Summer readings: The dismal science does art
Last week came news that a reputable economist at the University of Chicago, David Galenson, has devised a quantitative method to measure the importance of 20th century artists. His rankings, which received major section-front coverage in The New York Times, are based on how often paintings or sculptures by a given artist are reproduced in each of 33 art history textbooks published between 1990 and 2005. Science accords merit on the basis of citations in the expert literature. Why not art?
And the winner is… “Les Demoiselles d’Avignon” … followed by … Vladimir Tatlin’s “Monument to the Third International” … followed by … “Spiral Jetty” … followed by … Richard Hamilton’s “Just What is That Makes Today’s Homes So Different, So Appealing?” Huh? The last picture—you know, the collage with the bodybuilder in the living room—came in just a nose ahead of “Guernica.”
Economists are irrepressible when it comes to drilling down to the essence of things. They peel away layer upon layer of history, nuance, and context—so much “noise”—to get to the hidden underlying algorithms of societal and human behavior. But methodology can devolve into mind mush—as in the case of asserting that looking at pictures in art history books can reveal much more than, well, the likelihood of finding certain pictures in certain books.
This exercise in solipsistic reductionism is a bit like mistaking the warped reflection in a fun-house mirror with reality itself. Even that may be giving too much credit to the theory. A fun-house mirror does reflect all that is placed in front of it, whereas the mirror of institutional art history has some conspicuous blind spots.
I am reminded of another quantitative economic study, of the auction market, which started off with eliminating the top 10 and bottom 10 percent of all auction results: A perfectly legitimate and common statistical maneuver to cleanse the data of trend-obfuscating outliers—only one that removed from the study all the data points that most people concerned with art values actually care about. Nonetheless, one has to admire the chutzpah, the sheer rationalist braggadocio of it all.
But let us not knock the dismal science. Sometimes, economists give us something tasty to chew on, and they have the laudable habit of backing up their notions with data—on this point, I am with Prof. Galenson all the way. Clare McAndrew, an economist from Ireland, has applied the tools of her discipline to the art market. Her recent book, The Art Economy: An Investor’s Guide to the Art Market (Liffey Press, 2007), is a sensible overview of art investing, albeit from a somewhat quirky EU/Irish perspective, providing insights into a global art economy that, according to her estimate, accounted for some 50 billion Euros in combined sales in the year 2006.
McAndrew sometimes falls into the irksome habits of her peers. Case in point, her formula for measuring prices of art works: P=f(EC) + UP, or: Prices of Art Works = f(Characteristics of Artist + Characteristics of Work + Characteristics of Sale) + UP. “What is UP?” you may ask, if you are still reading. It is the “Unexplained Premium” that a buyer in an auction room may be willing to pay for a work (p. 100). This UP, according to McAndrew, “seems to derive from the emotional, subjective and often irrational process peculiarly attached to purchasing art.” Quantify that!
The book is most helpful to the lay reader when McAndrew summarizes the hypotheses of her fellow economists about how art values behave in the real world. I invite our panel to judge which of the following “price anomalies”—i.e. effects on art prices—sounds realistic to you. Some may ring familiar; others may deserve to enter the broader art-world lexicon. Clare McAndrew, to her credit, points out that most of the suggested effects have had “another piece of research carried out to prove the opposite effect.” They are listed here with her descriptions (p. 105) and without further commentary:
The Death Effect: A rise in the value of artists’ values immediately preceding, at or immediately after their death.
The Winner’s Curse: Cost of being the highest bidder (negative immediate return) at auction due to the private valuation component of art (evidence in the short-term only).
The Masterpiece Effect: No evidence of masterpieces outperforming the market and evidence of overbidding/above average prices paid for them at auction.
The Afternoon Effect: Sequential price declines at auction: final bid relative to the auctioneer’s estimated price declines throughout the course of an auction.
The Morning Effect: Sequential rise in auction prices relative to their estimates.
Burned Artworks at Auction: Negative effect on the future value of works that are unsold/bought in the first time at auction.
Law of One Price: Prices higher in US vs. UK and higher in Sotheby’s v Christie’s—the law on one price does not hold for art.