Wednesday 28 November 2012

Was The Hobbit worth it?

A question asked at the Homepaddock blog and we are offered this picture claiming it was,


Let us assume the numbers themselves are totally correct (a big assumption). The question we should ask ourselves is, If these are the benefits what are the costs? We need to trade-off benefits against costs to make a judgement about the usefulness of The Hobbit. After all we are often told of the great benefits of many things that governments back, like sports stadiums, and such claims turnout to be false, so why should we think otherwise about a movie?

Thus, what are the costs of the subsidies to the movie? And most importantly what are the opportunity costs of these subsidies. The money that went to the movie could have been used for something else which also would have produced benefits that we could make a graphic of.

So we need a full cost-benefit analysis before we can say the movie was worthwhile.

3 comments:

macdoctor said...

It is probably not possible to calculate the true economic impact of the Hobbit films. There is a effect of unknown size on tourism that would be difficult to quantify, because it may last for many years and because most tourists visit a country for a multitude of reasons, making it hard to determine the "hobbit component" of their motivations.

You can get some idea by the lift in tourism number immediately after the movies but this is a very rough approximation of the "real" benefit.

Eric Crampton said...

Do we have any clue how much the NZ Govt actually shelled out to support the movies? I've seen lots of talk about millions in subsidy, but that looks like the effect of a lower tax rate than that which would normally apply; if it was marginal in bringing the films here and if the government weren't actually out of pocket for it...

Horace the Grump said...

Presumably under the OIA one could ask for the analysis of providing tax breaks et al to the Hobbit production... but the financing of such ventures is very complex so the true value may never quantified...

Worth a shot though....