15 Hours and Counting...

The reality of this adventure finally set in for many of us this morning as we met for our first article discussion and asked last minute questions. Nerves of excitement and anticipation are overwhelming my thoughts, but much stress was relieved as we were able to sit down with one another and spark an initial conversation about the overarching economic themes of the course: Investigating Environmental and Economic Change in Italy.

Anna and I shared our article The Economics of Heritage and provided thoughtful questions to consider as we prepare to encounter thousands of years of built heritage in Italy this month. Built heritage includes all manmade or naturally occurring structures (ranging from archaeological remains to individual buildings and cities) of historical and artistic significance, many of which were not intentionally produced as a good of consumption but have developed a deeper significance over time. Therefore, their economic cost to today’s society is considered a sunk cost, as it was incurred at the initial point of production.

What are common places/ structures of built heritage here in the United States and what do consumers gain from the consumption of built heritage? A few examples of built heritage are history and art museums, national parks, and cities of historical value to our country. Our conversation formed around the idea that we, as consumers, have a desire to seek different perspectives and historical knowledge, and we are willing to make exchanges such as pay an entrance fee or accept different social norms in order to have access to places of built heritage. In this case, suppliers are generally private owners and the government.

We discussed that built heritage is determined and regulated by heritage authorities (professionals or experts) and their decisions include setting entrance fees to built heritage sites, defining and identifying built heritage, and preserving built heritage for future generations. This leads to supply-induced demand since consumers rely on experts to make decisions about quality and standards of built heritage. Relying on expert opinion can lead to imperfect information since experts have incentives to make regulatory decisions in their own favor. This could potentially lead to inaccurate representation of consumer preferences because consumers are not fully informed. However, consumers are able to register their preferences through three avenues of demand: a) visitors who register their preferences through entrance fees, b)non-visitors who have an option to visit and register their preferences through surveys and taxes, and c) future generations who cannot register their opinions but rather current generations pay taxes to express the importance of preserving built heritage.

It is difficult to measure the efficiency of built heritage for two reasons: public goods and externalities. Public goods are goods available for anyone to consume which leads to problems of overuse such as free-riding and “the tragedy of the commons”. There are external effects of built heritage, such as tourism, that can have both positive and negative effects on an economy. For example, while tourism can help stimulate an economy, consumer choices made by tourists may not reflect the preferences of native residents.

As citizens of a relatively young country, our built heritage of a few hundred years is minuscule in comparison to the built heritage that has accumulated over thousands of years in Italy. With a brief background of the economics of heritage, as we visit museums, the Vatican, the Colosseum, the Pantheon and many other sites, we hope to identify specific heritage regulations and policies that are in place. Furthermore, we hope to identify how the Italian culture allocates resources in order to preserve thousands of years of built heritage for consumers seeking historical knowledge much like ourselves. Over the length of this course we pose this challenge to our peers and ourselves: to thoughtfully inquire and identify how the economic model of built heritage in the U.S. compares to an economic model in Italy that spans thousands of years. Today marks the start of a month of adventure, curiosity, learning, and, most importantly, unforgettable memories!