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Oscar Winners Should Thank Their Economist

Research studies differ on the effect of an Oscar on a film's bottom line.
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As anyone who has channel surfed past Entertainment Tonight is aware, movie studios put massive energy into their Oscar campaigns each year. But does this effort to sway the voting members of the Motion Picture Academy of America pay off in terms of increased revenues? A series of studies over the past decade have reached conflicting conclusions.

In a 2001 analysis titled “What’s an Oscar Worth?” a team of economists led by Randy Nelson and Michael Donihue of Colby College compared the box-office take of 131 nominated films with that of 131 less-heralded movies released in the same week as the eventual nominees. Writing in the journal Economic Inquiry, the researchers determined a nomination or award for one of the top prices, such as best picture, actor or actress, “generally has a positive impact on a film’s probability of survival, its market share of screens, and the average revenue per screen.”


“The value of an award,” they added, “is several times the value of a nomination.” Specifically, they calculated a best picture nomination increased predicted box-office revenue by $4,799,118, while an award itself raised the projected take by $12,690,035. That’s a lot of dinners at Spago.

But don’t make those reservations just yet. In 2005, a team of German economists led by Eva Deuchert conducted a similar study using different data. (These researchers looked at the years 1990-2000, while Nelson and company examined 1978-87). Comparing the 204 most successful movies of each year, they concluded that “the financial value of the award itself is overrated by the industry. A large part of the extra rent created by Oscars is generated by the nomination, while the award itself contributes relatively little to this extra revenue.”

Nothing stirs debates over movies like the Academy Awards. Researchers also argue about the Oscars: Does the Oscar represent artistic quality? Does winning the award help you live longer? Does the award increase box-office sales? For more on the studies of Oscar, check out these stories:
Does an Academy Award Really Denote Quality?
Predicting Oscars for Bigelow, Bridges, Bullock
Death and the Oscar Winner

If they’re right, the Academy’s decision to increase the double of Best Picture nominees, which puzzled many observers, may have been a very smart move. Could there be some closet wonks on Wilshire Boulevard, reading academic papers between screenings?

Then again, perhaps the whole process is overrated. That’s the conclusion of a 2008 study by three scholars from the Netherlands, who compared the impact of peer-bestowed awards like the Oscars with two other categories of honors: those presented by experts such as reviewers, and those voted on by the public.

Writing in the Journal of Management, they found critics’ awards were most likely to boost ticket sales for independent films, while for mainstream movies, the impact of all three types of honors was pretty much the same. Their ego-crushing conclusion: “Apparently winning an Academy Award is not perceived by the mainstream movie-going public as a more credible cue (that a film is worth seeing) than winning consumer-selected awards such as the MTV Movie Awards.”