Placing a Value on Public Library Services|
Glen E. Holt, Donald Elliott, and Amonia Moore
THE ESTIMATED BENEFITS -- FIRST SURVEY RESULTS
The survey produced dramatic results. As reported to the PLA executive board on June 28, 1997, the consumer-surplus methodology produced an estimated value of $168,652,859 on SLPL's annual taxpayer investment of $15.3 million, and this figure was only for general users. In other words, benefits just for services used by general users were estimated to be more than $10 to $1 of taxes received. In making this report, Dr. Holt stressed the tentative nature of the conclusion, because so much work remained to be accomplished to finish the SLPL case study.9
Just as important from the standpoint of library practice was the source of the value in the initial consumer surplus measurements. Four library-service categories produced 94% of the total estimated value. These were:
In all of the later work accomplished in estimation of the values of library services in the SLPL study, these four categories have maintained their significance. The SLPL researchers are eager to test the CBA methodology in other library systems to see if the strength of these categories is sustained. Also, in the nearly two years since completion of the telephone survey, SLPL has nearly doubled the number of public computers at its locations, and circulation of electronic materials continues to escalate. It is important to find out in replicating this study how these changes affect the absolute and relative value estimates of the various service categories. The project's second benefits measurements - willingness to accept and willingness to pay - also produced intriguing results. As with the first measurement methodology, these are only for general users.
The specific survey question used to elicit a response on willingness to accept was as follows:
“The next question is hypothetical, but very important. Please take a moment to think about it before you respond: Suppose that in the next election the ballot contained a referendum on closing all public libraries. The referendum states that all public libraries in the region will close, and the budgetary savings will be used to lower taxes or provide annual cash payments to households. Under these circumstances, would you vote to close the libraries if the yearly tax savings or cash payments to your household were an amount ranging from ? to ?"
The pay-back ranges provided to respond to the question ran from a low of "between $1 to $100" to "over $2,500".
When the research team extrapolated the values from the question on willingness to accept, the cumulative population value was $109,700,000. Another way of reporting this finding is that when confronted with the closing option, cardholders responded that it would take a $7 payback for every $1 in current taxes to get those users to close libraries.
The problem with this conclusion is that it was produced by a very small percentage of total survey respondents. Only about 12% of those who completed the survey were willing to consider closing the St. Louis Public Library at any reasonable price. Fully 88% (283 persons out of 322 completing the survey) refused to answer the question. The project team had anticipated this refusal and had a follow up question in the survey for those who would not answer it. The question was, “Why would you vote ‘NO’ to closing public libraries regardless of tax savings or cash payments to your household?"
Here were the reasons survey respondents gave for refusing to close the library:
109 -- 39% said: Important/Needed/Priceless/Too Valuable.
29 -- 10% said: Community needed them.
25 -- 9% said: Children/Family needed them.
23 -- 8% said: Education/knowledge/literacy.
18 -- 6% said: Poor People/Those who can’t buy books needed them.
16 -- 5% said: Tax Savings Irrelevant.
16.-- 5%.said: Library and Materials Access should be free.
Other and still-smaller groups of respondents provided different answers, but the tenor of all objections was the same: Lots of users talked for many minutes, as survey takers filled pages of notes, with their comments about the value of libraries, and their belief that they should not be closed at any price. As stated previously, WTA responses appraise not only value of library services to the individual household, but also value to society (i.e., third-party and indirect benefits). Thus, the WTA estimate should have been higher than the consumer surplus estimate, which focuses only on the value of services used directly by the household itself. Readers will see how the researchers dealt with this issue in the next section of this paper.
Along with willingness to accept, the researchers also asked a question about willingness to pay. The question was posed in the following way:
“We have been discussing how the St. Louis Public Library benefits your household. Suppose, however, that no libraries had ever existed and taxes for libraries had never existed. How many dollars of taxes or fees would your household be willing to pay annually to create and maintain the St. Louis Public Library as it exists today? Please round your estimate to the nearest $100.”
The literature on cost-benefit analysis methodology suggests that willingness to pay should produce the most conservative results. The question is intended to make people ask, "If these services did not now exist, how much would I budget from my household expenses to purchase them?"
The population estimate of value derived from responses to this question was $15,170,000. Thus, the most conservative valuation methodology produced an estimate of $1 returned in willingness to pay for every $1 SLPL currently receives in tax revenues.10 Again, no secondary or indirect benefits are included in this 1:1 ratio of benefits to tax dollars.
The third estimation methodology, that for time valuation or opportunity cost, produced a valuation of $86,800,000 or over $5.50 in direct value for every $1 paid to the library in taxes. Again the methodology was conservative. One of the last questions on the survey asked respondents to furnish family income figures. The cost of each respondent's time and of an employed spouse's time, if the spouse used the library, was calculated based upon the income figures provided. The time of stay-at-home spouses and teens (12-17) was valued conservatively below minimum wage by using the midpoint of the lowest income bracket in the survey ($5,000 annually or $2.40/hr.). The time of younger children was valued at zero and not included in this estimate. To sum up this section, the three different CBA methodologies produced a wide range of values. Consumer surplus produced an estimated benefit of $10 for ever $1 of current taxes; willingness to accept produced $7 in benefits for $1 of taxes, willingness to pay produced $1 in benefits for every $1 of taxes, and cost of time produced a benefit of more than $5.50 in benefits for every $1 of taxes.