Embed Size (px)
Citation preview
1
An Economic Valuation Study of Public Libraries in Korea
Young Man Koa, Wonsik Shimb, Soon-Hee Pyoc, Ji Sang Changd, Hye Kyung Chunge
a Department of Library and Information Science, Sungkyunkwan University, Seoul, Korea b Department of Library and Information Science, Sungkyunkwan University, Seoul, Korea c Institute for Knowledge and Information Management, Sungkyunkwan University, Seoul, Korea d School of Economics and Trade, Kyungpook National University, Daegu, Korea e KDI School of Public Policy and Management, Korea Development Institute, Seoul, Korea
An economic value measurement model that enables the estimation of diverse types of public library
services has been designed using a contingent valuation method(CVM). To address the benefits, we have applied the value of the main services provided by public libraries such as accessibility to informational materials, facilities, and programs. To address the costs, we have applied the total amount of expenses at libraries such as personnel expenses, materials purchasing expenses, and other operational costs. Data has been collected from 1,220 users from 22 public libraries in Seoul/Gyeonggi-do and the other provinces. As a result, the Return On Investment (ROI) has been measured to be 3.66.
Introduction
The purpose of a public library is to accept the cultural, educational, and social demands
and requests of local society by providing information services to residents. The
administrators who operate the national and individual libraries should offer a variety of
services to achieve this goal, but they should first determine whether the goal has already
been achieved by using an appropriate operation assessment.
The assessment of public libraries is a critical process. The assessment helps
administrators judge whether the library’s goals have been achieved, and it also attempts to
improve and develop information services. In today’s environment, local governments should
actively accept the demands of its residents in this autonomous local governance era. Thus,
the assessment of libraries has become more and more important.
Address for the first author: Young Man Ko (E-mail: [email protected])
Address for correspondence: Wonsik Shim (E-mail: [email protected])
2
In the mid-2000s, Korea began to earnestly perform library assessments with the
establishment of the National Library Operation Evaluation Initiative that started in 2007.
However, these assessments are limited to service input factors such as informational
resources, budgets, manpower, the frequency of lending, and the number of users (Kim,
2010; Yoon, 2009). By performing an operational assessment, administrators can determine
the appropriate division and management of resources. However, a new type of assessment is
necessary to measure a library’s contribution to users and communities. The assessment of
users should be the final focus in the operation and services of libraries.
In the mid-1990s, researchers (Aabø, 2005; Holt, Elliott, & Moore, 1999) began to
study the benefits of public libraries, measure their value, and ask users for their opinions
regarding their performance. Our research results are expected to be recognized as tools for
measuring a public library’s social contribution level, which cannot be easily examined
through a simple operation-assessment. In addition, the results will offer evidence that can
establish a foundation for the expansion of policies and services.
Thus, the purpose of this study is to research the extent to which public library services
contribute to the lives of the users by measuring the economic value of public libraries in
Korea. The detailed purpose is to:
● Improve the awareness of the existential value and importance of public libraries,
which are one of the main public services;
● Establish a methodology to ensure usability by using and applying the method,
procedures, and results of measurement performed; and
● Ensure the efficient use of value measurement results.
Problem Statement
Economic valuations of public libraries are being carried out more frequently in recent
times. However, an attempt at measuring the value of an entire public library system at the
national level is rare. In this study, we investigated the economic value of services being
provided by public libraries in Korea, as experienced by real users of the libraries. The study
applied a combination of measurement techniques including the contingent valuation method
(CVM) in order to calculate the aggregate value of more than 600 public libraries in Korea.
Various measurement issues that would be useful for future studies of the value of library
services including sampling, applying CVM, and estimating the accrued value of services, to
3
name a few, were identified and negotiated during the research process.
Literature Review
Several methods can be used to measure library value; one example is the market
analogy method. With this method, the economic influence of libraries or the use types of
library users in local society is measured by calculating the opportunity cost of the time spent
at libraries by the users or by adopting the concept of the value and consumer surplus of
alternative services at libraries.
In 2001, a preliminary feasibility study on the "digital library program (DLP) of the
National Library of Korea" was performed by the Korea Development Institute, a
government-supported research institute (KDI, 2001; Kim, Jo and Ko, 2003). In the study, the
cost-benefit ratio was measured by calculating the opportunity cost of the time spent by users.
That was the first attempt to quantify the economic efficiency of libraries in Korea and after
that, there were 2 more feasibility studies done on new public library buildings for
budget allocation purposes by the Korea Development Institute (KDI, 2005; KDI, 2008).
These 2 studies measured the cost-benefit ratio using the Contingent Valuation
Method(CVM).
Generally, two types of methods are available to measure the user benefits of services
provided: the Revealed Preference (RP) and the Contingent Valuation (CV) methods. As the
RP method derives value estimates from comparable existing market behaviors, it is not
readily applicable to evaluate library services that have the characteristics of non-market or
public goods. In CVM (Contingent Valuation Method) or Stated Preference (SP) studies,
respondents are presented with fictional situations and asked to respond to those situations
with stated preferences or intentions that reflect the value/benefits of services being measured.
CVM has been used for decades to estimate the value of non-market goods and
services in a wide range of areas. Carson et al. (1994) lists more than 2,000 CVM studies.
Noonan in 2002 produced an annotated bibliography of 53 CVM studies involving the arts
and culture during the 30 year period between 1972 and 2002. Three library applications are
reported in the bibliography. In 1993, recognizing the importance of the technique,
particularly in the cases of judicial process or damage assessment, a panel of economic
experts set up by the U.S. National Oceanic and Atmospheric Administration (NOAA)
examined the technique and supported the reliability of the technique (Arrow et al., 1993).
4
The panel also provided guidelines for the appropriate use of the method which is still
influential in the design of CVM studies.
In CVM, two types of questions are used to elicit value: WTP (willingness to pay), the
maximum amount a person is willing to pay for a service or a good, and WTA (willingness to
accept), the maximum amount a person is willing to accept as compensation. While there has
been considerable controversy regarding the difference and appropriateness between the two,
it is generally agreed that WTP is a more conservative measure than WTA (Martin-Fernandez
et al., 2010). As a measure of economic valuation, both WTP and WTA represent relative
value, expressed in monetary terms, reflecting benefits library users experience in specific
situations rather than the real value of library services.
In this study, CVM is used to measure the value of use under the assumption that public
libraries are public services and non-market goods. Studies about the measurement of value
for the users of public libraries have been performed by the St. Louis Public Library, the State
Library of Florida, the British Library (BL), and many others. These libraries have measured
the users’ Willingness to Pay (WTP) or Willingness to Accept (WTA) under a fictional
scenario; this scenario typically claims that the library will be closing due to natural disasters
or budget issues and is used to measure the value of library services.
Diverse techniques for inducing value amounts have been used depending on the
circumstances or research conditions of each library. Harless and Allen (1999), McDermott
Miller Ltd. (2002), and Pyo (2006) used auxiliary tools such as payment cards in their studies.
The British Library and most public libraries in the United States examine the amount of the
WTP by asking open questions. Recently, Aabø (2005) used the split sample method with two
value elicitation question formats to minimize sampling and to correct for elicitation method
effects.
The St. Louis Public Library case study (Holt, Elliott, & Moore, 1999) uses three
different measurement methods including consumer surplus, the CVM, and time value. With
these methods, it measures the benefits that libraries provide to individuals. The study group
includes 332 regular users (mostly housewives), 75 teachers, and 25 entrepreneurs. For the
regular users, the WTA (which has two questions such as consumer surplus and the CVM),
the WTP, and time value re used. For the teachers and entrepreneurs, the measurement s only
based on the WTA.
At the St. Louis Public Library, the value for regular users reflects consumer surplus, the
WTA, the WTP, and time value per USD is $3, $9, $1, and $5.8, respectively. The WTA of
5
teachers and entrepreneurs, which are specific user groups, is $0.8 and $0.5, respectively.
Based on these results, the total value that can be created by the library ranged from $2 to $10
(Holt, Elliott, & Moore, 1999).
In 2000, the Baltimore County Public Library, the King County Library System, the
Birmingham Public Library, and the Phoenix Public Library applied the same method and
procedures for value measurement as the St. Louis Public Library used to measure benefits
for their users. At the Birmingham Public Library, the value ranges from $1.3 to $2.7 per $1
of library fees. The Phoenix Public Library results showed a value of $10 or greater per
$1(Holt & Elliott, 2000).
At the South Carolina State Library, diverse methods such as the WTP of the CVM,
time value, and consumer surplus are used to measure benefits to about 3,700 public library
users in all counties of South Carolina (Barron et al, 2005). The research results show that the
South Carolina State Library was evaluated to contribute to the state economy with $2.86 of
value per $1 investment. The indirect economic influence that was caused by the expenses
spent at the library (e.g., salaries, supply of goods, and materials) is $1.62.
These studies also measure the performance of lending services. When a user borrows
one book, one half of the average book price is set as the WTP of one lent book, and a quarter
of the market price is set as the WTP for non-book materials. In the study of reference
services, the average hourly wage was set for 30 minutes, which is the average duration of
the users’ reference services.
In a subsequent study, a total of 17 public libraries in Florida analyzed the benefits to
adult users who are 18 years of age or older; it also considered the economic impact on these
users. Just as in public libraries in South Carolina, this study categorized the main purpose of
users into specific categories including personal purpose, educational purpose, and
occupational purpose; it also measured the benefits for each purpose. As a result of the
analysis, approximately $6.4 of the total value per $1 of the budget has been created
(Griffiths, King, & Aemi, 2006).
To measure the value of the Andrew Carnegie Free Library, its economic influence and
its benefits for its users (which are measured with time value) were simultaneously analyzed
using the same methods as the State University of Florida and the South Carolina State
Library. To measure users’ benefits, the study measured the time that 1,300 users have spent
at the library. The value of the time used by each individual is calculated by applying the
intermediate value of male and female wages in the area.
6
The total value of the Andrew Carnegie Free Library was $3 per $1 of library expenses,
which varies according to the possibility of changes in time value offered by the users of the
library (Carnegie Library of Pittsburgh, 2006). The library creates $6.14 per $1 of budget
provided by the city government. In addition, the Andrew Carnegie Free Library measured
the value of the lending service, which is one of the main library services, as well as the total
value of the libraries in the consumer surplus method. The study also presents the results.
Studies of value measurement in the United States have been performed using diverse
measurement ranges, institutions, and methods as well as research methods for value
measurement. The British Library (BL) of the United Kingdom has measured a variety of
benefits including use value and non-use value that is received by individuals from the BL,
rather than the macro-economic influence caused by employment or consumption. This is the
first time such as measurement has been used among national libraries.
The use value is measured for the users of reading room services (which is a main
service of the BL), literature delivery services, and exhibitions/events services, while the non-
use value is measured for the entire British public. The use value of each service is measured
using different methods. The WTA and WTP of users are used as the main measurement
indicators for use value.
In this study, researchers have extracted 200 user owned cards for reading rooms. Then,
they have selected a sample and have conducted a survey via phone interviews. One-on-one
interviews have also been performed on 30 reading room users. Regarding non-users, 2,030
British people were surveyed by a professional research firm. Diverse data collection
methods were used, depending on the service. The value of the BL was calculated by
applying a variety of measurement methods and the results showed the value to be $4.4 per
$1 of budget for one year (Pung, Clarke, & Pattern, 2004) .
The study by the BL is the first research done about a national library. The measurement
methods were the CVM and time value, etc. The amount of the value finally selected is the
value measured based on the WTP. However, the study has been recognized to be reliable
since it offers analysis for each estimated value and attempts to reduce errors that may be
implicit in each value.
This study of economic value measurement, which has been performed by the BL,
shows the process of analysis and assessment regarding measurement results as well as the
measurement methods and process applied to diverse services. The process has since played a
role as one of the basic guidelines on the value measurement of British public libraries. In a
7
subsequent project, the value measurement of museums, archives, and libraries in Bolton was
performed by the Bolton Metropolitan Borough Council and MLA North West (2005). In this
project, the methodology used by the BL was applied to each local government. The final
value of public libraries in Bolton was measured based on the WTP of users and non-users.
The ROI ranged from 1.2 to 1.7.
Reflecting the growing body of library valuation studies, a number of reviews (Imholz &
Arns, 2007; Kim 2011; Missingham, 2005) and meta-analyses (Aabø, 2009; Chung, Ko,
Shim & Pyo, 2009) have been published.
Missingham (2005) provides summaries of four major CVM studies between 1999 and
2005 in terms of methodology and major findings. Also included in the review are two
national bibliographic services in Canada and New Zealand. Prepared for Americans for
Libraries Council (ALC), Imholz and Arns’ report summarizes 17 library valuation and
impact studies since 1998. It also provides discussions on the current and future library
valuation efforts. The most recent review by Kim is a critical evaluation of 15 library
valuation studies. He provides two contrasting frameworks—the evaluation and marketing
frameworks—under which these valuation studies were carried out. While researchers who
conducted the valuation studies may not have been aware of these frameworks, the
distinction together with contrasting purposes, intentions, objectives, and methodologies
seems to aid our understanding of valuation efforts of varying types.
Aabø (2009) and Chung et al. (2009) both conducted a meta-analysis of more than several
dozen library ROI studies. Aabø categorizes and summarizes 38 library valuation studies with
explicit ROI results. According to his summary, valuation studies involving public libraries
are dominant; there are only a handful of national-scale studies. Some of the statistical
analyses are suggestive but not conclusive. For example, his analyis shows that ROI tends to
increase with increased benefit types (both direct and indirect benefits as opposed to either
one). However, the explanatory power (R squared) seems too low. Chung et al. took another
attempt at the meta-analysis. Their analysis contains 42 library valuation studies. Using
multiple regression models, they wanted to see whether library types (public vs. university vs.
professional), measurement methods, benefit types, per capita GDP, or different combinations
of these factors effect ROI figures. The results show that ROI scores can be statistically
explained by per capita GDP (adjusted R2=0.336, statistically significant at 1 percent).
Contrary to Aabø’s finding that ROIs from studies using secondary economic impact are
higher than ROIs derived from CVM studies, Chung et al.’s study found no correlation
8
between ROI figures and the employed measurement method. With more libraries valuation
studies being accumulated, we will be able to discern clearer patterns in ROI results and their
contributing factors.
Methods
Model Design
In this study, the Contingent Valuation Method (CVM), which is one of the main value
measurement methods based on the statements of users, is used to measure the value of
libraries, which denotes the value obtained by users from the direct use of libraries. Since
value is completely measured based on the statements of users in the CVM, data is collected
by surveys for users.
Survey
A survey has been entrusted to Hankook Research1, a professional research firm with
considerable experience. A preliminary survey is performed before the main survey is
administered. The purposes of the preliminary survey are two-fold: to have an idea of the
range of value amounts in the main questionnaire to be presented to respondents and to learn
about practical issues of doing this kind of data collection with library users. A total of 106
users from two purposely selected libraries were interviewed for data collection. The users
were interviewed during weekdays and weekends in order to better represent user population
at the libraries. Also, we alternated between two types of questionnaires, one with open-
ended and the other with closed-ended questions, to see if there is a difference between
question types as to the monetary value users assign to library services. Overall we obtained
more results from open-ended questions. Mean values and standard deviations from the
preliminary survey were then used in determining the monetary values and their intervals to
be presented in the closed-end type questions in the main survey.
1 � http://www.hrc.co.kr
9
The main survey was carried out for two weeks in October 2009. Like the preliminary
survey, a one-on-one survey was performed for weekday users and weekend users at a ratio
of 1:1. To determine their value, we have asked questions about the WTP taxes for each
service including informational materials, facilities, and programs . The survey objects have
been limited to adults who are 18 years of age or older and who are able to make money;
their ability to earn money is important because taxes would be paid. In addition, in an effort
to reduce any inconvenience that may occur by asking unfamiliar questions about the
economic value of public libraries, only users who have used public libraries for the previous
year are able to respond.
(1) Payment Method and Question Types
In this study, we have used tax as a payment method to induce the potential value of
public libraries to their users. Alternatively, we could have asked the maximum amount of
usage fee users are willing to pay to measure the value of services. However, we were
concerned that the mere mention of a usage fee, even in a hypothetical situation in the study,
would bring resentment from users and interfere with data collection. Tax as a payment
method in our study is less confrontational to survey respondents and is closer to reality.
After all, public libraries in Korea are paid for by taxes. Taxes have been used in the well-
publicized studies of the value measurement of overseas public libraries (Aabø, 2005; Holt,
Elliott, & Moore, 1999).
Ideally, an open-ended question is used to ask how much money the user is willing to
pay for a given service. However, we chose to use a closed-end question type due to the fact
that respondents have a hard time answering the open-ended question. This issue was raised
during the preliminary survey. The closed-end question may introduce bias as a certain set
amount has to be presented. For this reason, we carried out a preliminary survey to have an
idea of the range of response amounts in order to minimize bias.
To enable us to ask questions about the amount of WTP, the question type that we have
used is the double-bounded dichotomous choice (DBDC) question type. In double-bounded
dichotomous choice questions, a respondent is asked to vote for or against a series of
differing amounts, thus easing the decision making process. Figure 1 illustrates a double-
bounded dichotomous choice question.
10
Figure 1 goes here
A payment card is often used in CVM studies in order to aid survey respondents to
reliably state the value of non-market goods or services. Typically, payment cards contain
price lists of comparable services or goods that help remind the respondents about the value
of items being measured. Of course the use of a payment card and its content may bring in
another element of bias. In our study, information on per capita library investment in four
countries (U.S., Japan, Australia, and Korea) was presented. To reduce potential bias, we also
provided per capita GDP figures next to per capita library investment. The payment card
information may as well have been used by survey respondents as anchors when formulating
their responses. However, our primary concern was to obtain reliable data in spite of
introducing potential bias to the data.
(2) Fictional Situation
In this study, we have presented the following fictional scenario: Public libraries are
facing a crisis and services must be stopped due to economic difficulties caused by natural
disasters. Thus, the respondents must pay taxes for a limited period of time to ensure proper
services. To simplify matters, we have selected tax as the payment method since it is easily
understood and is convincing.
In addition, a situation of possible services stoppage is presented. This situation ensures
that libraries are maintained in their physical spaces and are not closed due to natural
disasters. This prevents the essence of this survey from deviating if the respondents try to add
the amount of establishing libraries to the WTP.
Formation of Questionnaires for the Survey
Questions regarding the WTP, which plays the most important role in the formation of a
questionnaire, were conceived based on the results of the preliminary survey. Results from
the preliminary survey show that the average amount of the WTP for the use of materials is
KRW 5,216 (78 respondents), that the WTP for the use of spaces is KRW 6,883 (73
respondents), and that the WTP for the use of programs is KRW 3,796 (23 respondents).
11
We could use the above results to set the baseline amount to be used in the double-
bounded dichotomous choice (DBDC) questions. However, this would limit the range of
value amounts. For example, if we set the baseline value for the materials use WTP at 5,000,
the results would be among the four values: 0, 2500, 5000, and 10000. For the WTP amount
to vary in a wide band, we decided to have five different baseline values in the DBDC
questions. Following the suggestion made in Boyle, Poe, & Bergstrom (1988 1994), we
introduced four additional baseline values: two in the upper bands and two in the lower bands.
An interval of KRW 2,000 was used when we notched up or down the baseline values.
As a result, in the case of the WTP questions for materials use, we have baseline values
KRW 1000, 3000, 5000, 7000 and 9000. For the WTP questions for the use of space, the
baseline values were set at KRW 3000, 5000, 7000, 9000, and 11000. For the use of programs
WTP questions, the values were KRW 1000, 3000, 5000, 7000, and 9000. Therefore, we have
five different types of survey questionnaires, the first one having KRW 1000 for materials use
as a baseline value, KRW 3000 for space use and KRW 1000 for program use. A double
negative response to a WTP question would always result in the response as having zero
value regardless of baseline values.
While the use of 5 different survey questionnaires certainly makes the administration of
the survey more complex, it allows the responses to vary in a much wider range and reduces
the bias of the single baseline value. On the other hand, due to the bounded nature of WTP
questions, it is not possible for a user to state a higher value amount than is presented (KRW
9,000 for the use of materials and of programs, KRW 11,000 for the use of space). In a way,
the WTP result obtained from the study is considered as a more conservative figure than that
from a study with open-ended WTP questions.
For each library participating in the study, all five types of questionnaires were used
evenly. In total, 60 questionnaires (12 questionnaires of the same type for 5 different types)
have been distributed to each library. The assignment of the questionnaires during the survey
was random to minimize bias.
Besides the WTP, the questionnaires consist of a total of 26 questions. They are spread
among five sections including the use types of public libraries, the satisfaction level with
public libraries, the perception level of public libraries, questions about value, and user
characteristics. Since the value of the three services that are provided by public libraries is
created on the premise of using the services, people who have responded to questions about
12
library services must have used the services (e.g., informational materials, facilities, and
programs) and answered questions regarding the value of the services.
To select sample libraries, a multi-stage cluster sampling method has been used. About
600 Korean public libraries have been categorized into those in Seoul/Gyeonggi-do and those
in the other provinces first; then the same number (11) of sample libraries has been selected
from each category. We have implemented this process because the population of Seoul,
Gyeonggi-do, and Incheon-si account for 49.2% of the population of Korea; the other
provinces account for 50.8% of the population as a result of the survey (Source: Statistics
Korea (KOSTAT); 2008). In selecting individual libraries from two geographic divisions, we
used the following steps. First, to minimize selection bias, we used random numbers to select
libraries in each group. Several iterations of random number assignment were performed to
make sure that the service population represented by the sample in the two divisions is about
the same. Second, we substituted several libraries to better represent libraries of different
sizes (small, medium and large based on service population). Third, we contacted libraries to
inquire about their participation and gathered information about the characteristics of user
population and usage patterns.
The characteristics of libraries and survey objects are summarized in Table 1.
Table 1 goes here
The fact sheet on each library and user profiles have been created by contacting
personnel in each library and researching the statistical data of the libraries and Internet data.
Then, these materials have been delivered to the interviewers at the research firm. This
process ensures that there is more systematic and proper data collection by providing a
basic understanding to interviewers regarding the location, usage patterns, and user
characteristics of each library, in particular, to minimize sampling bias. The nation’s library
user demographics were not available and thus the comparison of our respondent
demographics and the national demographics could not be done. However, as we stated
above, efforts have been made to conform respondent demographics to typical use patterns at
the sample libraries.
Results
13
Analysis of Respondent Characteristics and Use Trends
On average, 60 questionnaires have been distributed to each of the 22 public libraries,
and 1,220 questionnaires in total have been collected and analyzed. Nearly the same response
distribution was received from Seoul/Gyeonggi-do (49.6%) and the other provinces (50.4%),
weekdays (49.4%) and weekends (50.6%), and males (46.9%) and females (53.4%). On
weekdays, females, specifically housewives, have primarily responded to the questionnaires
(33.8%).
With regard to the response distribution by educational background, university
graduates have accounted for the highest percentage at about 58%. Next, high school
graduates have accounted for 31%, and graduate school graduates have accounted for 9%.
With regard to the response distribution by occupation, housewives have accounted for the
highest percentage at about 28% of the responses. Perhaps the reason for this is that many
housewives have responded to the questionnaires on weekdays.
The response distribution by monthly average income denotes the monthly average
income per household including the respondent. The income of nearly half of the respondents
ranged from KRW 2 million to KRW 3.99 million. The average duration of using libraries
(per each visit) by occupation was as follows: University students and students who are
preparing to go to a higher-level educational institution or to get a job use libraries for four
hours on average. Housewives use libraries for one to two hours on average.
Finally, the value estimated is expressed as input and output indicators called the Return
on Investment (ROI). The ROI is a comparison of the money earned on investment versus the
amount invested. In this study, the totality of WTP values obtained by users of public libraries
is construed as the total return and the operating budgets (cost) of libraries as the money
invested. We used the simple ratio between the total benefits and the total cost. Typically it is
expressed in the following form, “the library generates x amount of value for every dollar it
spends.”
Budgets for Libraries
In this study, the total budget amount for individual libraries in 2008 was reported in the
Korean Library Yearbook 2009, and it has been deemed to be an input cost so that we may
express the value of public libraries as the ROI. The total budget amount includes personnel
14
expenses, materials expenses, and operational costs for public libraries. The input cost does
not include costs for the establishment of public libraries (which would be the initial
investment money for facilities at public libraries), fixed assets (such as costs for purchasing
land), and other income (including copying expenses, library use fees, and services fees);
these have not been included in the costs of the operation of libraries.
If these fixed assets are included in the input cost, it would have been more appropriate
to create a fictional situation where the library facilities are destroyed due to natural
disasters such as typhoons and earthquakes. In addition, the total amount of the operational
budget for the libraries and survey objects that are collected under these criteria are shown in
Table 2.
Table 2 goes here
Status of Using Libraries
For ease of analyzing the ROI, we have deemed the number of users registered at the
survey object libraries to be the status of the library users. In this study, the status of public
library users is the total cumulative number of users registered on December 31, 2008 in the
National Library Statistics System. Benefits are estimated by multiplying the number of
registered users by the WTP per capita in an average as shown in Table 3.
Table 3 goes here
WTP Responses
Table 4 summarizes WTP bids by respondents. Overall, average WTP amounts
converge around KRW 3,000, with the WTP figure for the use of library materials caming out
highest. Since the WTP question was directed only when the user had used a service, the
number of actual responses are lower than the total number of people interviewed. In
particular, the number of WTP responses for the use of programs is the lowest at 159 and this
may reflect low utilization (participation) of corresponding programs.
Table 4 goes here
15
The results include responses where users responded “No” as well as “No” in the
double-bounded dichotomous choice questions. Such responses were coded as 0 in the
calculation. Double negative responses accounted for around 40% of all responses.
Overall, WTP bids of males were higher than those from females (Table 5).
Table 5 goes here
Educational background seemed to affect WTP responses. Table 6 shows WTP
responses according to respondents’ educational level. University graduates and people who
have graduate school education gave higher WTP bids than people with less than high school
education. Household income also seems to correlate positively with WTP responses. That is,
the higher the household income is, the higher the WTP bid.
Table 6 goes here
ROI Analysis
The ROI analysis is categorized into the integration of 22 public libraries, research
objects, each area (Seoul/Gyeonggi-do and other provinces), and each size (small, medium,
and large). Procedures for the analysis of ROI are shown in Figure 2.
Figure 2 goes here
(1) ROI of Public Libraries in Korea
The total number of users registered at 22 libraries is 862,591, and the total operational
budget is KRW 26,272,000,000. The WTP per capita is KRW 9,296.78. This amount totals
the WTP amounts for three services such as the use of informational materials, the spaces,
and the programs. When the amount is calculated based on 12 months, the WTP per capita for
a year is KRW 111,561. (Refer to Table 7.)
16
Table 7 goes here
The ROI is calculated by multiplying the total number of registered users by the WTP
per capita for a year and dividing the resulting value by the total cost. The calculated ROI is
3.66. (Refer to Table 8.)
Table 8 goes here
(2) ROI of Libraries by Area
The target libraries are categorized into areas. The ROI of 11 libraries in
Seoul/Gyeonggi-do and those 11 libraries in the other provinces are estimated using the same
steps as shown in Figure 1. The ROI of libraries in Seoul/Gyeonggi-do is 5.42; however, the
ROI of libraries in the other provinces is 2.48, which is lower than the former by 200%. This
result shows that there is a difference in the economic value of public libraries depending on
areas.
However, the ROI of the other provinces is 2.48 and exceeds 1, which is the input cost
for libraries. As shown in the results, the WTP for public libraries in Bolton was 1.2 and the
WTP in the State Library of New South Wales is 1.36, but the ROI was never a low ROI.
(Refer to Table 9.)
Table 9 goes here
(3) ROI by Library Size
The results of estimating the ROI by library size is shown in Table 10. The ROI of large
libraries is 3.58; the ROI of medium-sized libraries is 4.06; the ROI of small libraries is 3.90.
The ROI of medium-sized libraries is the highest. However, our analysis shows that there is
no big difference in the ROI values due to the difference in library size.
Table 10 goes here
17
As a result of measuring the total value of public libraries in Korea in the CVM, the
final ROI is estimated as “3.66” in this study. This result is comparable to the mean value
(4.11) of over 40 library valuation studies all over the world which have been performed as
reported in a recent meta-analysis study (Chung, Ko, Shim, & Pyo, 2009).
It is difficult to compare the final value ratios estimated in this study to one another
because different measurement methods and objects have been used. However, we have
extracted and compared similar studies in terms of methodology, services measurement range,
and benefit range in Table 11. The low ROI figure in the New South Wales Libraries study
may be explained by the fact that a single, integrative WTP value for the entire library service
in that study was measured whereas separate WTP values for different services were sought
in the other studies.
Table 11 goes here
Discussion
In this study, the contingent valuation technique was used to measure the value of public
library services in Korea. As a methodology, it appears to be a reliable and effective means
with which to derive economic value of public services such as library services. Many past
studies and applications in this area informed us to design and implement the data collection
process. However the choice of samples, scope of measurement, elicitation formats used
to gather WTP responses, and questioning methods were determined with specific
requirements of the current study and may not be applicable to future studies of the economic
valuation of libraries.
In our study, we chose 22 libraries from over 600 public libraries in the country. The
sample reflects a variety of operating environments and different geographic regions.
However, a relatively small sample size is a threat to the validity of the result. Sampling of
individual users was more challenging as we did not have a good picture of the national
demographics of public library users. We relied on secondary sources (information from
librarians at the sample libraries) to strategize data collection timing and selection of users in
our efforts to minimize sampling bias.
18
Due to the concern that users might have difficulty answering open-ended WTP
questions, we used one form of closed-end questions: the double-bounded dichotomous
choice question. While the implementation of DBDC might have deprived some respondents
to place high values for the service they received, it can be defended as a conservative
approach.
Some of our choices might have inflated the WTP responses. Instead of asking the
respondents to give the overall WTP amount for the totality of library services, we sought
WTP for three major library services: the use of informational materials, the use of library
space, and the use of library programs. It is true that libraries provide services beyond those
three areas. However, obtaining WTP responses separately instead of as a single bid has a
good chance of inflating the result. Another factor that may have contributed to the WTP
result is the fact that we asked the monthly WTP amount as opposed to an annual obligation
in the form of tax payment.
At the current state of research on library evaluations, there are not enough evidence
bases to guide researchers to make confident choices in research design. There is a need for
more rigorous research to shed light on the differences that the choices of available
measurement techniques introduce. The outcome of economic valuation of library services
should be considered as one of many forms of library performance and value. As such, there
needs to be more discussion on how we can leverage results from these studies and
communicate them with our stakeholders.
Conclusions
This was the first research conducted on the economic value measurement of all public
libraries in Korea. The resulting ROI figure of 3.66 is quite comparable to results from
similar studies conducted in other developed countries. There are a number of measurement
decisions that could significantly affect the outcome of such studies. The choices we made
and the rationale behind them in terms of sampling, constructing questionnaires to collect
WTP data from users, and estimating aggregate value amounts would be useful for future
studies that deal with a large number of libraries.
The study focuses on the economic value measurement of public libraries on a national
level, and its purpose is not to examine the performance of a specific library. This study is
differentiated from preliminary validity research because the purpose of the former is to
19
estimate the economic value of public libraries that have already been established and are
operating.
Basic data for the establishment of national policies needs to be accumulated by
measuring the economic value measurement of public libraries in Korea continuously and
systematically based on the methodology and results of this study. In addition, subsequent
studies should continue to be performed under long-term plans. A good example is the St.
Louis Public Library, which has performed a long-term, systematic study for the value of
library services using a four-step research process that continued for more than 10 years.
Statistics on the use of public libraries are the most likely to affect the level of ROI. In
this study, the number of registered users entered in the national statistical system was
applied. Due to the incompleteness and invalidity of the data, however, direct data collection
from the target libraries was performed as well. Thus, thorough and continued management is
required to maintain the accuracy of statistics on public libraries including statistics on the
use of public libraries. Furthermore, strategic endeavors that help precise subsequent studies
by sub-categorizing statistical categories are needed.
Acknowledgement
The research was supported by the Research Fund of the Korean Ministry of Culture, Sports, and Tourism, 2009.
20
References
Aabø, S. , & Strand, J. (2004). Public Library Valuation, nonuse values, and altruistic motivations. Library & Information Science Research, 26, 351-372.
Aabø, S. (2005). Are Public Libraries Worth Their Price? New Library World, 106 (11/12), 487-495.
Aabø, S. (2009). Libraries and return on investment (ROI): A meta-analysis. New Library World, 110 (7/8), 311-324.
Arrow, K., Solow, R., Portney, P., Leamer, E., Radner, R., & Schuman H. (1993). Report of the National Oceanic and Atmospheric Administration Panel on Contingent Valuation. Federal Register, 58(10), 4016-4614.
Barron, D. D., Williams, R. V., Bajjaly, S., Arns, J., & Wilson, S. (2005). The Economic impact of public libraries on South Carolina. http://www.libsci.sc.edu/SCEIS/final%20report%2026%20january.pdf
Bolton Metropolitan Borough council and MLA North West. (2005). Bolton’s Museum, Library and Archive Services: An Economic Evaluation. Metropolitan Borough Council. Bolton.
Boyle, K. J., Poe, G. L., & Bergstrom, J. C. (1994). What Do We Know About Groundwater Values? Preliminary Indications from a Meta Analysis of Contingent-Valuation Studies. American Journal of Agricultural Economics, 76(5), 1055- 1061.
Carnegie Library of Pittsburgh. (2006). Carnegie Library of Pittsburgh Community Impact and Benefits. http://www.clpgh.org/about/economicimpact/
Carson, R. T., Wright, J. Carson, N., Alberini, A., & Flores, N. (1994). A Bibliography of Contingent Valuation Studies and Papers. La Jolla, CA: Natural Resource Damage Assessment.
Chambers, C.M., Chambers, P.E., & Whitehead, J.C. (1998), Contingent Valuation of Quasi-public Goods: Validity, Reliability, and Application to Valuing a Historic Site. Public Finance Review, 26(2), 137-154.
Chung, H. -K, Ko, Y. -M., Shim, W., & Pyo, S. -H.(2009). An Exploratory Meta Analysis of Library Economic Valuation Studies. Journal of the Korean Society for Library and Information Science, 43(4), 117-137.
Griffiths, J.-M., King, D., & Aemi, S. (2006), Taxpayer return on investment in Florida Public libraries. http://actforlibraries.org/old%20site/researchstates.php
Harless, D. W., & Allen, F. R. (1999). Using the Contingent Valuation Method to Measure Patron Benefits of Reference Desk Service in an Academic Library. College & Research Libraries, 60(1), 56-69.
Holt, G. E., Elliott, D., & Moore, A. (1999). Placing a Value on Public Library Services. Public Libraries, 38(2), 98-108. Retrieved from http://www.slpl.lib.mo.us/libsrc/restoc.htm
Holt, G. & Elliott, D. (2001). Public Library Benefits Valuation Study. Final report to the Institute of Museum and Library Services for National Leadership. St. Louis, MO: St. Louis Public Library. Retrieved from http://www.slpl.lib.mo.us/libsrc/valuation.htm
21
Imholz, S., & Arns, J.W. (2007). Worth their Weight: An Assessment of the Evolving Field of Library Valuation. Americans for Libraries Council. New York : NY.
Kim, D.-S., Jo, D.-H., & Ko, Y. M. 2003. “Economic Efficiency of Digital Library : A Case Study on the Digital Library Program of the National Library.” Journal of the Korean Society for Information Management, 20(4): 159-193.
Kim, G. (2011). A critical review of valuation studies to identify frameworks in library services. Library & Information Science Research, 33, 112-119.
Kim, S. -H. (2010). Current Status of Library Evaluation and Future Directions. National Assembly Library Review, 381(Nov.), 2-7.
Korea Development Institute (2001). The feasibility study on the undertaking digital library of the National Digital Library of Korea. Seoul: KDI.
Korea Development Institute (2005). The feasibility study on the library of Constitutional Court of Korea. Seoul: KDI.
Korea Development Institute (2008). The feasibility study on the building a new National Library in Sejong Multifunctional Administrative City . Seoul: KDI.
McDermott Miller Ltd. (2002). Economic Valuation: National Bibliographic Database and National Union Catalogue. Retrieved from http://www.natlib.govt.nz/catalogues/library-documents/economic-valuation-nbd-nuc
Martin-Fernandez, J., et al. (2010). Differences between willingness to pay and willingness to accept for visits by a family physician: A contingent valuation study. BMC Public Health, 10, 236. http://www.biomedcentral.com/1471-2458/10/236
Missingham, R. (2005). Libraries and economic values: A review of recent studies. Performance Measurement and Metrics, 6(3), 142−158.
Noonan, D. S. (2002). Contingent Valuation Studies in the Arts and Culture: An Annotated Bibliography. Working Paper Series 0304. Harris School of Public Policy Studies, University of Chicago. http://ideas.repec.org/p/har/wpaper/0304.html
Pung, C., Clarke, A., & Pattern, L. (2004). Measuring the Economic Impact of the British Library. New Review of Academic Librarianship, 10(1), 79-102.
Pyo, S. –H. (2006). A Study on the Measuring of the Economic Value of a Public Library. Journal of the Korean Society for Library and Information Science, 40(2), 243-261.
Yoon, H. (2009). Trends and Directions of Management Evaluation of the Public Libraries in Korea. Journal of the Korean Society for Library and Information Science, 43(2), 29-51.
22
Figures
Figure 1. An illustration of a double-bounded dichotomous choice question
Figure 2. Procedures for ROI Estimation
[ Total User Number of 22 Public Libraries X Annual WTP per Capita ]
Operational Costs for 22 Public Libraries
[WTP of Informational Materials, Facilities, and Programs] X 12
Total Number of 22 Public Libraries X Annual WTP per Capita
Total Operational Costs for 22 Libraries
Total Value Divided by Total Costs
Estimation of Total Value
Estimation of Total Costs
Estimation of the ROI
:
:
23
Tables
Table 1. Distribution Depending on the Characteristics of Libraries and Survey Objects
Operation Size
Large Medium Small
Seoul and Gyeonggi-do
(11)
Local Governments (Central) 3 - 1
Local Governments (Branches) 2 2
(One Small Library Included) -
Office of Education 2 - -
Private - - 1
The Other Provinces
(11)
Local Governments (Central) 2 1 1
Local Governments (Branches) 1 1 1
Office of Education 2 1 1
Table 2. Total Budget for the Operation of Libraries, Value Measurement Objects in 2008 (Unit: KRW)
Sequence Area Size Total Amount 1 Seoul/Gyeonggi-do Large 990,832,000 2 Seoul/Gyeonggi-do Small 736,333,000 3 Seoul/Gyeonggi-do Medium 229,420,028 4 Seoul/Gyeonggi-do Large 1,126,784,000 5 Seoul/Gyeonggi-do Large 406,813,000 6 Seoul/Gyeonggi-do Large 2,554,803,000 7 Seoul/Gyeonggi-do Medium 625,762,000 8 Seoul/Gyeonggi-do Large 2,297,018,000 9 Seoul/Gyeonggi-do Small 264,221,000 10 Seoul/Gyeonggi-do Large 629,012,121 11 Seoul/Gyeonggi-do Large 727,386,000 12 Other Provinces Small 316,038,380 13 Other Provinces Large 4,852,778,000 14 Other Provinces Medium 558,847,000 15 Other Provinces Large 1,379,649,500 16 Other Provinces Medium 788,844,000 17 Other Provinces Small 132,559,000 18 Other Provinces Large 1,446,020,000 19 Other Provinces Medium 904,800,000 20 Other Provinces Large 2,684,862,000 21 Other Provinces Small 453,850,732 22 Other Provinces Large 2,165,314,000
Total 26,271,946,761
24
Table 3. Total Number of Users Registered at Libraries for Value Measurement (as of December 31, 2008)
Library Area Size Total Number of Registered Users
1 Seoul/Gyeonggi-do Large 155,060 2 Seoul/Gyeonggi-do Small 12,980 3 Seoul/Gyeonggi-do Medium 2,671 4 Seoul/Gyeonggi-do Large 72,112 5 Seoul/Gyeonggi-do Large 7,756 6 Seoul/Gyeonggi-do Large 74,637 7 Seoul/Gyeonggi-do Medium 13,989 8 Seoul/Gyeonggi-do Large 3,876 9 Seoul/Gyeonggi-do Small 23,061
10 Seoul/Gyeonggi-do Large 68,651 11 Seoul/Gyeonggi-do Large 79,568 12 Other Provinces Small 7,413 13 Other Provinces Large 65,969 14 Other Provinces Medium 8,475 15 Other Provinces Large 3,984 16 Other Provinces Medium 52,156 17 Other Provinces Small 22,441 18 Other Provinces Large 23,173 19 Other Provinces Medium 35,868 20 Other Provinces Large 48,699 21 Other Provinces Small 620 22 Other Provinces Large 79,432
Total 862,591
Table 4. WTP Responses by Prompted Baseline WTP
Prompted baseline WTP
Materials Use
Use of Space
Use of Programs
KRW 1,000
Mean 1197.97 1287.88s.d. 766.92 857.23no. of responses 197 33
KRW 3,000
Mean 2497.30 1830.51 2274.19s.d. 2170.39 2067.63 2007.65no. of responses 185 177 31
KRW 5,000
Mean 3900.52 2729.89 3951.61s.d. 3668.22 3295.034 4121.80no. of responses 191 174 31
KRW 7,000
Mean 4080.31 3033.33 4484.38s.d. 4201.63 4224.70 4968.42no. of valid responses 193 180 32
KRW 9,000
Mean 4690.48 3235.14 3234.38s.d. 5449.06 4342.99 3473.37no. of valid responses 189 185 32
KRW 11,000
Mean 4140.45s.d. 6257.65no. of valid responses 178
Total
Mean 3263.87 2998.32 3034.59s.d. 3837.71 4327.54 3563.67no. of valid responses 955 894 159
25
Table 5. WTP Responses by Sex
Sex Use of Materials Use of Space Use of Programs
Male mean 3,874.08 3,485.11 3,539.47 n 409 470 38
Female mean 2,806.78 2,458.73 2,876.03
n 546 424 121
Total Mean 3,263.87 2,998.32 3,034.59
n 955 894 159
Table 6. WTP Responses by Educational Level
Educational Level Use of Materials Use of Space Use of Programs
Elementary School mean 3,500.00 - -
n 2 - -
Middle School mean 4,409.09 2,785.71 2,250.00 n 11 7 2
High School mean 2,950.91 2,884.21 2,078.95
n 275 285 38
University mean 3,193.91 2,953.85 3,145.00
n 575 520 100
Graduate School mean 4,494.57 3,695.12 4,447.37 n 92 82 19
Total mean 3,263.87 2,998.32 3,034.59 n 955 894 159
Table 7. Data on the WTP per Capita and the WTP per Capita for One Year
Use of Informational
Materials Use of Spaces Use of Programs Total WTP per Capita for
One Year
3,263.87 2,998.32 3,034.59 9,296.78 111,561
Table 8. Calculation of the ROI at Public Libraries in Korea
Calculation Process ROI
Total Number of Registered Users * WTP per Capita for One Year / Total Cost 3.66
(862,591 * 111,561) / 26,271,946,761
26
Table 9. ROI of Libraries by Area
Total Number of Registered
Users Total Budget (Unit: KRW) ROI
Seoul/Gyeonggi-do (11)
514,361 (59.63%)
10,588,384,149 (40.30%)
5.42
Other Provinces (11)
348,230 (40.37%)
15,683,562,612 (59.70%) 2.48
Total (22) 862,591 26,271,946,761 3.66
Table 10. ROI Depending on Library Size
Total Number of Registered Users Total Budget (Unit: KRW) ROI
Large (12) 682,917 (79.17%)
21,261,271,621 (80.93%)
3.58
Medium (5) 113,159
(13.12%) 3,107,673,028
(13.12%) 4.06
Small (5) 66,515
(7.71%) 1,903,002,112
(7.71%) 3.90
Total (22) 862,591 26,271,946,761 3.66
Table 11. Comparison of Main Value Measurement Results Overseas
Research Method
Services Measurement Benefit Range ROI
British Library (2005) CVM Value Separation Direct and Indirect 4.40
St. Louis Public Library (2001) CVM Value Separation Direct 3.75
New South Wales Libraries (2008) CVM Value Integration Direct 1.36
Current Study (2009) CVM Value Separation Direct 3.66
