Skip to main content
Log in

Rational addiction and cultural goods: the case of the Italian theatregoer

  • Original Article
  • Published:
Journal of Cultural Economics Aims and scope Submit manuscript

Abstract

This paper tests whether demand for theatre in Italy is consistent with the model of rational addiction presented in Becker and Murphy (J Polit Econ 96(4):675–700, 1988). Data from a novel 34-year panel on regional annual theatre attendance are used to estimate market demand. Four models are applied to investigate the demand function, and all of these also include per capita income and other control variables as regressors. The first two models are estimated to check whether theatregoers are myopically addicted to theatre. The results suggest that the theatre is an addictive good because past consumption (and prices) significantly raises the marginal utility of current consumption. The third model tests the rational addiction hypothesis, which assumes that future attendance also influences current attendance, whilst past and future prices influence current attendance only indirectly through their impact on past and future attendances. However, our most highly specified model, introducing past and future prices, demonstrates that Italian theatregoers are not myopic but fully rational as outlined in Becker and Murphy (1988). The results demonstrate that the rational addiction hypothesis is applicable not only to “harmful” addictions such as alcohol, cigarettes and drug consumption, but also to “beneficial” addictions, such as theatre attendance. This result has important policy implications because theatre is one of the most subsidised performing arts in Italy; if theatregoers are fully rational, policy makers can influence theatre attendance using alternative policy instruments (price and income), thereby reducing government expenditure on theatre subsidies.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3

Similar content being viewed by others

Notes

  1. In fact, in the case of theatre, we might expect a trend towards higher attendance because the average Italian citizen is becoming older and the theatre is most popular amongst older spectators. However, given that life is finite, older people may behave myopically because they have less time remaining so that addiction is less costly for older people. However, since older people are less healthy and subject to greater life cycle shocks, they may have fewer opportunities to make consumption choices even in the presence of beneficial addictions such as theatre attendance. Moreover, younger generations prefer new theatrical shows, such as musicals and one-man shows, which attract greater and longer attendance than traditional shows like dramas and comedies, which are popular amongst older spectators.

  2. In terms of the rational addiction model, a “steady state” is the level of consumption that is not characterised by an adjacent complementarity between current, past and future consumption.

  3. The log-run elasticity for the model in Eq. 3 is derived in the same way hypothesising that the coefficients β 4 and β 5 are equal to zero.

  4. The correlation matrix is available from the authors upon request.

  5. A variety of other unit roots tests has also been estimated. The results are the same as the IPS test and are available from the authors upon request.

  6. As a robustness check, we also estimated the model using total theatre attendance instead of attendance per capita, as an alternative dependent variable in the four empirical models. Results hold for the variables testing the myopic and rational addiction models. Results for these estimations are available from the authors upon request.

References

  • Alderighi, M., & Lorenzini, E. (2012). Cultural goods, cultivation of taste, satisfaction and increasing marginal utility during vacations. Journal of Cultural Economics, 36(1), 1–26.

    Article  Google Scholar 

  • Arrow, K. (1962). The economic implication of learning by doing. Review of Economic Studies, XXIX(3), 155–173.

    Article  Google Scholar 

  • Ateca-Amestoy, V. (2008). Determining heterogeneous behavior for theatre attendance. Journal of Cultural Economics, 32(2), 127–151.

    Article  Google Scholar 

  • Ateca–Amestoy, V. (2005). Determining Heterogeneous Behaviour for Theater Participation. In IESA working papers series 0502, Institute for Social Studies of AndalusiaHigher Council for Scientific Research.

  • Bask, M., & Melkersson, M. (2004). Rationally addicted to drinking and smoking? Applied Economics, 36(4), 373–381.

    Article  Google Scholar 

  • Becker, G. S., Grossman, M., & Murphy, K. M. (1994). An empirical analysis of cigarette addiction. American Economic Review, 84(3), 396–418.

    Google Scholar 

  • Becker, G. S., & Murphy, K. M. (1988). A theory of rational addiction. Journal of Political Economy, 96(4), 675–700.

    Article  Google Scholar 

  • Bonato, L., Gagliardi, F., & Gorelli, S. (1990). The demand for live performing Arts in Italy. Journal of Cultural Economics, 14(2), 41–52.

    Article  Google Scholar 

  • Borgonovi, F. (2004). Performing arts: An economic approach. Applied Economics, 36(17), 1871–1885.

    Article  Google Scholar 

  • Borowiecki, K. J., & Castiglione, C. (2014). Cultural participation and tourism flows: An empirical investigation of Italian provinces. Tourism Economics, 20(2), 241–262.

    Article  Google Scholar 

  • Cameron, S. (1999). Rational addiction and the demand for cinema. Applied Economics Letters, 6(9), 617–620.

    Article  Google Scholar 

  • Cameron, A. C., & Trivedi, P. K. (2009). Microeconometrics using stata. Texas: College Station.

    Google Scholar 

  • Castiglione, C., Infante, D., Grochovà, L., & Smirnova, J. (2011). The demand for beer in presence of past consumption and advertising in the Czech Republic. Agricultural Economics—Zemedelska Ekonomika, 57(12), 589–599.

    Google Scholar 

  • Chaloupka, F. (1991). Rational addictive behavior and cigarette smoking. Journal of Political Economy, 99(4), 722–742.

    Article  Google Scholar 

  • Chan, T. W., & Goldthorpe, J. H. (2007). Social stratification and cultural consumption: The visual arts in England. Poetics, 35(2/3), 168–190.

    Article  Google Scholar 

  • Collins, A., Hand, C., & Linnell, M. (2008). Analyzing repeat consumption of identical cultural goods: some explanatory evidence from moviegoing. Journal of Cultural Economics, 32(3), 187–199.

    Article  Google Scholar 

  • Elster, J., & Skog, O. J. (1999). Getting hooked: Rationality and addiction. Cambridge: University Press.

    Book  Google Scholar 

  • Favaro, D., & Frateschi, C. (2007). A discrete choice model of consumption of cultural goods: The case of music. Journal of Cultural Economics, 31(3), 205–234.

    Article  Google Scholar 

  • Frateschi, C., & Lazzaro, E. (2008). Attendance to cultural events and spousal influences: The Italian case, “Marco Fanno” Working paper N. 84.

  • Green, W. H. (2008). Econometric analysis. Upper Saddle River-New Jersey: Pearson Prentice Hall.

    Google Scholar 

  • Grisolia, J., & Willis, K. (2012). A latent class model of theatre demand. Journal of Cultural Economics, 36(2), 113–139.

    Article  Google Scholar 

  • Grossman, M., Chaloupka, F. J., & Sirtalan, I. (1998). An empirical analysis of alcohol addiction: Results from the monitoring the future panels. Economic Inquiry, 36(1), 39–48.

    Article  Google Scholar 

  • Hamilton, J. D. (1994). Time series analysis. Princeton, NJ: Princeton University Press.

    Google Scholar 

  • Houthakker, H. S., & Taylor, L. D. (1970). Consumer demand in the United States. Cambridge: Harvard University Press.

    Google Scholar 

  • Im, K. S., Pesaran, M. H., & Shin, Y. (2003). Testing for unit roots in heterogeneous panel. Journal of Econometrics, 115(1), 53–74.

    Article  Google Scholar 

  • Inps–ex-Enpals. (2012). Le attività d’impresa nel mondo dello spettacolo e dello sport professionistico. Rome: Consulenza Statistico Attuariale-Gestione ex ENPALS.

    Google Scholar 

  • ISTAT. (2013a). Il Valore della moneta in Italia, Rome.

  • ISTAT. (2013b). Il reddito disponibile delle famiglie nelle regioni italiane. Rome.

  • ISTAT. (various years). Capacità e Movimento degli esercizi ricettivi, Rome.

  • ISTAT. (various years). Indagine sulle forze lavoro. Media, Rome.

  • Laporte, A., Karimove, A., & Ferguson, B. (2010). Quantile regression analysis of the rational addiction model: Investigating heterogeneity in forward-looking behavior. Health Economics, 19(9), 1063–1074.

    Article  Google Scholar 

  • Lévy-Garboua, L., & Montmarquette, C. (1996). A microeconometric study of theatre demand. Journal of Cultural Economics, 20(1), 25–50.

    Article  Google Scholar 

  • Lévy-Garboua, L., & Montmarquette, C. (2002). The demand for the arts. CIRANO, Working papers 2002s-10, CIRANO.

  • National Endowment for the Arts—NEA. (1993). Age and arts participation: With a focus on the baby boom cohort (Executive summary). Washington, DC.

  • Pollak, R. A. (1970). Habit formation and dynamic demand functions. Journal of Political Economy, 78(4), 745–763.

    Article  Google Scholar 

  • Sciarelli, F. (2004). Analisi del settore teatrale e suoi fondamenti interpretative. In F. Sciarelli & W. Tortorella (Eds.), Il pubblico del teatro in Italia. Naples: Electa.

    Google Scholar 

  • Sciarelli, F., & Tortorella, W. (2004). Il pubblico del teatro in Italia. Naples: Electa.

    Google Scholar 

  • Seaman, B. (2006). Empirical studies of demand for the performing arts. In V. Ginsburgh & D. Throsby (Eds.), Handbook of the economics of art and culture (Vol. 1, pp. 416–472). Amsterdam: Elsevier.

    Google Scholar 

  • Sisto, A., & Zanola, R. (2005). Rationally addicted to cinema and TV? An empirical investigation of Italian consumers. Working paper n. 52, Università del Piemonte Orientale.

  • Sisto, A., & Zanola, R. (2010). Cinema attendance in Europe. Applied Economics Letters, 17(5), 515–517.

    Article  Google Scholar 

  • Società Italiana degli Autori ed Editori—SIAE (various years). Annuario dello Spettacolo. Rome.

  • Stigler, G. J., & Becker, G. S. (1977). De gustibus non est disputandum. American Economic Review, 67(2), 76–90.

    Google Scholar 

  • Werck, K., & Heyndels, B. (2007). Programmatic choices and the demand for theatre: The case of Flemish theatres. Journal of Cultural Economics, 31(1), 25–41.

    Article  Google Scholar 

  • Wooldridge, J. M. (2003). Introduction to econometric: A modern approach. Thompson: South Western.

    Google Scholar 

  • Yamamura, E. (2009). Rethinking rational addictive behaviour and demand for cinema: A study using Japanese panel data. Applied Economics Letters, 16(7), 693–697.

    Article  Google Scholar 

  • Zanardi, A. (1998). La domanda di intrattenimenti culturali: Un’analisi microeconometrica per l’Italia. In W. Santagada (Ed.), Economia dell’arte (pp. 123–144). Utet, Torino: Istituzioni e mercati dell’arte e della cultura.

    Google Scholar 

  • Zhen, C., Wohlgenant, M. K., Karns, S., & Kaufman, P. (2010). Habit formation and demand for sugar-sweetened beverages. American Journal of Agricultural Economics, 93(1), 175–193.

    Article  Google Scholar 

  • Zieba, M. (2009). Full-income and price elasticities of demand for German public theatre. Journal of Cultural Economics, 33(2), 85–108.

    Article  Google Scholar 

Download references

Acknowledgments

The authors wish to thank Trine Bille, Victor Fernández-Blanco, Carol Newman, John O’Hagan, Antonello E. Scorcu, Roberto Zanola and the participants at the European Workshop on Applied Cultural Economics in Dublin, for their comments on a previous version of this paper. The authors wish also to thanks the Editors and the anonymous referees of this journal for their useful suggestions. This research has been also funded from the Department of Economics, Statistics and Finance of University of Calabria.

Author information

Authors and Affiliations

Authors

Corresponding author

Correspondence to Concetta Castiglione.

Appendix

Appendix

Becker et al. (1994) rational addiction model considers one addictive good and one non-addictive good. According to this model, the representative consumer maximises a concave and time-separable utility function subject to a lifetime budget constraint. The concave utility function at time t may be defined as:

$$U_{t} = U(C_{t} ,C_{t - 1} ,Y_{t} ,e_{t} ) ,$$
(5)

where C t is the consumption of the addictive good; Y t is the consumption of the other goods, and e t is a stochastic term of the impact of unmeasured life cycle variables on utility. Assuming a constant rate of time preference, σ, a constant price of the non-addictive goods, treated as numéraire, and perfect capital markets, the intertemporal decision of the representative consumer consists in maximising its utility subject to a usual intertemporal budget constraint as follows:

$$\begin{aligned} U = \sum\limits_{t = 0}^{T} {\sigma^{t - 1} } U(C_{t} ,C_{t - 1} ,Y_{t} ,e_{t} ) \hfill \\ {\text{s}} . {\text{t}} .\,\sum\limits_{t = 1}^{T} {r^{t - 1} } (Y_{t} + P_{t} C_{t} ) \le A_{0} \, , \hfill \\ \end{aligned}$$
(6)

where r is the constant real interest rate; P t is the price of the addictive good; and A 0 is the initial value of assets. Since the utility function is assumed to be quadratic and discounted at the rate over a finite lifetime, the maximisation process gives a linear equation that takes the following form:

$$C(t) = \beta_{0} + \beta_{1} P_{C} (t) + \beta_{2} C(t - 1) + \beta_{3} C(t + 1),$$
(7)

where C and P represent consumption and price, respectively. Current consumption is predicted to be negatively related to the current price (β 1 < 0). If the good is addictive, current consumption is expected to be positively related to lagged and future consumption (β 2 and β 3 > 0). Equation (7) implies that current consumption is independent of past and future prices when C(t−1) and C(t+1) are held fixed.

On the other side, if we assume as in Chaloupka (1991) that past and future prices are used to capture unobserved shocks, the model takes the following form:

$$C(t) = \beta_{0} + \beta_{1} P_{C} (t) + \beta_{2} P_{C} (t - 1) + \beta_{3} P_{C} (t + 1) + \beta_{4} C(t - 1) + \beta_{5} C(t + 1) \, ,$$
(8)

also in this case, current consumption is predicted to be negatively related to the current price (β 1 < 0) but positively related to both past and future prices (β 2 and β 3 > 0). Moreover, if the good is addictive, current consumption is expected to be positively related to lagged and future consumption (β 4 and β 5 > 0), since past and future consumption are assumed to be constant.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Castiglione, C., Infante, D. Rational addiction and cultural goods: the case of the Italian theatregoer. J Cult Econ 40, 163–190 (2016). https://doi.org/10.1007/s10824-015-9247-4

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10824-015-9247-4

Keywords

JEL Classification

Navigation