On the response of household expenditure on cinema and performing arts to changes in indirect taxation: a natural experiment in Spain

  • Victoria Ateca-Amestoy
  • Javier GardeazabalEmail author
  • Arantza Ugidos
Original Article


This paper draws inference on the effect of changes in indirect taxation on household spending on cinema and performing arts using data from the Spanish household expenditure survey. As of September 2012, value-added tax (VAT) on cinema and performing arts in Spain was raised 13 percent points, with the exception of the Canary Islands which are not part of the Spanish VAT territory. Indirect taxation levied on cinema and performing arts through the General Indirect Tax of Canary Islands (Impuesto General Indirecto de Canarias, IGIC) had changed in July 2012 by only 2 percent points. Such an uneven raise in the tax rates is the source of exogenous variation used for identification in this paper. As the sample of treated households (exposed to the VAT rise) is much larger than the sample of untreated households (exposed to the IGIC rise), we use causal inference methods to estimate the average treatment effect of the VAT rise on the untreated households. We find that the average household expenditure on cinema and performing arts of the untreated households would not have changed significantly, had untreated households been exposed to the VAT rise. However, this average treatment effect would not have been homogeneous, as we identify an average treatment effect conditional on participation of 52.37 euros. Thus, the tax rise would have increased the annual expenditure of those households that spend on cinema and performing arts regularly.


Policy evaluation Natural experiment Indirect taxation VAT IGIC Cinema Performing arts Household expenditure Spanish household budget survey 

JEL Classification

D12 H31 Z11 



We thank participants at the 20th International Conference on Cultural Economics held at RMIT University in Melbourne, 26-29 June 2018 for their comments. Financial support from the Basque Government (IT873-13 and IT1336-19), and from the Spanish Ministry of Economy and Competitiveness/FEDER (ECO2015-64467-R) is gratefully acknowledged.


  1. Abadie, A. (2005). Semiparametric difference-in-differences estimators. The Review of Economic Studies, 72(1), 1–19.CrossRefGoogle Scholar
  2. Abadie, A., Athey, S., Imbens, G. W., & Wooldridge, J. (2017). When should you adjust standard errors for clustering? Working Paper No. w24003. National Bureau of Economic Research.Google Scholar
  3. Abadie, A., & Imbens, G. W. (2006). Large sample properties of matching estimators for average treatment effects. Econometrica, 74(1), 235–267.CrossRefGoogle Scholar
  4. Abadie, A., & Imbens, G. W. (2008). On the failure of the bootstrap for matching estimators. Econometrica, 76(6), 1537–1557.CrossRefGoogle Scholar
  5. Abadie, A., & Imbens, G. W. (2011). Bias-corrected matching estimators for average treatment effects. Journal of Business & Economic Statistics, 29(1), 1–11.CrossRefGoogle Scholar
  6. Agencia Estatal Boletín Oficial del Estado. (2012). Ley Orgánica 12/2012, de 27 de abril, de Estabilidad Presupuestaria y Sostenibilidad Financiera. Boletín Oficial del Estado.Google Scholar
  7. Agencia Estatal Boletín Oficial del Estado (2013). Ley 18/2013, de 12 de noviembre, para la Regulación de la Tauromaquia como Patrimonio Cultural. Boletín Oficial del Estado.Google Scholar
  8. Ahn, N., Jimeno, J. F., & Ugidos, A. (2004). ‘Mondays in the sun:’ Unemployment, time use, and consumption patterns in Spain. In The economics of time use, volume 271 of contributions to economic analysis, pp 237–259. Elsevier.Google Scholar
  9. Angrist, J. D., & Pischke, J.-S. (2009). Mostly harmless econometrics. An empiricist’s companion. Princeton: Princeton University Press.CrossRefGoogle Scholar
  10. Berbinau, J., & Waelbroeck, P. (2016). La réponse gradué: un modèle de simulation du cas français. In Y. Nicolas & O. Gergaud (Eds.), Évaluer les politiques publiques de la culture, Questions de culture. Paris: Ministry of Culture and Communication.Google Scholar
  11. Borowiecki, K. J., & Navarrete, T. (2018). Fiscal and economic aspects of book consumption in the European Union. Journal of Cultural Economics, 42(2), 309–339.CrossRefGoogle Scholar
  12. Brodaty, T. (2016). Annulation des festivals d’Avignon et d’Aix-en-Provence en 2003: des catastrophes économiques locales? In Y. Nicolas & O. Gergaud (Eds.), Évaluer les politiques publiques de la culture. Paris: Questions de Culture. Ministry of Culture and Communication.Google Scholar
  13. Chetty, R., Looney, A., & Kroft, K. (2009). Salience and taxation: Theory and evidence. American Economic Review, 99(4), 1145–77.CrossRefGoogle Scholar
  14. de Vries, J., & de Graaf, P. M. (2008). Is the intergenerational transmission of high cultural activities biased by the retrospective measurement of parental high cultural activities? Social Indicators Research, 85(2), 311–327.CrossRefGoogle Scholar
  15. Diniz, S. C., & Machado, A. F. (2011). Analysis of the consumption of artistic-cultural goods and services in Brazil. Journal of Cultural Economics, 35(1), 1–18.CrossRefGoogle Scholar
  16. Escardíbul, J.O., & Villarroya, A. (2009). Who buys newspapers in Spain? An analysis of the determinants of the probability to buy newspapers and of the amount spent. International Journal of Consumer Studies, 33(1), 64–71.CrossRefGoogle Scholar
  17. European Commission (2017). VAT rates applied in the member states of the European Union, situation at 1st January 2017.
  18. FAETEDA. (2012). Impacto del aumento del IVA en las artes escénicas en España. Informe realizado por encargo de la Federación de Asociaciones de Empresas de Teatro y Danza (FAETEDA).Google Scholar
  19. FAETEDA. (2013). Impacto real del aumento del IVA en el sector de las artes escénicas en España en los primeros meses de su aplicación.
  20. Fernandez-Blanco, V., Orea, L., & Prieto-Rodriguez, J. (2009). Analyzing consumers heterogeneity and self-reported tastes: An approach consistent with the consumer’s decision making process. Journal of Economic Psychology, 30(4), 622–633.CrossRefGoogle Scholar
  21. Fernandez-Blanco, V., Orea, L., & Prieto-Rodriguez, J. (2013). Endogeneity and measurement errors when estimating demand functions with average prices: An example from the movie market. Empirical Economics, 44(3), 1477–1496.CrossRefGoogle Scholar
  22. Gapinski, J. H. (1986). The lively arts as substitutes for the lively arts. The American Economic Review, 76(2), 20–25.Google Scholar
  23. García-Enríquez, J., & Echevarría, C. A. (2018). Demand for culture in Spain and the 2012 VAT rise. Journal of Cultural Economics, 42, 469–506.CrossRefGoogle Scholar
  24. Gimenez-Nadal, J. I., & Molina, J. A. (2014). Regional unemployment, gender, and time allocation of the unemployed. Review of Economics of the Household, 12(1), 105–127.CrossRefGoogle Scholar
  25. Hallmann, K., Muñiz-Artime, C., Breuer, C., Dallmeyer, S., & Metz, M. (2017). Leisure participation: Modelling the decision to engage in sports and culture. Journal of Cultural Economics, 41(4), 467–487.CrossRefGoogle Scholar
  26. Hernán, M. A., & Robins, J. M. (2019). Causal Inference. Boca Raton: Chapman & Hall/CRC, forthcoming.Google Scholar
  27. Katsuura, M. (2012). Lead-lag relationship between household cultural expenditures and business cycles. Journal of Cultural Economics, 36(1), 49–65.CrossRefGoogle Scholar
  28. Legoux, R., Carrillat, F., Boeuf, B., & Darveau, J. (2014). A meta-analysis of demand and income elasticity in the performing arts. Presented in ACEI2014 Montreal.Google Scholar
  29. Lévy-Garboua, L., & Montmarquette, C. (1996). A microeconometric study of theatre demand. Journal of Cultural Economics, 20(1), 25–50.CrossRefGoogle Scholar
  30. Lévy-Garboua, L., & Montmarquette, C. (2011). Demand. In R. Towse (Ed.), A handbook of cultural economics, 2nd edition. Cheltenham: Edward Elgar Publishing.Google Scholar
  31. Machado, A. F., Golgher, A. B., Diniz, S., & Gama, L. C. D. (2017). Consumption of cultural goods and services and time allocation in Brazil. Nova Economia, 27(1), 35–63.CrossRefGoogle Scholar
  32. Ministry of Education and Culture and Sports. (2013). Plan Estratégico Nacional de Fomento y Protección de la Tauromaquia. Google Scholar
  33. Nguyen-Hoang, P., & Yinger, J. (2011). The capitalization of school quality into house values: A review. Journal of Housing Economics, 20(1), 30–48.CrossRefGoogle Scholar
  34. Nicolas, Y., & Gergaud, O. (2016). Évaluer les politiques publiques de la culture. Paris: Questions de Culture. Ministry of Culture and Communication.Google Scholar
  35. Observatorio Vasco de la Cultura. (2014). El impacto del IVA en las artes escénicas, la música y el cine. Google Scholar
  36. O’Hagan, J. (2011). Tax concessions. In R. Towse (Ed.), A handbook on cultural economics, 2nd edition. Cheltenham: Edward Elgar.Google Scholar
  37. Peterson, R. A. (1992). Understanding audience segmentation: From elite and mass to omnivore and univore. Poetics, 21(4), 243–258.CrossRefGoogle Scholar
  38. Prieto-Rodriguez, J., Romero-Jordán, D., & Sanz-Sanz, J. F. (2005). Is a tax cut on cultural goods consumption actually desirable? A microsimulation analysis applied to Spain. Fiscal Studies, 26(4), 549–575.CrossRefGoogle Scholar
  39. Redondo-Bellón, I., Royo-Vela, M., & Aldás-Manzano, J. (2001). A family life cycle model adapted to the Spanish environment. European Journal of Marketing, 35(5/6), 612–638.CrossRefGoogle Scholar
  40. Ringstad, V., & Løyland, K. (2011). Performing arts and cinema demand: Some evidence of Linder’s disease. Applied Economics Quarterly, 57(4), 255–284.CrossRefGoogle Scholar
  41. Seaman, B. A. (2006). Empirical studies of demand for the performing arts. In V. A. Ginsburg & D. Throsby (Eds.), Handbook of the economics of art and culture (Vol. 1, pp. 415–472). Amsterdam: Elsevier.CrossRefGoogle Scholar
  42. Spanish Business Cycle Dating Committee. (2015). CF Index of Economic Activity.
  43. Suarez-Fernandez, S., Perez-Villadoniga, M. J., & Prieto-Rodriguez, J. (2018). Are We (Un)Consciously Driven by First Impressions? Price Declarations vs. Observed Cinema Demand when VAT Increases. In ACEI Working paper series AWP-02-2018, Association for Cultural Economics International.Google Scholar
  44. Thomas, K. (2016). Savoir évaluer des programmes dénseignement artistique: le cas de little kids rock. In Y. Nicolas & O. Gergaud (Eds.), Évaluer les politiques publiques de la culture. Paris: Ministry of Culture and Communication.Google Scholar
  45. Van der Ploeg, F. (2006). The making of cultural policy: A European perspective. In V. A. Ginsburg & D. Throsby (Eds.), Handbook of the economics of art and culture (Vol. 1, pp. 1183–1221). Amsterdam: Elsevier.CrossRefGoogle Scholar
  46. Villarroya, A., & Ateca-Amestoy, V. (2015). Spain. Compendium of Cultural Policies and Trends in Europe, 17th edition 2015. Council of Europe/ERICarts.
  47. Vogel, H. L. (2014). Entertainment industry economics: A guide for financial analysis, 9th edition. Cambridge: Cambridge University Press.CrossRefGoogle Scholar
  48. Von Rimscha, M. B. (2013). It’s not the economy, stupid! External effects on the supply and demand of cinema entertainment. Journal of Cultural Economics, 37(4), 433–455.CrossRefGoogle Scholar
  49. Zieba, M. (2009). Full-income and price elasticities of demand for German public theatre. Journal of Cultural Economics, 33(2), 85–108.CrossRefGoogle Scholar

Copyright information

© Springer Science+Business Media, LLC, part of Springer Nature 2019

Authors and Affiliations

  1. 1.University of the Basque Country UPV/EHUBilbaoSpain

Personalised recommendations