6.2.1 Effects of Prizes on Sales, Earnings, and Consumer Demand

Although they constitute the most robust and well-developed strand of economic research on prizes, studies of the correlations between awards and sales figures have been surprisingly inconclusive. Surprising, because we tend to take for granted that, for example, a film that wins major awards for best picture will realize a windfall at the box office and a boost to DVD sales. If there were no financial incentives, why would studios spend a combined $60–80 million on ‘Oscars campaigns’, lobbying the Motion Picture Academy’s membership on behalf of their films (Donegan, 2002)? Why would the Golden Globe Awards be plagued by judge-bribery scandals if the judges’ decisions had no effect on a film’s box office receipts? This same common sense pervades other fields of art and entertainment, as well. In literature, for example, America’s Newbery Medal for young adult fiction, France’s Prix Goncourt, and Britain’s Man Booker Prize are all widely thought capable of assuring sales in the hundreds of thousands, even for first novels by unknown authors. Anecdotal evidence of their powerful effects abounds, as the following quotes illustrate:

The [Goncourt] prize carries a symbolic purse of 10 Euros ($14), but can boost the winning book’s sales to around 400 000 copies, as well as stimulating sales of the author’s previous works (Soulez, 2011).

[Many] Newbery winners of the 1990s – The Giver, Holes, Number the Stars, and Maniac Magee – are still going strong [in 2008], making appearances on the best-seller lists year after year. For example, in 1999, the year Holes won the Newbery, it sold an impressive 323 000 copies. And to date, Holes and The Giver each sell anywhere from 200 000 to 750 000 copies annually (Silvey, 2008).

In the first week after the announcement of its Booker win, Life of Pi sold 7150 copies in the UK, making it the bestselling hardback fiction title in that week. The following week, it sold 9336 copies. Previously, it had sold only 6287 copies in total [in the 5 months] since its May publication. … D.B.C. Pierre’s Vernon God Little, which won the Prize in 2003, went from a sale of 373 copies in the week before the announcement to 7977 in the week after. … In 2000, sales of Margaret Atwood’s The Blind Assassin also jumped, from fewer than 200 a week to more than 3000 (Squires, 2007, p. 72).

However, these ‘obvious’ correlations turn out, on closer inspection, to be highly uncertain. Yes, there are prize-winning works that have succeeded brilliantly in commercial terms, but there are many non-prize-winning works that have succeeded even better. Conversely, there are all the many prize winners (e.g. most of the Newbery books of the present century) that have fared indifferently in the marketplace. In fact, where US and British literature (as also popular music) are concerned, the correlation between works that win the premier awards and works that appear on the annual bestseller lists has become notably weaker over the last half century and is virtually non-existent today (English, 2005, pp. 329–333). The cover-sticker or jacket band declaring a book the winner of a major novel-of-the-year award practically guarantees that the book is not a blockbuster. This, it is generally said, has to do with the nature of such books themselves, their somewhat narrower or more elite appeal, which wins them the approval of experts, but not of a mass readership. However, such reasoning merely begs the question: if it is the work’s inherent qualities, its underlying appeal to readers, that ultimately determine its commercial fate, then what impact can prizes really have, beyond perhaps a short burst of publicity attendant on the prize announcement?

The difficult task facing economists, therefore, has been to isolate the independent variable of award winning and the dependent variable of economic success, while eliminating from the analysis all spurious correlation, including that between a work’s success and its intrinsic interest or quality. Thus far, few unambiguous results have emerged. Examining sales data from the 1980s and early 1990s, Todd (1996) found that Booker Prize winners have on average realized a much larger post-ceremony commercial boost than books that are merely shortlisted. English (2005) noted that this effect is compounded by the much higher likelihood of a winning versus a shortlisted book being adapted as a motion picture, which generally results in a new movie tie-in edition of the novel and thus revives book sales. However, a more technical study of earlier Booker winners by Ginsburgh (2003) showed that over a longer time frame shortlisted titles are just as likely as winners to be issued in new editions and reprints, suggesting that the judges’ final decision has no significant economic impact.³

Neither of these studies attempts any comparison with non-shortlisted books (i.e. books that have not been affected at all by the prize). Such a study has been conducted on the major literary prizes in Belgium and the Netherlands (Ashworth et al., 2010), concluding that those awards have a positive market effect on all nominated books and that the outright winner does realize a larger sales increase than the also-rans, but not dramatically so. Whether this study has any relevance to the Booker Prize, or studies of the latter to the Pulitzer Prize, is unknowable, since no one has undertaken a comparative economic analysis of literary awards in different national contexts.

The literature on the economic impact of film prizes is more extensive but not much more certain in its conclusions. Ginsburgh (2003) found that the Academy Awards, the best known and presumably the most commercially powerful of cinema awards in the United States, correlate reasonably well with ticket sales and DVD rentals in subsequent years. Oscar-winning films tend to enjoy larger box office receipts, and significantly longer and stronger rental demand than merely nominated films. Others have shown that a nomination in itself correlates with higher revenue. Nelson et al. (2001) quantified the value of a Best Picture award at $16 million additional box office receipts in 1997 dollars and the value of a nomination at $8 million, excluding the additional gains from a longer probable run in the theaters. A more recent analysis by Wicklin (2010, p. 291) found that for films with budgets over $100 million, those that receive Oscar nominations make on average $50 million more in domestic box office than those that do not. A working paper by Rossman and Schilke (2012) concurs with this finding and notes the strongly bimodal character of the Oscars’ effect on box office, with substantial rewards accruing to nominated films, but even more substantial costs exacted from Oscar-seeking producers (those who make films that share the generic, thematic, and other features of typical Oscar winners) who fail to secure a nomination. The Academy Awards, they conclude, function rather like a ‘Tullock Lottery’ or all-pay auction, imposing such negative effects on the losing contenders as to make the effects on winners appear all the more positive and desirable.

However, as Ginsburgh warns, researchers are often too hasty to attribute the commercial success of a prize-winning (or prize-nominated) film to the impact of the prize. Since films are released some months prior to the Oscars voting, it may be that in selecting relatively more successful films, the Academy’s voters are merely ratifying the popular taste, passively acceding to viewer preferences rather than actively guiding them. Even if this bias in favor of already well-received films might be factored out of the analysis, we still cannot be certain that the prize actually affects consumer demand. It may be that Academy members and general movie-goers simply respond to the same inherent qualities, to certain aesthetic features, for example, that make some films more admired and more durably appealing than others.

6.2.2 Prizes as Judgment Devices and Quality Signals

The problem here applies generally to the economics of expert opinion and its relation to consumer demand for experience goods (i.e. goods whose quality, unlike that of lumber or cloth, cannot be known prior to consumption) (Nelson, 1970; Hey and McKenna, 1981). Artworks are a clear example of experience goods, in that consumers of novels, songs, films, paintings, and so on are highly uncertain of their quality prior to reading, hearing, or viewing them, and are often disappointed or otherwise ‘surprised’ by the experience of doing so (Hutter, 2011). Given the abundance and wide variety of artworks, it is obviously impractical to consume them at random in hopes of experiencing more good ones than bad. Rather, consumers rely on quality signals of various kinds (including prices and advertising), and in particular on what Karpik (2010) calls ‘judgment devices’, to improve their odds of having enjoyable and stimulating cultural experiences.

Work in this area has tended not to focus on prizes, but rather on the favorable or unfavorable judgments of book reviewers (Greco, 1997; Caves, 2000), restaurant reviewers (Shaw, 2000), movie reviewers (Wallace et al., 1993; Prag and Casavant, 1994; Sochay, 1994; Litman and Ahn, 1998; Holbrook, 1999; Basuroy et al., 2003; Elliott and Simmons, 2007), and similar experts in other fields of culture, such as wine-making. Research has also begun on aggregated online consumer reviews (OCRs), which have emerged as a major competing form of judgment device, arguably now more widespread and more widely consulted than the quality signals presented by certified experts (Beauvisage et al., 2012). We may, however, regard prizes as a similar mechanism inasmuch as they, too, inform potential consumers about judgments made by critics or other people with specialized knowledge of a particular field and thus may serve as ‘seals of approval’ in the minds of consumers (Cameron, 1995). Indeed, as Karpik observes, prizes are ‘the privileged device of the expertise regime’ and hence are rampant throughout the economy of ‘singularities’, which is to say, wherever we find markets for ‘singular, incommensurable products’ (Karpik, 2010, pp. 168, 3).

The problem, to adopt the terms used by Eliashberg and Shugan (1997), is how to distinguish between the ‘influence effect’ of such judgment devices (i.e. their capacity to sway the decisions of consumers independently of any inherent qualities in the selected work or product) and their ‘prediction effect’ (i.e. their tendency merely to duplicate and thereby anticipate consumer preferences for works or products possessed of certain qualities). Building on the work of Eliashberg and Shugan, Reinstein and Snyder (2005) devised a study to purge the prediction effect from the analysis of movie reviews by adjusting for a film’s success or failure prior to publication of the review. Unfortunately, their method has not yet been applied to prizes and if we attempt to extrapolate from their findings we are drawn in two opposed directions. On the one hand, they argue that while reviews have little effect on wide-release action films or comedies, they can strongly influence consumers of narrow-release pictures and serious dramas. This accords with studies suggesting that prizes can exercise a strong effect in more elite or high-cultural fields such as classical music (Ginsburgh and Van Ours, 2003). Since the major film awards are chiefly concerned with the more ‘serious’ categories of film (‘prestige pictures’), we might conclude that prizes are likely to be relatively influential vehicles of expert opinion. On the other hand, it appears to Reinstein and Snyder that the influence effect of reviews is greatest, and their prediction effect smallest, when they are published closer to the moment of a film’s release; the more ex post a review, the greater the bias due to prediction effects. Since the major film awards are conducted on an annual, retroactive basis, with the winners announced at least two to three months and sometimes up to a year after a film’s release, we might conclude that their real power of influence is likely to be weak. In short, even if we accept that prizes communicate expert opinion to movie consumers in something like the manner of film reviews or critics’ star-rating systems, we cannot say with confidence that they significantly affect the choices consumers ultimately make.

A further complication in the relation between prizes, in their function as quality signals, and consumers of cultural goods arises if we adopt a term introduced by Darby and Karni (1973) and consider how artworks might operate less as experience goods than as ‘credence goods’. These are goods whose quality the consumer does not judge by the consumption experience alone but rather by accepting, as a matter of faith or credence in a particular expertise regime, the judgment of certified authorities (Wolinsky, 1995). This way of classifying artworks seems most appropriate for the high-culture end of the art-entertainment spectrum, where we find the classics from earlier historical periods and the more avant-garde works of the present. After an evening at the theater, a consumer might judge for herself on the quality of a popular musical by Monty Python or Andrew Lloyd Webber, but trust to the experts on the greatness of a play by Dario Fo or his fellow Nobel Laureate Harold Pinter. To the extent that an artwork meets the description of a credence good, prizes may attract consumers to it, even long after its original production, by in effect guaranteeing its quality, warranting the ‘higher’ value of the consumption experience, however little enjoyment or understanding the individual consumer might derive from it. Most movie awards, including the Oscars, are probably incapable of exerting this kind of durable effect on consumers, since their function is to applaud and promote generally mainstream, accessible, more or less popular movies of the moment – the kind of movies that most consumers feel equipped to ‘judge for themselves’ when they view them. However, the credence effect might well arise in connection with major retrospective awards, such as the Academy Honorary Award among the Oscars (presented to Robert Altman in 2005 and Jean-Luc Godard in 2010) or with related judgment devices such as the all-time greatest film rankings list published by Sight & Sound (which places Vertov’s Man with a Movie Camera, Dreyer’s The Passion of Joan of Arc, and Murnau’s Sunrise: A Song of Two Humans among the top 10 greatest films ever made). There would also seem to be little doubt that consumers are swayed by the credence effect of prizes in other fields of culture such as contemporary art, where, for example, Britain’s Turner Prize draws large-scale public attention to artists whose work may remain opaque and unintelligible as art, even after viewing it, to all but the most practiced insiders of the art world.

6.2.3 Expenses and Earnings of Awards Programs

Of course, the Motion Picture Academy does not necessarily care whether the Oscars steer viewers toward Oscar-winning films. As a promotional and marketing tool, the awards were intended to encourage ticket sales in general, to raise the overall level of public enthusiasm for and interest in Hollywood productions. While their success in these more general terms would be difficult to quantify, there is no question that the awards have been a money-maker for the Academy itself. Since the first televised Oscars show in 1952, advertising income has grown tremendously, to the point where the Motion Picture Academy now realizes a profit of more than a million dollars on each and every statuette it presents at the ceremony (Elliot, 2000). In this respect, the Oscars have managed to invert the more expected cultural-award economy of the Nobel Prizes, which involve a gift of over a million dollars to each laureate with no expectation of financial return to the sponsoring Nobel Foundation. Other televised awards shows are far less profitable than the Oscars (Higgins, 1999), but the proliferation of such shows, which by the early 2000s numbered more than 100 in the United States alone (James, 2003), suggests that, whatever their capacity to boost the fortunes of winning artists and works, prizes at the popular-entertainment end of the cultural spectrum (mainly in the fields of film, TV and video, and country, rap, and rock music) represent an enticing financial opportunity for prize administrators, television producers, and advertisers alike. The most prominent of these entertainment awards have indeed become valuable brands, their logos and trademarks strategically exploited through commercial licensing arrangements and aggressively protected by legal departments.

However, apart from the televised entertainment awards (e.g. the Emmys, Grammys, BAFTAs, etc.) few prizes are financially profitable for their sponsoring organizations. While it is true that many honors and distinctions, such as military medals or academic titles, convey very high value to recipients without imposing significant material costs on donors (Frey, 2005, p. 5), this tends not to be the case with major awards in the arts and culture. The costs associated with administering such prizes are much higher than is generally recognized. Even when a prize carries a substantial cash award, that is only the visible tip of a budget iceberg. Prominent novel-of-the-year awards like Britain’s £30 000 Orange Prize or the $50 000 Nigeria Prize for Literature bear operating expenses roughly 10 times the size of their cash value (English, 2005; Mbanefo, 2011). These are relatively simple prizes involving a small management committee, a jury of unpaid judges, and an annual banquet. The costs of a more elaborate operation such as the Pritzker Prize in architecture, which flies its panel of judges around the world to tour the buildings of nominated architects, can represent an even higher multiple of the visible payout. More expensive still are prizes awarded on the basis of festivals or competitions where contending artists perform live or contending works are presented on screen. The Gold Medal winner at the Van Cliburn International Piano Competition receives $20 000, less than 1% of the cost to stage the event. The Toronto Film Festival, which presents just one, unjuried ‘People’s Choice’ award with no cash attached, costs $30 million to run and the organization recently completed a campaign to raise nearly $200 million to support future expansion.

6.2.4 Prizes and the Creative Industries

Budgets of this scale confirm that the presumptive ‘gift’ in honor of artistic achievement has itself become big business – an indispensible cog in the machinery of the creative industries (Smith, 1998; Caves, 2000) or the creative economy (Howkins, 2001). The creative industries represent an increasing fraction of income and employment not only in the United States, but throughout the developed world, and they have attracted much attention from economists and sociologists, particularly in the fields of management and organizational studies. Within these industries, Anand and Watson (2004) noted that prizes and prize ceremonies hold particular importance, serving as forms of ‘tournament ritual’ and providing ‘an important institutional mechanism for shaping organizational fields’ in culture and the arts (p. 59). Their prime example is the Grammys – a ‘highly charged ceremonial form’ by means of which the music industry not only distributes honors but highlights and resolves ‘conflicts about the legitimacy of different field participants’ (p. 59). The creative industries are especially reliant on these kinds of ‘field configuring events’ (Lampel and Meyer, 2008) because conflicts over legitimacy supply the essential fuel for the evolution of cultural fields. Every new aesthetic style or strategy begins from a position of illegitimacy and general disregard. It is only through symbolic struggle and conflict, involving displacement and demotion of other styles and their producers, that its recognition as genuine art, as a legitimate wave or school or eruption of individual genius may be achieved. Prizes offer the kind of ceremonial staging where these struggles may be played out with maximum participation and maximum resonance; they gather and focalize the legitimating powers of the field as a whole.

However, while scholars have come to appreciate prizes as ‘one of the central processes in the creative industries’ (Lampel and Nadavulakere, 2009, p. 239), they have largely failed to recognize their emergence as a kind of creative industry in and of themselves. The ‘awards industry’ has been rising along its own steep growth curve, expanding significantly faster than the creative economy as a whole (English, 2005, pp. 19–20 and 323–338). Large numbers of professionals are today pursuing careers in the awards industry as such, with no necessary connection to any other line of creative business. Prizes are themselves coming to define a field of creative and competitive production, vying with one another through aesthetic, commercial, and organizational innovation to achieve maximum publicity and profit. There are now prizes for the best prizes, awards for the best award programs.

Prizes have installed themselves as ever more inescapable and indispensible features of fields in which they used to be minor and even optional. This is evident when, for example, we consider the festival circuits in film, literature, and other arts. While there used to be many non-competitive festivals at which no works were singled out for special honor, that format has now been all but abandoned. Even the oldest and best-established festivals have been unable to resist the tilting of the cultural universe toward a logic of winners and losers, the sense that everything from their attendance figures to their role in shaping the wider field of reception and exerting an influence within the industry depends on their successful deployment of prizes. Nearly all festivals have now been restructured around the culmination of an awards night, and the overall enlargement of their awards programs, entailing a constant proliferation of new categories and criteria, has been out of all proportion with other vectors of their expansion. In short, rather than being simply an incidental effect or symptom of broader economic developments, prizes have emerged as drivers or agents in their own right, primary facilitators of what Caves (2000) describes as the essential business of creative industries: the negotiation of ‘contracts between art and commerce’.

6.3.1 Prizes as Symbolic Capital

Deeply interwoven though they are with commercial aims and motives, cultural prizes are not reducible to a simple business logic. Even Caves, whose analysis overstresses the strictly economic dimensions of cultural labor, includes the creative worker’s commitment to ‘art for art’s sake’ as a ‘bedrock structural property’ of the creative industries, noting, for example, that a film writer or performer might ‘trade off cash compensation for credit in a film that is likely to garner critical esteem’ (Caves, 2003, pp. 80–81). Such a tradeoff points to the symbolic dimension of cultural awards, their embeddedness in a shadow economy whose currency is not money, but ‘credit’ (i.e. acknowledgment or esteem in the minds of others). Within this symbolic economy, prizes function as a tangible asset – a cold hard form of reputational wealth. They are also among the most fungible of reputational assets, widely recognized and accepted as a guarantee of artistic merit or cultural prestige, and therefore, like university degrees or other academic credentials, relatively easy to ‘cash in’ or convert into future earnings. To use the term favored by Bourdieu and his school of sociology, cultural prizes are a form of ‘symbolic capital’ – a status asset that is immediately recognized and credited on the fields of cultural production, and which can be used to advantage on those fields alongside such ‘embodied’ or dispositional forms of cultural capital as an appreciation for abstract art or a facility in discussing avant-garde poetry (Bourdieu, 1993).

Bourdieu’s project was to model what he called a ‘general economy of practices’ (Bourdieu, 1977, p. 178) by:

… extend[ing] economic calculation to all the goods, material and symbolic, without distinction, that present themselves as rare and worthy of being sought after in a particular formation – which may be ‘fair words’ or smiles, hand-shakes or shrugs, compliments or attention, challenges or insults, honour or honours, powers or pleasures, gossip or scientific information, distinction or distinctions, etc.

Although often understood as a mere extension of conventional economic analysis, this ‘general economy’ is in fact intended as a radical critique. Rather than effecting a reduction of everything valuable to its money equivalent, as would be the case with economistic thinking, Bourdieu’s model allows for the relative autonomy and irreducibility of different forms of capital, the relative independence of different ‘fields’ of interaction and exchange, and the relatively distinct sets of motives, desires, and attitudes characterizing the agents or ‘players’ of different economic games. Every field, every market, whether for material or symbolic goods, may be understood economically as a struggle to acquire and control the forms of capital that are in play on that field, but no conceptual priority is assigned to the field of commerce or to capital in its money form (Bourdieu, 1996). On the field of poetry, for example, agents seek to maximize their poetic expertise and their status among other recognized poets and poetic experts, irrespective of commercial scales of value. (The poetry of a practiced greeting-card creator would be of greater commercial value than that of a typical Pulitzer Prize winner.) Bourdieu’s theory of cultural capital is in this respect distinct from Becker’s theory of ‘human capital’ (Becker, 1964), at least insofar as the latter has been understood by most economists as involving assets that are or may be oriented toward productive labor in the money economy.⁴

At the same time, however, Bourdieu’s model departs from the conventional economic understanding of aesthetic value or beauty as something ‘pure’, non-temporal, and wholly external to economics. His model does after all understand artists as economic agents, competing to acquire and control scarce resources. It allows as well for the ‘interpenetration’ of one field or market by another and the partial ‘interconvertibility’ of symbolic and material capital. Given the interconvertibility of cultural, educational, and economic capital, for example, the poet who wins a major prize stands a better chance of being offered a well-salaried position on a university faculty. More generally, while the schooling system distributes educational capital according to its own specific rules of acquisition and accumulation, such capital essentially circulates as a disguised or euphemized form of material advantage, such that economically privileged children are generally found by educators to be more able or ‘gifted’ than students of humbler origins. The schooling system’s recognition of certain students’ superior talent (e.g. by awarding them special academic honors or prizes) is in effect a misrecognition of their material advantages, a recoding of money as intelligence (Bourdieu, 1988).

According to this model of overlapping but relatively autonomous symbolic economies, then, artists are competing not just on the field of ‘general’ or mainstream production, where the stakes are primarily commercial, but also on the field of ‘restricted’ production, where money matters less than recognition from other artists (Bourdieu, 1993). This recognition may consist of ‘handshakes … or compliments’ from one’s peers, but its most concrete institutional form is that of prizes, the more or less official ‘honors … or distinctions’ that Bourdieu calls ‘consecrations’. The question arises whether these official, institutional rewards are well aligned with the less visible but arguably more durable and determinative estimations of artistic value in terms of which artists understand themselves and their relations to one another on the field. How well or badly do prizes reflect the actual distribution of symbolic capital on a given field? Do the most esteemed artists tend to win? How powerful or weak are prizes as symbolic instruments in their own right (i.e. as determinants of future reputation)? John Galsworthy won a Nobel Prize for Literature, but not James Joyce; Captain and Tennille won a Grammy Award, but not Bob Marley; Sylvester Stallone won the Oscars for Best Picture and Best Director, but not Martin Scorsese. Yet Joyce, Marley, and Scorsese were better regarded by their peers at the time when they produced their most important work, and they unquestionably enjoy higher standing on their respective fields today. If prizes are symbolically important, why are they so often second-guessed or even derided as a ‘joke’, by artists and onlookers alike? Are they a corrupt or false form of recognition, too contaminated by commercial motives or ‘politics’ to exercise any deep or lasting symbolic effect?

6.3.2 Prizes, Reputation Effects, and Branding

There are several strands of economic research that, though not specifically concerned with cultural awards, might suggest themselves as relevant to these questions about status or standing. There is for example the established literature on ‘reputation effects’. Its main focus has been on the reputations of brands or companies (e.g. on the asset value to a corporation of being associated in the minds of consumers with products of consistently high quality) (Kreps and Wilson, 1982; Tadelis, 1999; Mailath and Samuelson, 2006). However, this approach to the economics of reputation might be usefully extended at least to competition-based prizes where winning means being published or exhibited or distributed by a sponsoring company. In the field of American poetry, for example, one of the most important mechanisms for launching a career is the first-book prize competition, as pioneered by Yale University Press and now conducted by many academic presses. Editors in charge of these series are highly conscious of the need to guard their brand reputation, both for the sake of future sales of the series’ books and for that of future entrants in the competition, who, given the rather high entrance fees – more in most cases than the cost of a book – are also in a sense among the press’s paying customers, participating in what has been condemned as a cynical ‘economy of false dreams’, rife with scams (English, 2001; Casper, 2006). Even prizes that do not constitute an actual proprietary series of books, DVDs, CDs, etc., often begin over time to function as quasi-brands. To stay with literary awards for the moment, winners of the Caldicott or the Orange Prize or the Man Booker Prize are frequently shelved together in bookstores as though they belong to a particular series or were written by a single well-known author. The sticker or strapline on a book’s cover declaring it a prize-winner (or a nominee) is often mandated by the Prize administrators as a condition of accepting the award, and must conform in certain particulars of design and placement to the terms of the prize trademark. In this regard, the prize serves as a kind of secondary branding of an already branded product, and this process may be extended to the point where all the works of all the authors who have won or been shortlisted for a prize carry the mark of the prize as brand and are subject to its reputation effects (Squires, 2007, p. 74).⁵

6.3.3 Prizes, Status, and Incentives

Another potentially relevant branch of economic inquiry concerns the relationship between status and incentives. Again, the existing literature is focused on the corporate setting, in particular on questions about work incentives, such as how the timing and distribution of promotions and salary raises affect employees’ performance (Treiman, 1977; Gibbons and Waldman, 1999; Auriol and Renault, 2001). Although there is the occasional study of how medals or prizes or ‘gold stars’ might function economically as workplace status markers (Ball et al., 2001) or how a promotion of rank might resemble a prize for the winner of a competitive tournament among employees (Lazear and Rosen, 1981), this is a subfield of management and organization literature that has nothing directly to say on the subject of cultural awards. Still, such work has the merit of emphasizing the importance of symbolic incentives – status promotions – in motivating human agents, and certain of its findings might therefore apply to the motives involved in giving and receiving prizes.

Auriol and Renault, for example, have argued that agents tend to pursue ‘status congruence’: those who enjoy high status relative to their peers are more motivated by the prospect of higher income, whereas agents who enjoy high incomes relative to their peers are more motivated by the prospect of greater status (Auriol and Renault, 2008, pp. 306–307). While many artists strongly disavow any suggestion that either prize money or prize status might serve as the motive for their art, an obvious exception would be the so-called ‘incentive prizes’ designed to elicit work of a particular kind; examples include the annual Duck Stamp design contest sponsored by the Federal government or the Crash the Superbowl video contest sponsored by Pepsi in 2010–2011. These kinds of crowd-sourcing contest-prizes have lately been proliferating outside the arts, notably in the fields of software design and green technology, but they have a long history in fields such as poetry, architecture, and music. It is likely that contenders in these highly structured competitions follow the same pattern of status congruence as workers in other fields, with the most established and reputable artists submitting work mainly for the sake of the monetary windfall while unknowns are more motivated by the chance to make their reputation in the field.

It might be possible to generalize further, however, with respect to the motives involved in giving and accepting prizes. For administrators of all but the most distinguished awards, it is by no means an easy matter to persuade a busy and famous artist to attend their banquet and receive their prize. Administrators of new, start-up prizes in particular need to consider carefully the kind of incentive they can offer and the kind of artists whose taste for status congruence would lead them to respond to that incentive. A new prize cannot hope to command the symbolic capital of the most longstanding and well-known awards in the same field. Offering a new and symbolically negligible prize to an artist of major worldwide reputation would be foolhardy, as it would almost certainly result in a snub; prizes must be cognizant of their proper symbolic level or league. If, however, that symbolically small fledgling of a prize has attached to it an exceptionally large monetary award and if the designated winner has a sterling reputation among peers, but relatively little popular acclaim or traction in the marketplace, both parties stand to gain from the transaction. The agents involved in awarding the prize gain credibility and status when the distinguished artist accepts their award graciously and in person, while the artist gains the wherewithal to produce more work.

This may be why ambitious start-up prizes so often carry larger cash awards than the leading prizes in their field and why they also typically allow their monetary value to drift down relative to other awards over time (as new, even higher-value start-ups enter the scene). The large cash value is mainly needed in the early years, when it acts as an incentive to attract the notice and participation of cash-poor but symbolically well-endowed artists. Once some of those artists’ symbolic capital has been transferred to the prize – in the form of a list of past winners or present judges (the recipients of a prize very often being asked to serve as its judges in later years) – the likelihood of a snub is much reduced and the cash incentive becomes a lesser factor. This is a successful outcome not only for winners and administrators but also, in the case of many philanthropic or family-foundation sponsored prizes, for the sponsor behind the scenes, the Alfred Nobel figure, who is typically well endowed in economic terms, but poor in terms of status on the fields of art. The reflected glory attained by the sponsor through regular association with distinguished artists raises the status congruence of the system as a whole.

6.3.4 Prizes and the Pursuit of Esteem

This is about as far as one can go with conventional economic approaches to reputation and status, which imagine the pursuit of artistic status as a straightforward goal-seeking behavior among openly competitive agents. Such approaches fail to appreciate the peculiar and stringent rules governing ‘art worlds’ (Becker, 1982); they fail to grasp the nature of art as a special kind of game. A better model is that of the ‘economy of esteem’ proposed by Brennan and Pettit (2004). This, they argue, is a ‘hidden’ economy, subtly and paradoxically structured such that individuals must compete for the high opinion of others without appearing to do so. In their pursuit of esteem, that is, agents face a ‘constraint on the intentional pursuit of esteem’ (Brennan and Pettit, 2000). As Jon Elster observed in his classic study of irrational choice, there is a ‘general axiom’ at work here – that ‘nothing is so unimpressive as behavior designed to impress’ (Elster, 1985, p. 66). However, the ‘Elster axiom’ seems to apply with particular force in the case of the artist – not because artists are more prone to behave cynically or mendaciously than others, but because cultural fields are, to an unusual degree, characterized by structural duplicity; the rewards at stake on these fields accrue most readily to players who invest, or appear to invest, only in higher or more purely artistic rewards than are in immediate circulation in the form of institutional status. More than the world of ordinary industry, the art world tends to favor those of its members who least curry favor; highest esteem accrues to artists who produce their art for ‘art’s sake’ rather than for the sake of worldly success, either material or symbolic. For this reason, whether judging, receiving, or commenting on an award, artists are expected to act toward the prize according to a version of what Bourdieu has called ‘strategies of condescension’ (Bourdieu, 1991, pp. 19 and 68–69). That is to say, no matter how involved with a prize they become (as nominee, winner, judge, commentator, etc.), if they hope to realize the symbolic profits it makes available they must contrive to signal their own lofty indifference to such profits. An artist who too eagerly embraces awards, seeming to accept them as a genuine index of value, betrays a misapprehension of art as such and thereby suffers a loss of esteem in the eyes of his or her peers. English has argued that it is one of the main economic functions of prizes to provide opportunities for artists and critics to ‘rehearse the Enlightenment pieties about “pure” art and “authentic” forms of greatness or genius, and thereby to align themselves with ‘higher’ values, or more symbolically potent forms of capital, than those which dominate the (scandalously impure) prize economy’ (English, 2005, p. 212). By thus appearing to discount the symbolic value of prizes, these agents of condescension and disparagement are actually supporting it. The seemingly tainted or debased currency of prizes and awards is collectively understood to derive from this other and purer form (the intrinsic value of art as such), which serves as a kind of gold standard behind and above the economy of cultural prestige.

The point here is that although artists and other agents of the art world are obliged, for the sake of their own status, to hold prizes in rather low regard as a measure of artistic worth, we should not regard this apparent denigration as limiting prizes’ actual power to determine cultural hierarchies. On the contrary, their symbolic efficacy is predicated on that very negativity.

6.3.5 Symbolic Effects and the Long Term: Measuring Canonicity

To verify this symbolic efficacy through quantitative analysis is, however, a difficult task. A series of studies of major movie awards by Ginsburgh and Weyers (1999, 2006, 2011) highlights these prizes’ poor track record in predicting a film’s later critical reputation. There appears, for example, to be no correlation between the most prize-winning films for each year 1950–1990 and the films from those same years that appear most frequently in recent critics’ lists of ‘100 greatest films of all time’. On the contrary, many of the top films on the critics’ lists – including Vertigo (ranked 1), 2001: A Space Odyssey (2), Singing in the Rain (4), and Raging Bull (7) – received no best-picture awards in the year of their release, while films that dominated their respective awards seasons, winning most or all of the best-picture prizes and receiving large numbers of nominations – Around the World in Eighty Days (in 1956), A Man For All Seasons (in 1966), Ordinary People (in 1980), and Terms of Endearment (in 1983) – scarcely figure at all in the rosters of all-time greatest (Ginsburgh and Weyers, 2011). Findings such as this remind us how rarely the judgments of a particular moment survive the test of time. However, they do not establish a firm basis on which to conclude that prizes convey no long-term symbolic gain to their winners. It may still be the case that Ordinary People enjoys more critical recognition than it would if it had not won so many awards or that Raging Bull would hold a position of even greater critical esteem today if it had not been so widely snubbed in 1980. Until we have devised quantitative studies capable of testing these kinds of counterfactual hypotheses, we cannot claim much knowledge about the symbolic efficacy – or inefficacy – of awards.

A further problem is that researchers do not agree on the best way to determine quantitatively a particular artist’s or artwork’s position in an enduring hierarchy of cultural status. What data provide the best index of lasting success or ‘canonicity’ in the arts? Some economists have relied on long-term sales figures or numbers of editions, or relative presence in libraries of film, literature, or music – all presumably indicators of an artist’s lasting appeal or a particular artwork’s success in maintaining value over time. However, we might need to measure canonicity, reputation among experts, quite differently, such as by counting the scholarly books and articles devoted to a particular artist, or the presence of his or her work on college syllabi or, as with the studies of film awards mentioned above, on critics’ lists of all-time greats. While disparities between popularity and canonicity tend to flatten out over time, commercial success being relatively ephemeral and popularity over the very long term being tantamount to canonical status, in practice the problem persists. Consider two Oscar-winning films of 1969, Butch Cassidy and the Sundance Kid and Midnight Cowboy. The former has earned twice as much as the latter and continues to outsell it on DVD, while the latter is held in much higher esteem by critics and film professors. It might seem clear that, for purposes of judging symbolic fortunes, we need to weigh critical esteem more heavily, but the long view of the history of the arts suggests that lasting popularity can trump the canons of academic taste over time. History teaches us as well that the reputations of artists and their works wax and wane; an artist can fade almost to oblivion for decades at a stretch, only to re-emerge as a major focus of scholarly interest and popular attention. An Oscar-winning filmmaker or a Nobel laureate of the 1930s might appear today to have realized no lasting status-effect, but if we revisited our analysis 20 years from now, or 50, the situation could look very different.

Thus, no matter how we measure the dependent variable of long-term symbolic success or canonicity, it appears in most cases to be impossible to eliminate the factor of ‘inherent quality’. Who is to say whether the prize-winning books, films, sculptures, or musical compositions are not simply better than the also-rans? If they are better, how could one quantify that inherent advantage in order to factor it out of the analysis? Ginsburgh and van Ours have made the best effort to overcome this problem in their analysis of winners of the Queen Elizabeth Piano Competition (Ginsburgh and van Ours, 2003). Building on earlier studies that showed a strong correlation between the time and day that a performer appears in the competition and that performer’s eventual ranking by the judges (Flores and Ginsburgh, 1996; Glejser and Heyndels, 2001), Ginsburgh and van Ours seized on the fact that the performer’s place in the order, being randomly assigned and hence entirely independent of quality, constituted a unique instrumental variable. They were able to show a further correlation between the performers’ (randomly assigned) order of appearance and their long-term success as measured by the number of different recordings held in major music libraries and the strength of opinions expressed by music critics. The researchers’ conclusion was that pianists who happened to be assigned a more advantageous place in the line-up of the competition enjoyed a significantly higher likelihood of long-term critical success, quite independent of any inherent quality in their performance.

Of course, this result cannot be generalized nor can the analysis that produced it be applied to prizes that lack the convenient random-order variable of this particular case. Until similarly ingenious studies have been conducted for a range of prizes across various fields of culture, the role of prizes in the symbolic economy of cultural prestige will remain something of a black box where quantitative analysis is concerned.

6.3.6 Prizes and the World-Economy of Cultural Prestige

In a more qualitative fashion, however, scholars are extending the model of cultural capital and cultural consecrations beyond the framework of Bourdieu’s original field theory. Especially influential has been the work of Pascale Casanova (2004, 2005), who uses the concepts of world-system (Wallerstein, 1974) and world-economy (Braudel, 1984) to enlarge the essentially national parameters of Bourdieu’s work in an effort to map the world economy of literary status and literary value production. Like Bourdieu’s model, Casanova’s asserts the relative autonomy of cultural and monetary capital. Countries that are minor and peripheral in terms of the global flows of economic capital may claim a major share of the world’s literary capital: Casanova’s prime example here is Ireland – a poor country whose authors have for half a century been among the world’s most canonical. However, while the two world-systems, capitalist and cultural-capitalist, are distinct and relatively autonomous, they conform to essentially the same economic logic, with core nations holding a monopoly on the latest, most advanced products (in culture, the most avant-garde work) and nations on the periphery lagging behind, depending on the major centers of power for the (literary) capital and (literary) credit needed to catch up and to be recognized as fully modern and up to date. Within this framework, prizes are seen as among the most powerful instruments of market domination, with the Nobel Prize in particular helping to sustain Europe’s ‘monopoly on worldwide literary consecration’ and its status as ‘virtually unchallenged arbiter of literary excellence’ (Casanova, 2004, p. 147).

Like most observers, Casanova regards this symbolic economy, this economy of specifically literary capital, as coming increasingly under threat from the forces of commerce. Like André Schiffrin (2000), she sees a traditional business model of independent book publishing being vanquished by the ‘blockbuster’ model of conglomerated media production. Geographically she describes the situation as an encroachment on Paris and London, the world capitals of genuine literary culture, by New York, the world capital of bestsellers. Aesthetically, she describes it as an insinuation of false, pseudo-modern, pseudo-sophisticated airport novels onto the terrain of the serious works of world literature whose themes and devices these ersatz novels cynically and profitably mimic. In effect, the counterfeit works are cheap knockoffs that threaten a longstanding monopoly, gradually gaining unwarranted credibility and prestige on a literary field whose institutional barriers and protections – including prizes – have been weakened or corrupted by commercial pressures.

Casanova’s ambitious and often illuminating extension of the economic analysis of cultural prestige onto the terrain of world-systems theory and globalization studies thus leads us back in the end to the most familiar and banal critique: that prizes have come to serve at the pleasure of money, assisting in the inexorable rise of commercial values and the concomitant erosion of the value of cultural capital as such. Prizes, according to this venerable and by now virtually automatic reasoning, are a Trojan horse within the bastions of culture, a seeming gift or windfall that actually functions as a weapon of war against independent artists.

Yet Casanova’s work can also be read as a passionate defense of the Nobel, whose continuing consecratory power enables the Swedish Academy to lionize an author as permanently poisonous to commerce as the Austrian Elfriede Jelinek (laureate in 2004). In her embrace of the Nobel prize as an ‘autonomous’ institution that stands even today as a key European bulwark against commercial penetration by New York, Casanova betrays the instability of the whole oppositional scheme, the tendency of prizes to appear now on the side of money, now on the side of art.

6.4.1 Prizes as ‘Tournaments of Values’

We can hope that as the economics of awards gains maturity as a field of academic research, awareness of this persistent instability will lead us toward a different and better model of cultural markets and cultural currencies, beyond the simple binarisms of art versus commerce. Prizes have come to occupy their current powerful position in the various fields of culture not because they represent one of two great, simple, and antagonistic forms of capital: filthy lucre, on the one hand, and pure aesthetic merit, on the other. They hold that commanding position because in the real world of cultural practices there are no pure or simple forms of capital, only complex mixtures. To borrow the terms of analysis from a recent study of arts fairs, cultural festivals, and other competitive creative events, prizes are not ‘tournaments of value’ but rather ‘tournaments of values’ (Moeran and Pedersen, 2011). They are mechanisms for the ‘production, negotiation, and transaction of various kinds of values’, including commercial and aesthetic value but also social value, material value, political value, publicity value, and more (Moeran and Pedersen, 2011, p.11).

To be a cultural actor is to engage in transactions involving all these multiple kinds of value, using one’s portfolio of relevant assets – however weighted it may be toward educational capital, economic capital, social capital, or what have you – to assert oneself, to claim a place for oneself, on a chosen field of cultural production. Players in the art worlds aim at securing advantageous rates and terms of exchange, not at attaining a symbolic currency so perfectly autonomous and unfungible as to bring all transactions to an end. Prizes have proliferated because they are among the best instruments we have for facilitating these sorts of transaction, these circulations and interconversions of capital. The messy work of transvaluation and exchange that we accomplish through prizes is not to be understood as a threat to culture, but as the very means of its production – the vehicle of emergence for that special composite form of value that distinguishes the work of art.

6.4.2 Directions for Further Research

It is evident from the foregoing discussion that fundamental questions about the economics of cultural awards remain wide open for future research. What Frey (2005) characterized as economists’ overemphasis on the ‘material consequences’ of prizes and their indifference to ‘prizes as such’ (i.e. to the play of agents and values at work within them) has meant that virtually no research has been done on sponsorship (including the role of philanthropic motives), judging and accepting (including the role of ‘social capital’ and the apparent rule of status equilibrium between judges and winners), or the economics of the cultural awards industry as a whole (including its role in a global system of cultural value production).

Even the most well-developed areas of research, dealing with the ancillary and future earnings attendant on prize-winning, need to be broadened substantially. Too much of this work has focused on the single case of the Academy Awards. While findings remain somewhat inconclusive, we do now have fairly compelling evidence of an ‘Oscar effect’ as regards box office, DVD rental, and other basic forms of revenue. What remains entirely unclear is whether this positive effect on winners’ earnings is typical of cultural awards in general. Economists have been drawn to the Oscars as an object of study for good reasons: the awards have been running in more or less their current form for over 70 years and box office data are fairly easy to gather in connection with Hollywood movies. However, the Oscars have also made a congenial object for economic analysis because Hollywood movie production is a field of culture where commercial motives are avowedly paramount, and tend to override aesthetic and symbolic considerations. In other fields of culture, especially those such as poetry or traditional music, where both the costs of production and the scale of potential commercial success are low, the relationship between status and income is notably different. Indeed, far from being an obviously suitable case study for the economics of cultural awards in general, the Oscars stand out as an anomaly against a backdrop of tens of thousands of little-known prizes covering every obscure nook and cranny of artistic practice. It is time to begin conducting parallel studies of such awards – in music, theater, painting, sculpture, fiction, and poetry, as well as in minor arts such as quilting, wood-carving, and hat-making – in order to support more nuanced, comparative analysis of their efficacy in the marketplace.

The most important avenues for future research, however, are those that lead away from what has been too exclusive an emphasis on the consequences of winning. It is only because economists have focused so narrowly on the after-effects of awards that they have been able to regard a hugely profitable, industry-sponsored awards extravaganza, loosely ‘juried’ by a membership in the thousands, as somehow paradigmatic. If we shift attention from effects to causes, the whole scene of cultural prizes looks quite different. What are the economic motives of prize sponsors, many of whom are individuals, families, small non-profit organizations, or companies that have no immediate stake in the creative industries? For many sponsors, the prize economy is a gift economy, utterly distinct from the business model represented by the Oscars. What are the significant differences in the organizational structure and the economic goals of participants if we turn from industry-sponsored prizes to prizes sponsored along philanthropic lines (the Nobel, the Pritzker) or prizes sponsored as part of a corporate promotional strategy (the Man Booker, the Orange Prize)? Does a different calculus of ‘success’ apply for different forms of sponsorship? Are different forms of economic partnership, different ‘contracts between art and commerce’, involved in the relationships these different sponsors establish with a prize’s administrators or its judges?

The role of judges in particular warrants more attention from economists than it has received. The sheer quantity of prize-judging labor that is now required to support the awards industry is staggering and especially so when we consider how very little money is spent on compensation. If, as economists have tended to assume, individuals have no real interest in the prize as such but rather view it as a mechanism for increasing their future income, then how do we explain the willing participation of uncompensated judges, who in some cases must devote days or even weeks to the task of selecting a winner? Of what benefit to the judge is the act of judging? How does this largely moneyless economy sustain itself and what are the limits to its expansion?

Questions like these point to a potential stream of future research into the economics of social and symbolic capital in the cultural awards industry. Perhaps because so little money is involved in the core business of their adjudication, cultural prizes appear to be unusually dependent on the trading of favors among friends and professional associates. Being awarded a prize, or even being invited to judge a prize, connects one to a sub-network of relationships within the larger field of cultural players. This social network may be understood as a kind of marketplace of mutual credits and obligations – a space in which social capital serves as the main currency. Prizes are especially reliant on social capital in their start-up phase when, in order to gain recognition in an ocean of more or less similar prizes, it is vital that they secure the participation of highly regarded artists and critics to serve as judges. High-status judges not only confer prestige on the prize in a general way, they also make it possible for high-status artists to be named as recipients. A very distinguished artist is unlikely to show up to accept a new, unknown, and untested award unless it is either worth a great deal of money or has been judged by individuals of more or less equivalent stature to the artist him/herself. However, since judges are almost never paid in money for their work, it is often the social capital of a well-connected prize administrator or other key initiator that secures their services. Once a prize is firmly established, with a history of distinguished judges and recipients, it can offer more symbolic capital to a prospective judge as an incentive to participate, and there is thus less need for an administrator to call in social favors. One could go on sketching these arrangements in a rough fashion, but the point is that there is clearly a well-elaborated if informal and inexplicit framework of reciprocities at work in prize adjudication and in the protocols of acceptance. It amounts to a veiled system of ‘payments’ in social and symbolic wages that is arguably more fundamental to the economy of prestige than is the motive of increased income. In recent decades economists have pioneered important streams of research into symbolic incentives, status-seeking, and the hidden economies of esteem in the workplace. Focusing these lines of research on the ‘workplace’ of cultural awards, and especially on the interplay of judges, recipients, and administrators, could quickly yield a very different understanding of prizes from the one that predominates at present.

Finally, more work is needed on the economics of the prize industry as a whole: its growth, its global dispersion, its large-scale functions and effects within the creative economy. The economic literature on the creative industries is now vast, but the particular reliance of these industries on prizes and awards has gone largely unremarked. Also left out of the analysis has been the tendency of prizes to form a kind of industry of their own, featuring various forms of merger, acquisition, and consolidation, and the emergence of specialist firms providing consultancy or management services to multiple clients. This tendency is visible even in the non-profit sector, where for example the independent British charity Booktrust now manages more than a dozen literary prizes. In their international and global aspect, prizes are among the most efficacious instruments of what Casanova (2004, 2005) describes as a cultural world-economy – a parallel economy with its own centers of wealth and power, and corresponding zones of profound impoverishment. The kind of work Casanova has pioneered on the monopolistic control of world-literary value could be usefully extended into other fields of cultural production, notably film (where the struggle over values is more dependent on festivals and festival-based prizes) and music (where the struggle over values is less dependent on the mediating role of translators and hence less subject to control by the cosmopolitan centers).

Situated as they are at the very heart of the process of cultural value production, prizes present a rich seam of cultural practice, ready to be mined more intensively by economists of the arts. The existing literature, though narrow, has produced some valuable findings, while a number of thriving approaches and subfields propose themselves as gateways for further research. We can expect much exciting and illuminating new work in the coming years.