From this week’s Economist article “Going, going, up,” a paint-by-numbers rehash on the rising market:
Among the anxious are Jianping Mei and Michael Moses of New York University, who compile an index which shows that prices of post-war and contemporary art have done better than the S&P 500 Total Return index over the past ten years.
Once again, a journalist fails to specify that the Mei Moses index only tracks art that was auctioned twice. This is a very select group of artworks, and it’s thus a crucial point. In fact, when I interviewed Moses for my New York magazine feature on the art market last spring, he was anguished by such mistakes, saying: “As an economist, that bothers me. Because I have no idea what the non-auction market is doing, since there’s no transparency of prices.” Well, I have an idea: If you tracked down all the art sold during that ten-year period and measured its value now, the returns would be pitiful, because 75 percent would be totally illiquid.
I’d excoriate the writer, but since the Economist is un-bylined, maybe we can just suggest a remedial course in reading economic studies. Seriously, if people writing about finance were this loose with the data, they’d get sacked. But, hey, it’s only the art market – why bother being accurate?