The Contribution of Culture & Merit Goods to the Sustainable Development of the Greek Economy

by: Yannis Eustathopoulos, Economist, Coordinator of the ENA Sustainable Development Observatory

April 2024

In the late 1950s, the German-American economist Richard Musgrave (1910-2007) introduced the term 'merit good' to describe goods that individuals should be able to enjoy regardless of their ability or even desire to pay for them. A merit good provides more benefits to the individual who enjoys it and to society as a whole than the individual often realises. Accordingly, the term 'demerit good' describes goods with a negative social value. In recent years, we have witnessed a rapid global development of new and renewed 'traditional' demerit goods that significantly undermine the quality of the cultural sphere. These goods include, among others, online gambling, the widespread dissemination of extreme and 'raw' violence in video games and audiovisual works, junk food (fast food, energy drinks) and social media and other online services that encourage addictive behaviour and overconsumption. Overall, the prevailing mix of merit goods and demerit goods in each society determines the level of actual well-being of a society and the sustainability of the development model it has chosen. Cultural activities undoubtedly have elements that make them a "genuine" merit good. Arts institutions such as theatres, museums, conservatories, dance and film schools, festivals and participatory cultural practices contribute to the intellectual development, mental health and personal fulfillment of those who engage with the arts, whether by attending artistic events or by participating in artistic activities. Beyond the benefits to individuals, cultural institutions stimulate social and economic activity in local communities, enhancing social capital and sustainable development.

How developed is cultural participation in Greece?
A 2022 survey by the Hellenic Statistical Authority (ELSTAT) provides interesting data on the culturally active segment of the population in Greece:
  • 31.6% of the population aged 16 and over did not attend theatre performances, concerts, opera, etc. because they were not interested
  • 42.8% did not visit cultural sites because they were not interested
  • 50.9% did not read books (41.1% because they were not interested or did not like reading and 9.8% because they did not have time)
  • Finally, 62.2% did not take part in any cultural activity.

A "pessimistic" interpretation of the above data would focus on the percentage of people, i.e. 6 out of 10, who do not participate in any cultural activity. Particularly worrying is the number of respondents who attribute this attitude to a lack of interest in the arts and reading. On the other hand, a more 'optimistic' view would focus on the approximately 3.6 million people who are involved in culture and who represent a significant critical mass. Regardless of the interpretation of the data, the ELSTAT survey can help to set clear and measurable public policy objectives. For example, an indicative strategic target could be to increase cultural participation from 40% to 60% by 2030, combined with an increase in the frequency of participation (e.g. increasing weekly participation from 10% to 30%). Unfortunately, the next update on cultural participation is not expected until 2028, making it difficult to formulate evidence-based public policies.

The situation from the perspective of demerit goods: The case of online gambling
Online gambling is the digital version of a "traditional" commodity. Data published by the Hellenic Gaming Commission leaves no doubt about the dynamism of this industry. From 2019 to 2023, gross revenues from online gambling will increase cumulatively by 103.3% over four years, with the prospect of approaching €1 billion in the coming years (€889 million in 2023). Significant and increasing fiscal revenues from the taxation of online gambling -totaling €541 million in 2023- initially mitigate concerns and reactions regarding the dynamics of the sector in Greece, given its established use to fund sectors such as culture and sport. However, the new gambling tax legislation does not provide for the funding of mass leisure sports, but rather earmarks 50% of the relevant revenues for professional sports. These sectors are often associated with harmful activities such as football hooliganism, juvenile delinquency and organised betting networks on fixed matches. Despite the fiscal benefits generated by the gambling industry and the claims of "responsible gaming" measures, legitimate questions are being raised about the long-term effects of the widespread diffusion of betting as a socially acceptable activity. It is therefore imperative to examine the far-reaching effects of gambling at a macro-systemic level through interdisciplinary analysis, in order to arrive at an assessment of the net fiscal revenues, taking into account all the negative externalities of the sector (e.g. the consequences of gambling addiction) and their long-term fiscal costs.

The comparison of the current dynamics of the cultural participation and online gambling sectors reflects the general contradictions of the country's development model and the unfavourable mix of merits and demerits goods. The laissez-faire approach which took the form of horizontal market deregulation policies during the economic adjustment period in the 2010s has evolved into a generalized laissez-aller1 of the Greek economy and society in terms of sustainable and fair development.

Culture: An undervalued but tangible source of innovation and excellence
It is increasingly accepted that culture can become a leading sector for sustainable development:
  • Firstly, cultural activities have a strong positive impact on society at a time when social cohesion in Greece is disrupted by income inequalities, domestic and juvenile violence and delinquency, the increase in mental disorders, new forms of addiction, etc.
  • Secondly, the "culture-sport complex" can make a disruptive contribution to the fight against climate change by encouraging a way of life that decouples individuals from excessive consumption. Potentially, cultural activities constitute a factor in reducing the environmental footprint of the economy, just like other prominent sectors such as green technological innovation and industry, which are generously supported by public policies in Europe.
  • Third, from a macroeconomic perspective, cultural services contribute to the development of creative skills -beyond the purely artistic- that are particularly useful in today's knowledge economy and in the production of innovation.
  • Fourth, the contribution of culture helps to redefine happiness and success from material wealth and private consumption to social contribution, creativity, volunteer work, environmental commitment and the commons. This approach lends itself to shaping a 'social vision' for humanity at a time when the political system is challenged and struggling to present a discourse that meets today's challenges and risks.

Making culture the 4th pillar of sustainable development
Despite this, the cultural sector is rarely included among the leading sectors and holds a residual status in the dominant approaches and policies for economic development. In Greece in particular, the level of public spending on cultural services as a percentage of GDP has historically been at the bottom of the EU ranking and is well below the EU-27 average (2022 Greece: 0.2%, EU-27: 0.5%). Moreover, the new multifaceted crisis has a structural impact on the cultural sector. The pandemic has been a major destabilising shock for workers and enterprises in the sector. Fiscal austerity policies lead to a structural reduction of public funding for culture in favour of private funding. Price inflation is leading to cuts in citizens' spending in favour of more " essential " needs.

The development of culture requires a long-term strategy and vision, an integrated multi-level and decentralised public policy with clear quantitative and qualitative objectives, participatory planning, and effective implementing bodies, as well as accountability and evaluation procedures. But no strategy can succeed without adequate financial resources. Increasing public funding to at least the European average should aim first at a necessary generous increase in funding for contemporary cultural creation, artistic education and the establishment of a basic income framework for people working in the arts. In addition, new public resources should prioritise the sector's ability to enter into a virtuous circle of economic and artistic autonomy. These resources should be channeled to support cooperative ventures, using the institutional framework of the social and cooperative economy; to decentralise public policy functions for culture; to improve and better target relevant financial instruments for culture; to support local government organisations and cultural institutions with a focus on linking culture, local development and sustainable tourism; and to provide comprehensive support for small and medium- sized enterprises in the sector -especially artistic education- with the aim of sustaining and further enhancing the significant social value they produce.

1 French expression for lack of discipline, laxity in work and behaviour. In this article, the term refers to a situation characterized by a decline in the cultural, social or moral values prevalent in society and the economy.


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