Measuring the Economic Impact of the British Library

August 2004, IFLA/CDNL

Lynne Brindley

Chief Executive, The British Library

The British Library holds unsurpassed collections and offers a great range of services based on them

The largest document supply service in the world

‘Helping people advance knowledge to

enrich lives’

£14.9m annual acquisitions budget

Accommodation for over 1200 readers at St Pancras

One of the five largest research libraries in the world

Serves researchers, business, libraries, education and the general public

Legal deposit worth £10m per year – and now e-legal deposit

250 years of collecting – across time, space, disciplines, languages, cultures, formats & materials

150 million items (books, serials, newspapers, microforms, philatelic, sound, manuscripts, graphic & electronic materials)

What do we know about the value of the British Library?

We have an incredible range of information resources and we know that they add value (culturally, socially, economically)

And we have very considerable staff expertise and we know that this adds value

But just how much value does the British Library add?

How do we go about demonstrating our value, and communicating that value in a meaningful way?

We wanted to obtain a composite measure to reflect the total value of the British Library to the UK economy

… TO OUTCOMES

How much value, in monetary terms, does the Library add to the nation as a whole?

What benefit does the Library bring relative to the funding it receives?

What would be the economic impact if the Library ceased to exist?

FROM OUTPUTS …

8,000,000 items supplied remotely & consulted in Reading Rooms

382,000 visits to our exhibitions

FROM ANECDOTES …

‘ Contemporary publishing depends upon the research and scholarship of the past. Bother publishers and authors relay on the British Library’s unrivalled collections …’

Our reasons for wanting to measure our value like this were four-fold

Accountability

Validation

To inform strategy

A mandateFor continued investment

To government and to the taxpayer

Confirm our own belief in the value the Library brings

To help us understand our impact more clearly

To inform our thinking about our products and services

So we undertook a quantitative assessment of the value generated by the Library to the UK economy

We commissioned work to provide an independent assessment of the value of the British Library to the UK economy

The study was undertaken jointly by Spectrum Strategy Consultants and Indepen Consulting. There was also substantial input from BL staff, led by our Head of Strategy and Planning, Caroline Pung.

The core of the work took place over the three month period, August to October 2003

There were two main valuation methods available – we used the consumer surplus approach

Consumer surplus approach measures economic impact through the value individuals directly gain above the price they pay

Macro-economic impact analysis measures economic impact through macro-economic variables such as expenditure, GDP contribution and employment

The macro-economic approach is not well suited to un-priced goods such as the BL where value is not adequately reflected in macro-economic impacts

Therefore, this study selected the consumer surplus approach

Consumer surplus represents the value under a demand curve above the price paid

The net benefits consumers enjoy from consuming a good/service

Captures the benefits created for non-users and future generations

Measured through either

revealed preference or

stated preference techniques

QuantityQ*

Consumer surplusSupply curve

Demand curve

Price

P*

P1

Q1

Involves the construction of a ‘hypothetical market’ within a questionnaire

Interviewees asked a range of questions and asked to provide a monetary estimate of the value of the Library to them

directly measures consumer surplus

captures use value, option value and existence value

Cross checked against values derived from investment in access and cost of alternatives

We primarily adopted a leading stated preference technique known as ‘Contingent Valuation’

Contingent valuation has been used for decades within the environmental and transport fields

Emerged in US when used to quantify damages in legal disputes over environmental damage

Major review in early 1990s by Nobel prize winners Arrow and Solow provided backing for the technique

Now commonly used

recommended by institutions such as the World Bank and OECD

has been used by UK Government departments in setting policy

1,000s of studies completed in academic literature

There is also a handful of studies using Contingent Valuation in the library and cultural fields

St Louis public libraries in the USANational Bibliographic Database & National Union Catalogue of National Library, NZThe Royal Theatre in Copenhagen

Between 2 and 10 times the costs3.5 times the cost

An amount equivalent to the costs

Application of Contingent Valuation methodology:

Valued at:

The aim of the project was to place a monetary value on the British Library

Objective was to derive total value of the Library – use value, option value and existence valueBut not all the Library’s services could be valued. We focused on

Reading room access to collectionsRemote document supply and bibliographic servicesPublic exhibitions and eventsIndirect value of existence and option to use the Library to wider society

We did not includeEmerging products and servicesProducts and services generating low valueOverseas users

No precedents for a National Library – partial values for New Zealand national library and some work on public libraries

We derived estimates of the value of the Library through five main types of question

Asking individuals how much they are willing to pay to continue to access the serviceDirectly measures the demand curve with a budget constraintAsking individuals how much they would accept in compensation to forego the serviceDirectly measures the demand curve without a budget constraintEstimate the time and cost invested in accessing the serviceServices must be worth at least that amount to themCosts incurred if forced to use alternatives. Likely to be an upper-end estimate as may alternatively forego use

Change in demand with a change in price

Willingness to pay

Willingness to accept

Investment in access

Cost of alternatives

Price elasticity

Examples of these different question types…

How much would you be willing to pay for the Library’s continued

existence?

How much would you be prepared to sell your readers pass for, assuming you could

not then replace it?

How much do you invest, in terms of time and

money, to make use of the Library?

How much would you have to pay to use

alternatives to the Library, if such alternatives could

be found?

How much would your usage change if the price

went up by 50%?

Willingness to pay

Willingness to accept

Investment in access

Price elasticity

Cost of alternatives

Spectrum designed questionnaires and NOP (a market research company) carried out most of the survey work for us

200 users of the reading roomsWeighted by academic, business and personal 29 users of the Colindale site(1)

100 users of the remote document supply service50 commercial and 50 non-commercial users

2,030 members of the general publicRandomly selected across GB, based on the population distribution

Reading room users

Remote documentSupply & bibliographicservice users

Indirect value to widerUK society

Note: (1) Completed by Spectrum

A benchmark study was undertaken for visitors to exhibitions

A less resource-intensive method of determining value was employed for exhibitions because it was anticipated that the value would not be nearly so great as the value for the other three areasA benchmark exercise was undertaken with major national museums whose visitor numbers increased markedly when entrance fees were abolished a few years agoThe value of the Library’s exhibitions was estimated to be the product of the average entry fee charged by the national museums and the (lower) visitor numbers expected if charges were imposed

A range of values was obtained for reading room and remote services

Approach

Reading Room users

Remote Document Supply and bibliographic service users

Public exhibition visitors

Indirect value to wider UK society

Willing-ness to

pay

Willing-ness to accept

Invest-ment in access

Price elasticity

Altern-atives

Survey

Survey

Benchmarks

Survey

1

1

1

1 2

2 3

3 4

4

5

Key: 1= highest value for each service

Key: 4 = lowest value for reading rooms; 5 = lowest value for remote supply

For remote users

For reading room users

For non-users

For public exhibition visitors

Only one value was obtained

The highest estimate (WTA) was considered to be the most realistic as this was very similar to internal estimates made by the Library to represent the annual cost of replicating the remote document supply services

One of the two middle values (WTA) was considered to be the most realistic estimate

Only one value was obtained

The value of the British Library was determined by aggregating the most realistic estimates from the four areas

In each case these values were scaled up to represent the total population

The value of the Library was determined by aggregating the four values

The study showed that the British Library generates value around 4.4 times the level of its public funding

Note (1) Net of BL revenues. (2) In 02/03 Library received £7m of donations/investments and £27m from its commercial services in addition to GIA

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

Excludes value generated for non-UK registered users which is considerable

£83m

£363m(1)

Total Public funding(2)

Benefitcost ratio4.4:1

Total value relative to Grant-in-Aid

Of the £363m of value generated by the Library each year:£59m comes directly from users of the services we tested£304m comes from wider society

In other words, a key part of the British Library’s value:Reflects ‘existence’ and ‘option to use’ value for wider UK society (all regions of the UK)Reflects a wide range of positive impacts that the Library generates for society and that society recognises

A significant part of the value is indirect value to the wider UK society

The Library has derived many benefits from this study

The study represents the first comprehensive evaluation of the benefits of the British Library to the UK economy

It reinforces the Library’s position as a sound investment for public money

By undertaking the study, the British Library has taken a clear lead in demonstrating public accountability

To the best of our knowledge, the study represents the first time that the Contingent Valuation methodology has been used to derive a figure for the overall value of a national or major research library

We have received a great deal of interest in this study and hope that our experiences encourage other libraries to think about new ways of quantifying their value

We are using this work in several ways

We are using the results

To inform our strategic thinking about where the Library should focus going forward

To communicate the Library’s role and contribution to stakeholders

To motivate all Library staff and remind ourselves of the importance of what we do

To prompt ourselves to focus on adding value (economic, cultural, social)

We expect to conduct further studies in future to build on this work, e.g. to enable us to develop an understanding of the value of emerging products and services

Key success factors for the study

1. Invest time to find the right expert help - and get them up to speed on your organisation quickly

2. Invest your own staff time into the study – can’t just outsource it to consultants

3. Identify the right areas of your organisation to focus on (services, audiences)

4. Test the questionnaires rigorously

5. Engage with key stakeholders from start to finish

6. Remember that economic value is one part of the picture – it supplements other ways of measuring performance and value but does not replace them

Contact information

Greencoat HouseFrancis StreetLondon SW1P 1DH

T +44 (0)20 7630 1400F +44 (0)20 7630 7011

www.spectrumstrategy.com

tabitha.elwes@spectrumstrategy.comlaurie.patten@spectrumstrategy.com

Spectrum Strategy Consultants

Diespeker Wharf38 Graham StreetLondon N1 8JX

T +44 (0)20 7324 1800F +44 (0)20 7704 0872 www.indepen.co.uk

phillipamarks@indepen.co.uk

Indepen Consulting Ltd

Caroline Pung, British Librarycaroline.pung@bl.uk