“When critics disagree, the artist is in accord with himself. We can forgive a man for making a useful thing as long as he does not admire it. The only excuse for making a useless thing is that one admires it intensely. All art is quite useless.” Oscar Wilde, The Picture of Dorian Gray.
ALL, YOU ARE NOT GOING TO BELIEVE WHAT THE MATH GUYS HAVE FIGURED OUT ABOUT VALUATION OF CONTEMPORARY ART AND ALL YOU WOULD BE ARTISTS BETTER PAY CLOSE ATTENTION TO THE RESULTS OF THIS BRILLIANT MATHEMATICAL ANALYSIS IF YOU WANT TO MAKE ANY MONEY!
In total, the global public auction Fine Art market generated a total revenue of $ 6.4 billion in 2006 and 5.9 billion in 2014. WE’RE AT THE PEAK OF THE ART MARKETS FOLKS-8 YEARS LATER ART AS AN INVESTMENT IS BASICALLY GENERATING THE SAME AMOUNT OF MONEY.
DON’T GET BORED BY THE BIG WORDS
Academics and people active in the financial sector to show an increasing interest in the art market. For example, several attempts have been made to launch art investment funds. In the academic world, an increasing literature has tried determining how art markets price artistic work. In contrast to bonds or stocks, which are homogeneous goods traded in liquid markets, paintings represent unique artwork (which makes them de facto heterogeneous goods) and are sold infrequently. Two methods have been suggested to assess the returns for heterogeneous goods: hedonic regressions and repeated sales returns.
An alternative method, commonly used to analyse homogeneous goods, has also been applied to heterogeneous goods analyses. The so-called repeat-sales regression method is based on commodities sold more than once on a specific time period.
“Art objects, and paintings in particular have inelastic supply and deviations from production costs are marked and persistent. In this respect, paintings are characterized by the lack of any “natural” price in the classic sense” which is one of the underlying hypothesis of the repeated sales regression. The determinants of price in the literature have mainly addressed parameters such as the size of the art work, is it attached to a specific currant, the name of the artist, the fact that the piece of work is signed or not, dated or not, etc. No model takes into account the quality or the perceived quality. This seems however essential and can only be addressed by the hedonic regression analysis.
We analysed the perceived value of piece of works. Previous analyses took the name of the artist as best proxy for the quality of a piece of work. We suggest that a ranking made by experts, mainly curators, based on their judgement of the quality brings insightful information to the model.
THE GERMAN KUNSTKOMPASS RANKINGS
Our analysis is based on an original set of data. The Kunstkompass ranking is established every year by the German magazine Capital. It ranks 100 contemporary living artists based on the number of expositions made by each artist. A weight is given to each exposition. For instance, being exposed to the Metropolitan Museum of Modern Art in New York is more relevant and therefore more rated than be exposed by a gallery in Düsseldorf. The artist name is not sufficient to differentiate two heterogeneous goods especially in Art. For each of our 100 artists, we have all the auctions sales and details (size, medium, age, signed/ or not, etc.) since 1987 provided by the Guide Mayer. We therefore have a good basis to investigate the perceived quality of an artist. The purpose of this system is to simplify the orientation on the market for contemporary art, one of the most obscure markets of the world.
The attempt to make this market more transparent through objective criteria and to permit a fairer evaluation of contemporary artists is new. The first step in developing the Kunstkompass was to send a list including all major exhibitions, museum and galleries to 106 German and Swiss experts in the field of art, asking them to rank the listed items as “important”, “less important”, and “very important”. Another result of the poll was to determine the importance of various artists, the definition of “important” referring to the quality, degree of innovation and charisma of the artist. This means (also) that the artist should have some continuity in his production. For each edition of the Kunstkompass, Bongard contacts “gallerists”, artists and exhibitors, broadens the range of parameters and gathers points.
FEMALE ARTISTS FINALLY GET RECOGNIZED
In 1990, for the first time as much as ten female artists appeared in the top 100 list. During the eighties, the list changed continuously, due to the rapidly changing careers of the artists. As consequence many didn’t appear more than once in the Kunstkompass. In 1988, Kunstatlas and Kunstkompass were merged and the counting of the points was started in 1980 in order to give the younger artists a chance. Today, 160 museums are considered as well as 130 group-exhibitions. The number of considered artists has risen to around 10,000.
15,000 WORKS OF ART WERE ANALYZED BUT UNSOLD ART NOW ONLY IMPACTING VALUE
We think anyway that the Kunstkompass has considerably increased its level of standardisation making it a reference globally used and yearly expected by the connoisseurs. The prices in the analysis are actual selling prices (CPI corrected), not listed prices. The data set does not contain information on unsold art works (1,514 of our 16,307 original sample). The number of works of art used in the analysis is almost 15,000
IT’S ALL SKEWED
The works of art have been categorized across seven different media: Painting – Drawing – Watercolor – Print – Photo – Sculpture – Other (Video, etc.) Although the overall mean price of works sold via the arrangement is $91,217, the mean price per artist was $58,987. This implies that – on average – “expensive artists” sell more works than “cheap artists”. In other words, the distribution of success is skewed. Male artists represent approximately 79 percent of the artists. The average artist age is 57. The average number of works sold by is 145. Many artists work in more than one medium. There are 21 nationalities presented. Sales at Sotheby’s and Christie’s represent 33% each.
IS THERE AN ECONOMICS OF TASTE?
The question remains: is it a good sample to determine the return on the Art Market? Basically, we are confronted with some available data what about all the unknown data? We think that the conclusion they draw are however correct but for a more straightforward analysis. As in publishing, where less than 1 in 800 books represent half of the total unit sales. And even that is a sample of the published books. What about if we take all the written books? It is the same for Fine Arts. You have the sold works and for those ones a few that achieve significant returns.
HYPE, HYPE, HYPE
Significantly higher values are placed on the works by Cy Twombly, Jasper Johns and Damian Hirst and are associated with percentage price.increases of 277.15, 320.65, 243.35 percent7 over the standard artist,
DAMIEN HIRST’S POPULARITY COMES FROM BEING OUTRAGEOUS, NOT FROM ANY INTRINISC VALUE OF WHAT HE MAKES
We can easily explain that artists with higher values enjoy a well established reputation on the international art scene. Damian Hirst is one of the few living artist able to achieve million dollar auctions. In May 2007, the White Cube gallery in London presented Beyond Belief, an exhibition of Hirst’s new work. A human skull recreated in platinum adorned with 8,601 diamonds weighing a total of 1,106.18 carats entitled For The Love of God. The only surviving human part of the skull is the teeth. This piece of work made history being the most expensive artwork ever created (approximately £15,000,000 worth of diamonds were used). Hirst has been quoted as saying he intended to sell the work for £50 Million other even mention £75 Million.
UNEXPECTED NEGATIVE FACTORS ON CONTEMPORARY ART VALUE-SIGNATURE AND DATE BY ARTIST AND SIZE OF THE ART
The variables SIGNED and DATE have an unexpected, negative effect. Piece of works signed and dated lead to percentage decreases of 5.04 per cent and 0.1 per cent respectively, over those that are not. This goes against the common wisdom that there is a higher value placed on works which have characteristics associated with authenticity. N
Contemporary art prices first tend to increase with size, then decrease as the piece of work become too large and difficult to house.
THE CARTELS OF AUCTION HOUSES
Turning to our third set of parameters regarding the process of sales, they show that auctions at Sotheby’s, Christie’s and the country of sale increase significantly the standard price by 178.36 per cent and 177.47 per cent, respectively, over other auction houses. BUT THE MONTH AND THE DAY OF THE AUCTIONS HAVE LITTLE EFFECT
GOTTA HAVE OIL PAINT
The medium of execution indicates that painted works command higher prices, with increases over the standard work of 136.63 per cent. WATERCOLOR, PRINT, PHOTO lead to 116.04, 20.68, 133.44 per cent increase. The coefficient associated with DRAWING is not relevant. The medium of execution indicates that painted works PAINTING command higher prices, with increases over the standard work of 136.63 per cent. WATERCOLOR, PRINT, PHOTO lead to 116.04, 20.68, 133.44 per cent increase. The coefficient associated with DRAWING is not relevant. The significance of oil is largely due to the permanence of oil and the difficulty of use, ESPECIALLY FOR USA ARTISTS.
THE CONCLUSION–THE SEVEN DEADLY SINS-BOTTOM LINE: GO SUCK UP TO A FAMOUS PERSONAND BE RICH ENOUGH TO OPEN UP YOUR OWN MUSEUM
Wealthy individuals often consume highly conspicuous goods and services in order to advertise their wealth, thereby achieving greater social status. Some people have a tremendous influence. Leo Castelli was a gallerist at the onset of the Pop Art currant. Damian Hirst set up the Young British Artist (YBA) association with purpose to promote them. He is also well known for buying his own pieces of work from collectors. His relation with the well known collector Charles Saatchi is even famous. Christie’s owner François Pinault, a famous contemporary artist collector acquired the Palazzo Grassi in Venice in order to expose his collection. Piotr Ulanski, untitled X-Rayed portrait of François Pinault is probably the quintessence of the collusion between the artist and the patron. Exposed at the entrance of the Palazzo Grassi exhibition: “Where are we going?”. Who can estimate the value of this work? Moreover what can we say regarding the artistic value?
AUTHOR OF THE STUDY: Does Artistic Value explain the perform ance of Contem porary Artists? R. Rozenbaum
CENTRE EMILE BERNHEIM
RESEARCH INSTITUTE IN MANAGEMENT SCIENCES