Movie Attendance During The Economic Depression

The motion picture industry began with one small Edison studio in the state of New Jersey, USA in the early 1900's, and eventually grew into a full-fledged industry with tens of thousands of movie theaters and billions of dollars of revenue.  The success of this industry must surely reflect the fact that it is able to satisfy the certain popular needs.  In the case of television, the Uses and Gratifications theory identifies four needs

- Diversion (a form of escaping from the pressures of every day)
- Personal relationships (where the viewer gains companionship, either with the television characters, or through conversations with others about television)
- Personal identity (where the viewer is able to compare their life with the lives of characters and situations on television, to explore, re-affirm or question their personal identity)
-  Surveillance (where the media are looked upon for a supply of information about what is happening in the world).

These needs are equally applicable to motion pictures.  The validation of the theory can be done via in-depth interviews and surveys.  But there exists a famous piece of macro-economic evidence.  According to this article (Michelle Pautz, The Decline in Average Weekly Cinema Attendance, Issues in Political Economy, 2002, Volume 11; Adobe Acrobat pdf format), "One interesting aspect of cinema attendance is that during the Great Depression, which swept the United States in the 1930's, a higher percentage of the population went to the cinema each week than during the times of economic expansion and great prosperity the U.S. has seen since."  She offers the standard explanation of this observed phenomenon: "During the Depression, cinemas provided an escape from life and the plague of problems that accompanied it in the tough time.  A major function of the cinema was a source of entertainment and a way for people to forget their troubles with stories that almost always had happy endings.  After all, films at the local cinema very rarely depicted the unpleasant realities about life in America during those times."

To what extent do we believe in this theory?  Today, unfortunately, Argentina is embroiled in a severe economic depression (see our articles Consumer Confidence in Argentina: 2000-2002 and Demographic Responses to Economic Hardship in Argentina).  Unintendedly, this may serve as a test for the theory.  

We will cite some survey data from the TGI Argentina study.  This is a consumer survey of 16,904 persons between the ages of 12 to 75 years old who were interviewed between 2001 and 2002 in the midst of the economic crisis.  Within this study, 33.6% of the respondents said that they went to the movies during the past 6 months.  The nature of our analysis will not be to compare this figure against some historical numbers.  Even assuming the time series data exist, that analysis is confounded by co-varying factors (e.g. ticket prices, movie offerings, etc).  Rather, we will look at a cross-sectional analysis of the TGI Argentina database, focussing on the fact that the economic crisis affects people differentially --- some bad, some worse and even some good.  If the hypothesis is that movies provide cheap escapist entertainment for troubled masses, we would expect to see higher attendance among those more adversely affected.

In the next chart, we show the movie attendance figures according to the response to the standard consumer confidence question ("We are interested in how people are getting along financially these days. Would you say that you and your family are better off, or worse off, or about the same financially than you were a year ago?").  The observed pattern is exactly opposite to the hypothesized pattern.  

(source: TGI Argentina)

In the TGI Argentina study, 5.0% of the respondents said that they had gone to the movies in the past seven days.  In the next chart, we show the movie attendance figures for the past seven days.  The pattern is exactly the same.  

(source: TGI Argentina)

Why has the Depression-era pattern in the USA failed to materialize?  In 1939, at the end of the Depression, a reserved orchestra seat for the movie Gone With The Wind cost US 55 cents.  But adjusted for inflation over the years, this is equivalent to US $9 today, which is not necessarily different from actual ticket prices in New York City today.  However, in the context of Argentina, even the lower ticket price may seem exorbitant when one if not faring well economically.  That may be one reason, but we believe that a much stronger explanation comes from the change in environment.  The Depression era took place before the advent of television.  Today, we have the choice of watching a movie or some other types of television programs for free on broadcast television in our homes.

(posted by Roland Soong on 03/26/2003)