So BBC spending has a multiplier does it?

A new study by the BBC argues it generates £8.3 billion a year for the country in “positive” benefits – around twice the amount it spends on television programming, radio stations and the website.

Some of this boost to the economy comes from sales of BBC programmes around the world. It makes income from selling successful series such as Top Gear and Sherlock Holmes to other countries to the value of around £1.3 billion a year.

However, almost £7 billion of its “economic impact” is calculated by seeing how the money it spends on wages and programming “ripples through” to private businesses. The report says there is a “multiplier effect” which means the wider British economy profits from its vast spending.

Gosh, how lovely. Now, go away and do the study again. This time, properly. And remember to include the dismultiplier, the divider, that comes from taxing money off people. From preventing them from spending their money in the manner they would wish, not you would. And, importantly, remember to include the multiplier of households spending £3 billion themselves, rather than through the medium of the BBC.

For the argument ain\’t \”what is the effect of BBC spending?\”. It\’s \”what is the difference between the effect of BBC spending and household spending?\”

And it\’s rather unlikely that there\’s any economic benefit to shovelling the money through the BBC when properly measured.

8 comments on “So BBC spending has a multiplier does it?

  1. The money spent in brothels has any number of multiplier effects: e.g. keeping people employed in condom factories. And then there’s all those NHS doctors and nurses kept employed treating sexually transmitted. Plus many “employees” in brothels are foreigners who remit some of their earnings to poorer countries. We really should subsidise brothels.

  2. Is this not just a modern version of Bastiat’s Broken Window?

    Though I’m happy to say that I’ve nevr given the BBC a penny and never will.

  3. James Ahiakpor back in 2001:

    “It is quite misleading to leave public policymakers with the notion that their spending is not at the expense of the private sector because it may be autonomous or have multiplier effects”

    This example of yours is a good (bad?) example of NEF disease – it was only when I did my MSc dissertaion that I discovered that this multiplier thing they banged on about had little empirical support and ignored the other half of the equation – how folk would have spent the money elsewise.

    I also discovered that NEF hadn’t tested their theory, submitted it to peer review, published it in a recognised journal or done any of the things we’d expect from “research”. This was largely because it is rubbish of course.

  4. If the BBC can bring in £1.3 billion from overseas sales then why does it still need us to subsidize it?

    You’d think that after all those decades of license-fee money — and we’re talking about £35 billion pounds just in the last decade — that it could stand on its own two feet by now, wouldn’t you? :)

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