Valuation of Public Libraries

1. Valuation of Public Libraries Dr. Jennifer Weil Arns, Associate Professor, Dr. Robert V. Williams, Distinguished Professor Emeritus, Ms. Karen A. Miller, Doctoral Student School of Library and Information Science University of South Carolina A Research Project Funded by IMLS

2. Why value public libraries?

3. Valuing Public Libraries:A Brief Review of Approaches

4. Approach 1: The “imagined” good of public libraries

5. “Imagined Good” • Historically, public libraries in the U.S. have been justified by arguments that the “public good” of the community would be greatly enhanced. • These arguments have varied over time and from place to place but they have included at least the following: • Support for democracy • An extension of the public schools • Civic pride and strengthening community • Enhancing literacy and learning • Social centers of a neighborhood • Moral and intellectual advancement Approach 1: The “imagined” good of public libraries

6. Support for Democracy • Ditzion (1949) called public libraries “arsenals of a democratic culture” • Putnam considered public libraries to be “instruments of acculturation” for immigrants and working class communities • Andrew Carnegie considered public libraries to be instruments of acculturation • Historians of the public library in the U.S. and elsewhere say that all “great civilizations” supported public libraries • Justin Winsor called public libraries “a great civilizing and stabilizing force in America” Approach 1: The “imagined” good of public libraries

7. An Extension of the Public Schools • Public libraries and public education are logically collaborative agencies and the public library is the natural community repository of learning • The public library provides a natural and logical extension of the public school for equal educational opportunities for adults (Lee, 1964) • Promoting and enhancing literacy levels for everyone in the community is a key goal of public libraries Approach 1: The “imagined” good of public libraries

8. Civic Pride Strengthening Community • “A classical good and icon of literacy and learning, of civic pride and prosperity” (George Ticknor, 1850) • "A library outranks any other one thing a community can do to benefit its people. It is a never failing spring in the desert." (Andrew Carnegie) • "Libraries are the heart of every community, keeping our minds and spirits alive." (Gail Lukasik, author, ALA Library Quotes site) Approach 1: The “imagined” good of public libraries

9. Enhancing Literacy and Learning • The National Assessment of Adult Literacy says that 14% of adults are illiterate. • Literacy issues are a collective concern that affects the quality and prosperity of our entire nation. The struggle to win the battle of literacy in America is one which should be fought by everyone. The public library has been one of the major players in this struggle. Approach 1: The “imagined” good of public libraries

10. Social Centers of the Neighborhood • “At the moment that we persuade a child, any child, to cross that threshold, that magic threshold into a library, we change their lives forever, for the better.” -- Barack Obama, 2005 • Libraries are a shared community resource. • Libraries are community information resources. • Libraries foster community identity • Libraries provide global reach and local touch Approach 1: The “imagined” good of public libraries

11. Moral and Intellectual Advancement • “I think the health of our civilization, the depth of our awareness about the underpinnings of our culture and our concern for the future can all be tested by how well we support our libraries.” -- Carl Sagan • Libraries minister to the moral as well as the intellectual needs of the individual and the community Approach 1: The “imagined” good of public libraries

12. Public Library ValuationMoving From“Imagined Good” TO“Calculated Good” The “imagined good” justifications of the public library have not been replaced! They are still good and valid ways to value public libraries. However, they are also not always sufficient in situations where agencies are being asked to provide justifications that are based on quantitative measures that are expressed in monetary terms. This approach is now being used in many publically funded agencies, such as: public health, transportation, environmental quality — and many other areas.

13. Approach 2: Calculating the Cost-Benefit of the Public Library

14. Cost-Benefit • Figuring cost-benefit (CB) is a very simple formula: The value of all benefits from library services divided by the total cost of library services • Costs are usually easily determined but calculating benefits is usually problematic and a variety of methods have been used to calculate them. • Sometimes the final CB result is simply stated that way but the most useful way is to state them as return on investment (ROI). A CB formula of, for example, $10/$5 means you get benefits of $10 and your costs are $5. This is an ROI of 2.00 — for every $1 you invest or expend, you get $2 in return — a 200% return Approach 2: Calculating the Cost-Benefit of the Public Library

15. There Are Two Cost-Benefit Methods for Deriving a Monetary Value for Public Libraries: 1. Contingent Valuation Analysis (CVA) Asking users (and sometimes non-users) to value the services using a Willingness to Pay (WTP) approach or a Willingness to Accept (WTA) approach. 2. Services Valuation Method Assigning monetary values for each service offered by the library and summing results for a total value of all benefits. Approach 2: Calculating the Cost-Benefit of the Public Library

16. CVA Method for Calculating Benefits • Ask library users how they would value specific services of the library or the entire library. The values assigned by the respondents are based (contingent) on the answers. • WTA (willingness to accept) asks what respondents would accept in money or lower taxes if the library no longer existed. The WTA approach is not considered to be as valid as WTP. • WTP (willingness to pay) asks respondents to value the entire library or a specific service. For example: • Suppose no libraries existed in your town: how much would you be willing to pay annually to create and maintain the library? Approach 2: Calculating the Cost-Benefit of the Public Library

17. CVA Method for Calculating Benefits • WTP questions can value specific services, such as children’s books and programs, online databases, reference help, and many others. • A related approach is asking users how much they spend annually at commercial services on books, videos, CDs, etc., and using the answers to value equivalent library services. • Another WTP method is the referendum approach—asking respondents to “bid” on a specific service as if they were at a referendum of city council trying to decide about the future of the library. Approach 2: Calculating the Cost-Benefit of the Public Library

18. CVA Method for Calculating Benefits • Strength of CVA: asks users to directly estimate the value of a non- market good. • Weaknesses of CVA: may be easy to manipulate values; lack of respondents familiarity with choices and library finances; respondents over or under estimation of the value of library services. Overestimating value is called the “warm glow” effect. • CVA is the most commonly used method of valuation in public library research, used in over 25 studies since about 1999. • Elliott, et al. (2007), published a very useful manual on using CVA and how it relates to cost-benefit approaches of analysis. Approach 2: Calculating the Cost-Benefit of the Public Library

19. Services Valuation Method • This method assigns a monetary value to every library service and program, then those values are multiplied by the number of users. A total direct valuation is then calculated for the library for that year. • The monetary values for each service or program are usually based on a combination of costs derived from other studies and local economic conditions (e.g., labor costs, comparative commercial prices, etc.) • Once total value of services and programs has been calculated, this value is compared with the costs of operating the library . The cost-benefit formula is applied and the ROI is calculated. Approach 2: Calculating the Cost-Benefit of the Public Library

20. Services Valuation Method • This method had been used in several studies over the past few years: SC, Suffolk County, NY, Vermont, and Charlotte, NC. • Strength of this method: assigns a monetary value to services and programs and compares those benefits to costs. May be used in parallel with CVA and other methods. • Weakness of this method: monetary values assigned for services and programs open to dispute and may over or underestimate specific and total values. Approach 2: Calculating the Cost-Benefit of the Public Library

21. Approach 3: The economic impact of public libraries

22. Public Libraries Generate Positive Economic Impacts In Communities • Wages paid to staff • Construction costs for buildings • Purchases made for books and other materials • Value of providing information for economic decision-making, recreation, entertainment, education, self-improvement, career enhancement, among other activities • Enhancing community pride • Attracting and retaining business and industry Approach 3: The economic impact of public libraries

23. Positive Economic Impacts • Some of these positive economic impacts are easily calculated (e.g., wages, purchases) but some are not easily calculated (e.g., community pride, supplementing education). • Over the last 20 years a variety of methods have been developed by public library researchers to calculate these benefits in monetary terms. Some of these methods extend or supplement CB, CVA, and valuation of services, which have already been discussed. Approach 3: The economic impact of public libraries

24. REMI (Regional Economic Modeling) This method calculates the regional (local or state) impact of all of the expenditures of the library and their secondary impacts through all sectors of the local/state economy. This is sometimes referred to as “indirect” benefits (as opposed to the direct benefits measured in CVA or the services valuation method). This approach has been used in many different studies in a variety of ways and using different modeling assumptions. The following studies illustrate these various approaches: Suffolk County, NY; SC; and the Florida study by Griffiths, et al. Some of these studies have given estimates of the total value in terms of increased wages, additions to employment, increases to gross regional product, etc. Approach 3: The economic impact of public libraries

25. Input/Output Modeling This method depends on the particular model employed by the modeling process (e.g. IMPLAN) but the one common use in public library research is to estimate the benefits that accrue to the local economy when major construction projects occur. A similar approach (called the “halo effect”) is to calculate the impact on commercial enterprises located near the library and estimate what the presence of the library adds to the local community. A 2009 series of studies in Colorado communities concluded that these effects ranged from $200,000 in small communities to $7.5 million in larger communities. Another approach is to consider the economic benefits that accrue to the community or state because the library exists. The benefits include gifts, federal support, state support, etc. Approach 3: The economic impact of public libraries

26. Positive Economic Impacts • While extremely valuable as an additional approach to calculating the value of public libraries, it should be noted that most of the studies using economic impact approaches do not include the value of the information provided by the library. • Thus, there is a need to utilize methods such as Cost-Benefit, Contingent Valuation Analysis, or Services Valuation for a more complete calculation of the monetary value of the library. Approach 3: The economic impact of public libraries

27. Approach 4: Long-TermProspects

28. Long-Term Prospects • This approach links public library services to community-wide improvements, such as improving literacy, work readiness, and neighborhood revival. • These effects are similar to the value of immunization programs for improved overall community health. • A 2007 Urban Libraries Council study and a 2010 study of the Free Library of Philadelphia concluded that the existence and work of the library provided significant indirect economic benefits to the entire community. • These economic benefits, however, are difficult to measure and require considerable research work using government statistical data, library data, surveys, and interviews. Approach 4: Long-TermProspects

29. Long-Term Prospects This approach has often been used as an additional public library valuation method to supplement the cost-benefit Contingent Valuation Analysis or Services valuation methodologies. Approach 4: Long-TermProspects

30. Conclusions

31. Conclusions • There is no one best method or approach to valuing the contributions the public library makes to the community, state, and nation. • All four approaches to public library valuation have advantages and disadvantages. • The use of all four approaches in concert, while expensive and time consuming to conduct, is probably the best way to conduct a thorough library valuation. Valuing Public Libraries: Some Conclusions

32. Conclusions • The least expensive approach to a monetary, economic valuation of public libraries is the services valuation method. • The most expensive approach to a monetary, economic valuation of public libraries is the contingent valuation analysis method. • Libraries considering doing an economic valuation should be aware of the advantages and disadvantages of the method (or methods) they select as well as the quality and usefulness of the information obtained by the study. Valuing Public Libraries: Some Conclusions