Marketplace: Economy of Architecture


This lesson printed from:

Posted January 21, 2009

Standard: 14

Grades: 6-8, 9-12

Author: Council for Economic Education Technology Staff

Posted: January 21, 2009


In March 2004, Andrew Haeg reported that in this age of globalization, great cultural centers have become essential to a city's economic survival. The arts can even put cities like Milwaukee on the map.


Benefit, Costs, Entrepreneur, Externalities, Opportunity Cost


  • Describe the risks and benefits that entrepreneurs face when launching a new enterprise.
  • Understand that entrepreneurs weigh financial risk and potential profit when they decide whether to launch a new enterprise.


Many factors influence a city's economy. Economic prosperity is affected by more than a city's financial citydistrict; international reputation, culture, and even architecture play a role in determining a city's economy. In this lesson students learn how some cities today are attempting to revamp their economies by building new and architecturally intriguing cultural centers. In studying these cases, the students will learn to recognize the costs and benefits of building such structures. [Note to the teacher: in explaining costs and benefits, you may want to use examples to show how externalities (positive and negative spillovers) are associated with decisions to build certain structures. Positive spillovers help to explain why cities build stadiums, museums, etc.; there's more than just  prestige at stake. There are spillover costs, too, and they are sometimes overlooked. Many cities don't factor in all the spillover costs (such as the cost of relcating, homeless people,  managing traffic flows, etc.) when they set about building a new structure. One of the extension activities below suggests using the lesson New Sense, Inc. vs. Fish 'Till U Drop or Coase Vs. Pigou, to  expand on this concept.]


Activity 1
Have the students listen to the Marketplace audio file (Economy of Architecture) about cultural centers and cities. As they listen they will complete an outline of important information contained in the audio file. Then they will use their outlines to answer factual and evaluative questions about economic concepts addressed in the audio.

Give students the following instructions:

Listen to the Marketplace audio file about Economy of Architecture (timestamp 15:35).

While you are listening, use the note-taker to record supporting details about three main ideas:

  • Reasons why "Great Cultural Centers" are vital to a city's economic prosperity.
  • Cities that have developed or are developing Great Cultural Centers.
  • Economic risks in establishing Great Cultural Centers.

    Additionally, as you listen to the segment, record any words that you don't know or that you think are important economic terms.

    Then, listen to the audio file again to gather additional supporting details and possible definitions of the vocabulary words using context clues, and record them in your note-taker.

    Finally, you will be asked a series of questions related to the story.


1. What are some of the characteristics of a great cultural center?
a) Artistic
b) Economically viable
c) Architecturally intriguing
d) All of the above [correct]

2. What other characteristics might also be of importance to a great cultural center? Why? [Possible answers: location, city's current reputation, architect and his or her reputation, etc.]

What is the model many cities are looking towards for a great cultural center?
a) New York City
b) Milwaukee
c) Bilbao, Spain
d) Minneapolis [correct]

4. Do you think a great cultural center to replace the World Trade Center would have more benefits or costs? Why? What are the costs and benefits and risks? [Possible answers: Risks: economic risks -- would it pay off in the end? Benefits: Job opportunities, tourism, etc.]

5. Why are great cultural centers vital to a city's economic prosperity?
a) They will contain many retail shopping outlets.
b) They will attract people with a lot of money. [correct]
c) They will sell very easily in the real estate market.
d) None of the above

6. What are some other reasons why a great cultural center might be vital to a city's economic prosperity? [Possible answers: tourism, long-term reputation of the city, etc.]

[Note to the teacher: at this point, you may want to include a discussion on the opportunity costs of building such structures (for example, "If we don't build a museum, we could build a school").]

Activity 2
wtcHave the students read the article "A Struggle for Solvency At Milwaukee Museum" by Stephanie Strom. This article will inform students about the financial woes of the Milwaukee Art Museum.

Give the students the following scenario, and have them evaluate it, using information and ideas from the audio file and the additional web site.
The students should record their ideas.

You have just been hired to offer your advice on the building of a cultural center to replace the World Trade Center. Consider the following as you record your ideas:

  • What are New York City's potential benefits from creating a cultural center in downtown Manhattan?
  • How will a cultural center help New York's economy?
  • New York City already has a reputation as a culturally rich city; does it need a new cultural center?
  • Learning from the experience of the Milwaukee Art Museum, what are some potential risks of rebuilding in lower Manhattan?
  • What are some issues specific to rebuilding the World Trade Center site that are important to consider?


Evaluation 1: Have the students turn in their note-takers. Their work should reflect an understanding of how buildingarchitecture and culture can both positively and negatively affect a city's economy.

Evaluation 2: Have the students hand in their recorded ideas from Activity 2. Their work should display an understanding of the risks and benefits that entrepreneurs would face when building a cultural center in lower Manhattan.

Evaluation 3: Have the students determine the hypothetical costs and benefits of building a convention center/event arena in their city. Have them come to a decision of whether to build this arena or not, and why.


By the conclusion of this lesson, the students should be able to identify at least three ways in which a city's architecture and cultural opportunities can affect its economic prosperity, both negatively and positively. These "opportunity costs" should be identified within the specific examples throughout the lesson.

[Note to the teacher: Support the students' as they make their decisions by using the P.A.C.E.D. model below. The following link provides a pdf file for the students to work on -- P.A.C.E.D. Decision Making grid]

Steps in the P.A.C.E.D. Model:

P- PROBLEM: Clearly define the problem.
A- ALTERNATIVES: List alternative solutions.
C- CRITERIA: Determine the criteria/goals.
E- EVALUATE: Evaluate each alternative.
D- DECISION: Make a decision.


1. Entrepreneurs starting private businesses also face costs and benefits- some similar to and some different from- the costs and benefits faced by those who build cultural centers. Compare and contrast these costs and benefits. Then have the students further explore the risks/benefits entrepreneurs face by completing Business Ownership: How Sweet It Can Be.

2. Have the students explore how specific cultural institutions in New York were affected by  the attacks of September 11th, 2001. To do this, they should complete Marketplace: To Show Or Not To Show.

3. Have the students consider how important it is to carefully weigh the units of costs and benefits when making decisions. To do this, they should by complete New Sense, Inc. vs. Fish Till U Drop, or Coase vs. Pigou.