Libraries and economic value
a review of recent studies
Abstract
This paper outlines the development of research into the value of libraries over the past decade. Recent studies using contingent valuation for the British Library, South Carolina Public Libraries, Florida Public Libraries and St. Louis Public Libraries are summarised both in terms of methodology and findings. Studies into two national bibliographic services ( Canada and New Zealand) are reviewed to demonstrate the application of value studies to specific services. Discussion of the contingent valuation studies focuses on comparing the results and to determine how the results could be interpreted to understand whether the libraries provided a positive return on investment. Consideration is then given to alternative uses of the contingent valuation and potential areas for further research such as analysis of the optimum return on investment for libraries by sector or service.
Keywords: Contingent valuation; Return on investment; Comparative studies
Libraries support research and education which in themselves are difficult to assign precise economic value. (Broadbent and Lofgren 1991 p 96)
Introduction
Demonstrating the value of library and information services has been a theme of library research for many decades. The application of many different approaches to evaluation has waxed and waned together with the development of theories of evaluation across the humanities and social sciences. There are now at least two major journals devoted to library evaluation, Performance measurement and metrics and The Bottom line, and a range of books and conferences. These indicate that this aspect of library and information science has developed into a significant strand of professional activity.
Over the past two decades research and activity on library value has adopted new approaches and increased in its scope and implementation – harnessing increasingly sophisticated methods developed in metrics. The development of more complex means of valuing library services has taken the road from simple output measures to calculating broad social value measures.
This paper provides a summary of the threads of value studies which have led to the application of contingent valuation theories in library and information science. It reviews the findings of contingent valuation and return on investment research projects in public libraries and national libraries, comparing four recent major studies. It also summaries value studies of two national bibliographic services as examples of applying this methodology to a defined type of library activity. In reviewing these studies the paper focuses on the following questions:
- What does the numerical value obtained through contingent valuation and return on investment studies of libraries actually mean?
- What is a successful return of investment for a community from their library?
- How can contingent valuation and return of investment be used to determine how future investment in libraries can maximise the value to the community served by the library? And
- What further conceptual approaches or research could be undertaken to improve the measurement of the value of libraries using these methods?
To commence the review of current studies of contingent valuation and return of investment there is benefit in reviewing how evaluation and assessment of the value of library services has evolved.
Value of library services: a brief history
Over the past years there have been many developments in evaluation theory which has led to the development of methodologies to measure the value of programs and organisations operating in the knowledge economy and contributing to social capital. These methodologies are beginning to be applied to libraries and a body of literature has developed.
Studies can be summarised in three waves of activity. Each wave represents a different style of evaluation focused on demonstrating the value of individual library services. While each style has certain characteristics there is not a hard break between approaches. Indeed many libraries use a mix of methods depending upon the context of their environment or the particular purpose of their assessment. Most libraries, for example, continue to measure outputs such as number of items available to users and number of reference enquiries, to meet the day to day needs of managers and to demonstrate an ongoing need for services or collections. There have been a range of methodologies applied to the evaluation libraries and library services in the past. To establish a context to review the use of contingent value theory, library evaluation studies are summarised, based on three general periods which resulted in awareness of gaps in the techniques used during these research approaches.
The first wave of studies can generally be described as “efficiency” or output oriented studies. These were undertaken to demonstrate the value of libraries in operating efficiently in managing human and material resources, being financially responsible and therefore of providing value as a service per se. This type of evaluation demonstrated response to costs through comparisons which demonstrate relative efficiency. Examples of these studies are:
- Costing library activities with a view to determining how processes and services can be made more cost effective – these have been regular occurrences in many libraries often applying the activity based costing methodology;
- Benchmarking to create process models and costing data on services and activities which can be compared across organisations to establish best practices, such as the National Resource Sharing Working Group’s study of ILL/DD and benchmarking studies and manuals for Australian university libraries ( Wilson 1999). These studies provide comparative information which can be used to review workflows and practices to develop more efficient services and processes.
Most libraries continue to benchmark at intervals to determine how they compare and to continuously improve processes and reduce costs. These studies can demonstrate that libraries are efficient managers of resources, but they do not provide managers and stakeholders with information which immediately demonstrates that the right services are being offered or specific benefits are derived from the library.
The next wave of value studies took quite a different approach. The focus moved to demonstrating the success of the library in providing a financial return to the organisation, in the case of corporate and organisational libraries, and to research or students in the case of tertiary and school libraries. The problem statement for this wave of research was what is the dollar figure for the contribution of the library. Some examples of studies in this framework are:
- Developing surrogate measures of the value provided by libraries through assessing the financial savings of organisations by library operations for resource collection and delivery of information. This can be calculated as labour costs saved based on comparative salary information. Longren and Broadbent developed such a methodology – “ When the real impact of an information system cannot be measured, the perceived value may have to be accepted as a proxy. The perceived value approach is based on the subjective evaluation by users and presumes that users can recognise the benefits derived from an information service”... (Broadbent and Lofgren 1991 p 98).
- Case studies have also been used to demonstrate value – for example in contribution to product development, patents or legal research (for example United States Department of Transportation - Federal Highway Administration, Marshall, Griffiths and King)).
These studies gave new insights into the value of services. Some of the corporate libraries which undertook these studies were, however, abolished and the overall results were of interest. The studies did not seem to fully convince managers or stakeholders of funding models for libraries or information centres.
In the 1990s a new wave of studies emerged – taking a broader view of the value of libraries and seeking to establish their value to managers, stakeholders and clients. Establishing the perspectives of these core groups and then assessing the relevance of the library service emerged in studies of special libraries first, particularly corporate libraries. The development of the Balanced Scorecard methodology enabled hard numbers to be applied to set targets based on consideration of which services should be changed and also to consider process improvements. Examples of these studies are:
- Assessing the perceived value of library services, generally in the special library context, to determine organisational alignment and a set of broad indicators about library value, best demonstrated by the work of Matarazzo and Prusak – replicated in Australia by Walsh and Greenshields. The studies are based on surveying managers to determine the relative value of library activities such as number of requests handled, time saved and money saved, valued services such as electronic resources, reference services and circulation of journals and compare gaps between perceptions of library staff and managers;
- Application of the Balanced Scorecard: this tool, developed by Kaplan and Norton, enables clarification of the organisation’s vision, defining expected results in terms of financial perspective (including return on capital), customer perspectives, internal business processes and learning and growth of staff. Libraries using this methodology are able to demonstrate value by linking their activities to the organisation’s value statements.
The high point of this wave can be seen in the new studies of value using return on investment and contingent valuation. These studies are generally undertaken to determine the economic benefit to citizens of public libraries and the economic benefit of particular services, such as national union catalogues and bibliographic services.
Return on investment and contingent valuation studies
The concept of return on investment has been in existence for a number of decades. The NOAA Panel on Contingent Valuation noted in 1993 that “The contingent valuation technique has been used for twenty years or so to estimate passive use values.”(p 4603). At its heart is the principle of costing activities and the benefits from these activities to individuals. Its is a methodology related to consumer surplus which has also been used to calculate return on investment.
A new approach was taken to assess the use of contingent valuation in 1993 when a panel, including two Nobel Laureates, reviewed its application to determine the passive use losses from oil spills in the United States. The Panel applied the technique to non market good, primarily determining the “existence value” of the environment.
Contingent valuation is an economic methodology used to estimate the value that a person places on a good or service. Applied through the 1990s in studies of environmental goods and services, it is based on surveying individuals to establish value. It seeks to determine how much individuals would be prepared to pay, willingness-to-pay (WTP) in order to secure the provision of a public good. For example they may be asked a question such as “What are you prepared to pay for 5 days per year of clean air?”. In addition, they are asked how much money they would be willing to accept for loss of quality of life - willingness-to-accept (WTA). For example they may be asked a question such as “What is the minimum amount you would be prepared to accept in compensation for a reduction of 5 days per year of clean air?”
The use of contingent valuation has not been without controversy. There has been considerable debate over its relevance and the validity of the surveys and findings. The continued application of the technique across a number of service areas and discussion in the literature reflects the position that the methodology is now well established, but needs to be used with care (see National Oceanic & Atmospheric Administration).
Applied in a library/information context the methodology enables consideration to be given to the cost implications of having and of not having a library service. The direct economic contribution of the library to their users is calculated including investment in terms of time and travel.
Recent studies of libraries have occurred in public and national library sectors and are summarised below. It should be noted that so far only a very small number of studies have been undertaken.
British Library study (2004)
The British Library commissioned Spectrum Strategy Consultants and Idepen to undertake a report to assess the contribution of the Library to the economy. The study was based on contingent valuation and assessed the value enjoyed indirectly and directly by UK citizens.
Over 2000 individuals were surveyed to assess:
- Willingness to pay : a sking individuals how much they are willing to pay to continue to access the service and directly measure the demand curve with a budget constraint;
- Willingness to accept: asking individuals how much they are willing to accept in compensation to forego the service and directly measure the demand curve without a budget constraint
- Investment in access: estimate of the time and cost invested in accessing the service
- Cost of alternatives: costs incurred if forced to use alternatives
- Price elasticity: change in demand with a change in price
The study showed that the British Library generates value around 4.4 times the level of its public funding:
- The total value each year of the British Library is £363m - £59m comes directly from users of the services and £304m comes from wider society
- For every £1 of public funding the British Library receives each year, £4.40 is generated for the economy
- If public funding of the Library were to end, the UK would lose £280m per annum
The study includes case studies of the benefit to companies and individuals, for example benefit to a startup company through enabling access to a comprehensive range of patents and supporting teaching and learning in the higher education sector through use of collections and services.
The economic impact of public libraries on South Carolina (2005):
The University of South Carolina's School of Library and Information Science, in partnership with the South Carolina State Library and the SC Association of Public Library Administrators conducted a Public Library Economic Impact Survey based on surveys in 2004.
The study was in two parts, with the first based on a survey to determine the perceived value of the libraries for general use, business use, personal investment use and job seeking use. The findings from this part of the study were that the public library:
- improves the overall quality of life: 92% said yes
- Enhances personal fulfilment: 73% said yes
- Nurtures a love of reading: 73% said yes
- Is a source of personal enjoyment: 64% said yes
- increases local property values: 47% said yes
- 78% of business users indicated that information obtained from the public library contributed to the success of their business
- without access to the information in their public library, 23% of the business users indicated that they estimated costs would increase between $500 and $5,000, and 7% estimated costs would increase by $5,000
- 41% of business users said that if they did not have access to the public library it would have some negative impact and 33% said it would have a major negative impact on their business
- 56% of personal investors said they obtained the information needed for making investment decisions from their public library
- 48% said “definitely” the investment information at the public library had contributed to their financial well-being and 34% said “somewhat”
- 32% of respondents said the dollar value of the information obtained from the public library was between $10,000 and $1 million and 2% said over $1 million. (p 3-4)
The second component of the study analysed the financial value of service provided by the library network as follows:
- Direct economic impact of all public library expenditures = $80 million
- Public libraries bring almost $5 million (from federal and private sources) that the state would not otherwise have (excludes funds received directly by the S.C. State Library).
- Value of the loan and use of books, videos, cassettes, CDs, newspapers, magazines and other materials to users is approximately $102 million (based on comparable retail costs).
- Value of reference services to users is approximately $26 million. (Estimate based on time saved.)
- The bottom line -- Total direct and indirect return on investment is $347 million. This means that for every $1 spent on public libraries by state and local governments, the state receives $4.48, a nearly 350 percent ROI. ~ The breakdown -- Total direct economic impact of public libraries is estimated at $222 million, while the actual cost of these services to the state and local governments is only $77.5 million. (p. 4)
Florida public libraries ROI study (2004)
Drs Jose-Marie Griffiths, Donald King and Thomas Lynch prepared perhaps the most detailed public library study in 2003.
Benefit to cost ratios were determined using several approaches including:
- availability of libraries, calculated as total cost to use alternatives if the public libraries did not exist
- use of public libraries, time and money saved through use of the library
- wages
- benefit to the state in terms of Gross Regional Product.
They found, from surveys and statistical analysis:
“Libraries play an important role in economic development across the state, from providing informational resources for small businesses to helping Floridians develop marketable skills. The total direct economic impact of Florida’s public libraries on the state economy is $6 billion a year.
- Libraries bring a substantial return on investment for Florida’s taxpayers. Overall, Florida ’s public libraries return $6.54 to the economy for every $1 invested from all sources.
- The economic impact of libraries directly affects Florida’s citizens. Every dollar invested in Florida’s public libraries results in an additional $12.66 in wages in Florida ’s economy.
- Libraries are efficient economic engines. A $1 public investment in libraries results in a $9.08 increase in the gross state product.
- Strong neighborhood libraries are community anchors that improve the quality of life, helping cities and counties across Florida grow and thrive. Local communities are building more public libraries today than ever before. Floridians visited public libraries over 66 million times in 2002 (p. 4)
The benefits of the library services were determined from analysing user groups. For example small and medium business benefited from the development of information skills and education which utilised the library. The library also supported career centres and training such as special programs to teach English to those from a non-English speaking background which resulted in improved job skills.
St. Louis Public Library study (1999)
Funded by based on analysis of expenditure by the library and users. User surveys were a key to determine the value of the libraries in the five public libraries included in the study – St. Louis Public Library, King County Library System, Seattle; Baltimore County Public Library ; Birmingham Public Library , Alabama; and Phoenix Public Library. In St. Louis 320 library members were surveyed to identify consumer surplus (library users were asked to place a dollar value on specific services); contingent valuation (questions focused on willingness to accept to go without library services); and opportunity cost (questions focused on the expenditure in using the library including time and travel).
A relatively early study, the contingent valuation methodology found different results in each library system. Baltimore County Public Library returned $3-$6 in benefit per tax dollar. Birmingham Public Library returned $1.30-$2.70, King County Library System returned $5-$10 and Phoenix Public Library returned over $10. St. Louis Public Library returned $2.50-$5 in benefits per tax dollar. Libraries also were considered to yield a good return on invested capital. The return was calculated to be 72% for Baltimore County Public Library, 5% for Birmingham Public Library, 94% for King County Library System, 150% for Phoenix Public Library and 22% for St. Louis Public Library.
In addition to differences between libraries at a library system level, differences were found for different types of services. For children’s services St. Louis returned more than King County which invests a lower percentage of its ann ual taxpayer investment in youth services. Services or activities were not all of equal value -for example users considered staff assistance the most important, nearly 40 percent of total direct user benefits, then adult books (29 percent), children's books (13 percent), and electronic materials (12 percent).
Different types of users experienced different benefits. Teachers and business users were asked to identify willingness-to-pay and consumer surplus questions. Small businesses were found to highly value the library’s services.
Interestingly the study found that undertaking a cost benefit and contingent valuation analysis took a considerable investment of time and resources. It also did not explain in any detail the considerable differences between libraries.
Economic benefit of national union catalogues/record services
It is also possible to consider economic benefit from particular services provided by libraries. Two recent examples were completed in 2002 tackling the issue of determining the value of a national union catalogue and bibliographic services.
Canadian study: Summary
The Graduate School of Library and Information Studies, McGill University, undertook a study on behalf of the National Library of Canada (NLC) to determine the dollar value of savings incurred by Canadian university and large urban public libraries as a result of using Canadiana printed monograph cataloguing records (including federal government documents) generated by the NLC rather than cataloguing these items themselves.
The study was conducted between January and March 2002, using three methodological approaches: questionnaires were sent to 90 Canadian university and college libraries, and to 30 member libraries of the Council of Administrators of Large Urban Public Libraries (CALUPL); follow-up telephone interviews were held with 18 university and 12 public libraries; and a sample of 100 bibliographic records for Canadiana printed documents was selected by the NLC from its 1999 cataloguing production and then compared with records in a sample of 20 university and 10 public library OPACs to determine the extent to which NLC records form the basis for copy cataloguing by other libraries.
The record matching suggests that only 4% of the Canadiana documents catalogued by the NLC overall find their way into university and large public library catalogues. University libraries on average hold 7% of monograph titles and 11% of government document titles catalogued by NLC; the comparable figures for large public libraries are 2% in each case.
Questionnaire analysis (58% response rate) revealed that the saving per library through using NLC records as the basis for copy cataloguing rather than originally cataloguing items was $16,400 per annum for university libraries and $7,800 for large urban public libraries. An extrapolation to all university and large public libraries suggests an annual saving of $1,476,000 for all Canadian university libraries, and $249,000 for all Canadian large urban public libraries, a total of $1,725,000 as a result of NLC catalogue record use for copy cataloguing. The report explains in some detail the problems encountered in establishing these figures and the riders that must be attached to their interpretation.
New Zealand Study: summary
The National Library of New Zealand in early 2002 requested quotations for a study to research and measure the national economic benefit of the National Bibliographic Database and National Union Catalogue of the National Library of New Zealand. The study covered access, identification and supply functions of the databases. This study uses consumer surplus methodology rather than contingent valuation.
McDermott Miller Limited conducted the study and found a total economic value of the NBD/NUC of $NZD160.6 million based on an interpretation of economic impact analysis suitable for non monetary tradable goods and services. Stated choice methodology was used, based on comparing costs using scenarios with and without the NBD/NUC. The valuation also found a cost benefit ratio of the service as 35:1, comparing the value of the service to its costs. The benefit to the national economy was also considered in terms of the additional value which would be obtained if a wider group of students and researchers had direct access to the NBD/NUC.
Discussion
Return on Investment and Contingent valuation approaches offer a very specific approach to valuing libraries in economic terms. While the end result is numeric, the measurement of value of library services is in fact a very complex issue. The methodology used in the above studies focuses very much on the principle of libraries’ value in use by specific users. This can be considered critically as but a part of the whole value of libraries.
In essence the valuations are based on:
- calculating the actual dollar value perceived by users of the library for various library services including loans, reference and information access;
- calculating the actual total costs of the service;
- calculating the financial input of users including time spent in using and travelling to the library;
- assessing the total return (perceived value) against the actual costs.
Under the methodologies used for these studies the key factors for successful projects include:
- determining the user groups to which the library provides a service to establish the scope of value considerations and the participant groups for surveys and research;
- consideration of the perceived value indicators for research, taking into account the services provided by the library to its users;
- establishing the real direct and indirect costs of providing the library service;
- establishing the real direct and indirect costs for users of the service;
- developing survey instruments and conducting extensive surveys; and
- calculating the cost rate of return and other indicators.
Studies are therefore complex and require careful pl anning, management and analysis of data.
In summary the findings of the studies reported above are:
Total annual value |
Return on investment |
Direct value to users |
Value to wider society |
|
British Library study (2004)
|
£363m |
4.40 |
£59m |
£304 |
South Carolina (2005)
|
$347 million |
4.48 (~350%) |
$222 million |
|
Florida public libraries ROI study (2004)
|
$6 billion |
6.54 (average varies by purpose of use) |
$1.72 billion (user investment) |
$2.93 billion |
St. Louis Public Library study (1999)
|
2.50-5.00 per tax dollar spent |
$67 million. |
||
Canadian national union catalogue |
$1.725 million (value to libraries) |
|||
New Zealand Te Puna service |
$NZD160.6 |
35:1 |
To return to the questions posed in the introduction:
- What does the numerical value obtained through contingent valuation and return of investment studies of libraries actually mean?
- What is a successful return of investment for a community from their library?
- How can contingent valuation and return of investment be used to determine how future investment in libraries should be made to maximise the value to the community served by the library? and
- What further conceptual approaches or research could be undertaken to improve the measurement of the value of libraries using these methods?
Care needs to be taken in assessing the implications of these studies because there are, as yet, only a small number to compare. There have been variations in the actual data collected which also adds a complication to any comparative assessment. While comparisons are therefore limited, by reviewing the results so far collected, information relevant to future use of this methodology can be gathered, together with some general conclusions about the contingent value of libraries.
Numerical values –variability, meaning and “success”
The fundamental search for meaning in measurement is often focused on demonstrating that services provide benefits of significance, particularly in comparison to expenditure of services. To determine whether the return on investment represents a high or low value for a particular library provides a challenge with this methodology. At present the studies do not provide an answer to the following questions:
- What is the industry standard for ROI to which libraries should aspire? Is there variation by industry type (for example public versus national libraries)
- Are there other factors which should be taken into account in interpreting ROI results?
Environmental studies using contingent valuation have been used to determine damages claims and funding models. For libraries to utilise the findings of contingent valuation and return on investment studies analysis requires an understanding of how the numerical figures can be translated into meaningful information. As with other past library evaluation methodologies, determining whether the return demonstrates that a library is an effective and efficient provider of services, or whether the return is low because of decisions that organisations or funders have made about the role of a library or its services needs to be taken into account. The context therefore of the particular library is a factor which influences the outcome and demonstrating where a library should be targeting its return on investment would provide a basis to take the research into a practical outcome.
For library evaluation to effectively use the contingent evaluation methodology work should be established to benchmark value for individual libraries depending upon their sector, services and role. The comparison of previous studies indicates that an overall return on investment figure of between 3 and 6 is likely to result, however it is not clear whether this is dependent upon particular factors relating to community needs and values or related to the actual services of the library.
The evidence collected by each study shows significant variability in the key measures of return on investment and direct value to users for each library. The St. Louis study included five public libraries and the results of this study demonstrated variability in the indicators by individual library, type of user and library activities and services. This is particularly interesting as the libraries studied were all American public libraries with relatively similar situations in urban environments offering roughly similar services. The important question for consideration in terms of variation is can the variation be explained by differential value to communities? For example, are some communities more business oriented and this has greater potential for a higher value for commercial information. The British Library and St Louis studies in fact both found a high return for investment for business or commercial use of the library services, but the other studies did not collect data on this use to the same extent. Future studies could be set in the context of the scope of services and objectives of individual libraries in order to determine the basis for any variation. Statistical tests could then be used to determine whether the variation from the expected results was significant.
There appears to be a relationship between size of library and relative return on investment. The larger libraries appear to provide a higher return on investment. Later studies also appear to find a higher return on investment. Because of the small number of studies it is difficult to draw a firm conclusion in about the effect of size or type of library. Whether these results are significant will only become evident with further research.
The studies of national bibliographic services provide an interesting comparison with the library based studies. The return on investment was found to be remarkable high for New Zealand, and low for Canada, in comparison. The libraries surveyed indicated that they would not be able to operate effectively or within their current budget should the services not exist. This offers a different approach to return on investment- one in which the benefit of national bibliographic services can be seen in enabling libraries to provide the current range of their services rather than in terms of financial return on investment.
Overall the evidence collected so far does not provide sufficient information for an individual library to establish whether their result is a sign of success or suggests a need for improvements in services. It does however suggest that for the public library sector the band in which their result should sit is approximately 3-6.
Issues not considered in current value studies
One could argue that for libraries the value of the collection and services is not always seen in immediate use by patrons. The research collections, including historical collections in public libraries, are not created simply to develop use each year, but are a long term investment in building a cohesive resource based for current and future study. Applying a methodology which formulaically designates these unused collection items as an expense but not an asset means that this value of library collections and services is unrecognised. There also may be communities which do not use the library but have the potential to benefit in the future. Overall the concept of latent value, available for future returns lies outside this methodology.
To establish a more long term view of libraries’ services it would be possible to map contingent valuation to long term impact to establish comparative information. Libraries by sector would be likely to lie in different quadrants. For example national and state libraries would be likely to be higher on long term value and possibly less in terms of contingent value. Public libraries would be likely to be lower in long term value and possibly higher in terms of contingent value because of their delivery of immediate services and collections for immediate use.
In terms of determining longer term use the actual investment or costs of preparing research papers, reports and books is considerable and could be considered as a factor which could be used to understand the value of a library and its collections. If the whole national research output of a nation is available through libraries a multimillion dollar research cohort is accessible. This is not included within the framework of these methodologies and would significantly increase the actual dollar value of library services.
It may also be that perceived benefit would not turn out to be as high if the actual library services were taken away and users had to pay for information. The ILL/DD Benchmarking Study included a survey of patrons who indicated that they would be willing to pay around $2 for publications via ILL, a lower figure than that found in the above studies.
A new applications of ROI
In Australia perhaps the most interesting example of applying ROI to an organisation/program building social and education capital is the Allen Consulting Group’s report A Wealth of Knowledge: the return on investment from ARC-funded research . The report reviews funding of research in the higher education sector. The key finding of the report was that the social rate of return on ARC-funded research to Australia was conservatively estimated to be 39%. The report returns on investment in 2003-2018 was calculated as equivalent to $18 recouped and an additional $14 in real consumption generated. Value was achieved from ARC research through including: building the basic knowledge stock; generation of intellectual property; improving the skills base; improving access to international research and international networks; better informed policy making; and health environmental, social and cultural benefits. This study took a very different approach using the Monash University economic simulator to assess national economic figures such as GDP, rather than surveying users to determine perceived benefit.
An alternative method for measuring the value of libraries can be seen in measures of the knowledge economy. These provide, at a national level, comparative information on knowledge capital in the broadest sense. The indicators developed by OECD and other organisations such as the Australian Bureau of Statistics provide a different insight into the value of knowledge based services. These figures generally include:
- innovation and entrepreneurship indicators such as:
- Total R&D expenditure as a proportion of GDP
- Expenditure on basic research and applied research and experimental development
- Human capital indicators such as:
- Proportion of all persons aged 15-64 with a non-school qualification
- Highest non-school qualification of employed persons by occupation
- Knowledge workers as a proportion of employed personsisits to public library facilities, per capita
- Information and Communications Technology (ICT) Indicators such as
- Internet services: number of Internet service providers (ISPs), and access lines
- Internet workstations available in public libraries and proportion of individuals (adults aged 18 years or over) accessing the Internet via public libraries
- Proportion of households with access to a computer, by type of household, State or territory and broad regionack of skills as a constraint to household use of computers and the Internetesearch and experimental development (R&D) performed by the ICT industry
The Knowledge based economy indicators use number of libraries, visits to libraries and availability of the Internet in public libraries as key indicators. The methodology provides a different approach to considering the value of libraries in contribution to the national knowledge economy. While it does not easily transfer to a value statement for local libraries, it is an example of using indicators of business and research investment to consider the national information economy. If libraries support this economy supporting business and research and enabling access to information built from these sectors it might be possible to construct a value figure based on more that the perceived value of existing users.
Implications for the libraries
The studies listed above demonstrate consistent use of contingent valuation and return on investment for libraries in public and national library sectors. Each study took considerable resources, many person years, in order to establish a community/user based economic result.
Any consideration of undertaking a ROI or contingent valuation study should be considered after taking into account:
- the benefits that might be gained from such a study – either in terms of public or stakeholder perceptions of the return from the government’s investment in the Library;
- the costs that might be incurred in undertaking such a study, including management time and whether they might be the potential for a pro bono research contributor;
- the established methodologies which might be used and whether they would reveal clear benefit without raising any suggestion that the Library should charge the community for the services.
The next evolution of analysis may be able to use national economic figures such as that done for the ARC and for the knowledge based economy. There is clearly a need for further research and a macroeconomic theory for interpretation of the ROI studies.
Conclusion
Broadbent and Lofgren’s warning about the difficulty of achieving a precise economic value for library services has been mitigated to some degree through the recent studies using the contingent valuation methodology. The studies do provide valuable information as to the high value placed on library services in general by the public. The direct benefit to users is perceived to be many times that of the actual investment in the service.
There are many questions which have yet to be answered through using this methodology. At the most basic level it is not yet clear whether any particular numerical result represents the best return on investment for an individual library. The lack of comparative of studies means that the appropriate level return on investment than that which the taxpayer or investor should expect has yet to be established. There is a need for further research to identify the relative position in which libraries in the major sectors should expect to be found. More significantly there is a need to consider how a value identified for current use of a service should be balanced against future use, and to establish how these two analyses might be combined.
Contingent valuation does not provide a “magic bullet” by which to ensure any particular funding level or an increase in funding for a particular library service. This is a feature it has in common with other library valuation studies such as economic benefit in terms of labour saved, benchmarking and the balanced scorecard. Rather it demonstrates the community benefit of the library and provides data which can be shared with the public as part of responsible accountability for public services.
Determining the value of libraries will continue to be a key area of research, with contingent valuation providing insights which can be further built upon. How the new streams of research into national benefit and establishing a value in terms of social capital will effect further return of investment studies has yet to be fully explored. For contingent valuation to come to maturity for the library and information sector considerable progress will need to be made in creating a cohort of studies to set a series of appropriate measures for libraries in each sector. If these can be developed they have the potential to enable objective measurement of the match between funding and service models and targets for return on investment.
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