well receive by the public or incurs too many costs to be profitable it can be disbanded and cease to exist as a good for consumption. Cultural consumption is similar to normal goods consumption except that it is often funded in part or in whole by the government. Without government action cultural products may not be profitable causing market failure. The decision to create a cultural good then deems many factors including but not limited to cost benefit analysis. The purpose of this research is to evaluate the social and cultural costs and benefits influence onto the perceived economic benefits and ultimately the overall approval of a cultural product (in this study wall mural villages throughout Korea). By looking at visitors to and local government workers of wall mural villages, the study uses a structural equation model (SEM) to determine the strength of the participants’ perceptions of each of the latent variables. The variables used in the study are as follows; first the dependent variable overall approval, the dependent and mediating variable economic benefits, the independent variables social benefits, social costs, cultural benefits and cultural costs. The findings of this study indicate that both visitors and local government workers perception of wall mural villages economic benefits positively influences the relationship between their predisposition to economic benefits and their overall approval, but also indicates that this positive influence is mediated by their perceptions of the cultural and social benefits of the area. In addition, the cultural costs did show a negative influence of overall approval, though weak, it is still worth noting. Another interesting finding was that cultural benefits also positively influences both visitors and local government workers overall approval of wall mural villages. The last finding was that the perceptions of the social costs associated with the wall mural villages had no affect onto either the visitor or local government workers approval of either’s perception of economic benefits or their overall approval. These findings serve to clarify some of the confusion regarding the relationship between visitors and local government workers’ approval of wall mural villages. Additionally, they offer insight into how the government may make more effective use of this tool in order to foster higher levels of local economic development.