In his 2010 book, “The $12 Million Stuffed Shark: The Curious Economics of Contemporary Art,” university business professor Don Thompson attempts to demystify the subjective determinations of value that define the art world, by interviewing collectors, dealers, curators, and auctioneers. The example from which he derived the title was Damien Hirst’s installation of an embalmed 15-foot Australian tiger shark, which was partially decomposed in its glass tank, but which still sold for the eight-figure sum in 2005. For outsiders, or even casual players in the art world, it can be hard to understand the driving forces behind the high valuations certain artists or pieces of artwork dictate, the “curious economics,” as Thompson called them.
“The reason that many people continue to be astonished or enraged when they hear that a particular work of art has been sold for a large sum of money is that they believe art serves no necessary function.”
– Michael Findlay, “The Value of Art”
So what are the main factors that decide how much modern art is worth? It’s easy to rely on the economic theory that an item’s value is whatever someone is willing to pay. But it isn’t quite that simple.
1. Econ 101
Henri Neuendorf, Associate Editor for ArtNet, wrote, “Speaking in the most basic economic terms, high demand and a shortage of supply creates high prices for artworks. Art is inherently unique because there is a limited supply on the market at any given time.” For artists that are dead, this supply obviously becomes even more limited. Add in the ease with which international buyers can participate in auctions halfway around the globe, and there is a definite increase in competition (demand) for any given artwork (supply).
2. Hot or Not
Many established artists consistently do well at auction, realizing higher and higher prices against higher and higher estimates. Other artists have a brief season where they are in demand, but fail to have repeat success at future auctions. Likewise, thematic elements of the artwork can be on trend, or not. The market can for an artist or style can change within a single auction season, and there is often more volatility for newer contemporary art.
3. Providing Context
Value is frequently dependent on context and collectors, museums and scholars alike look not only to the specific work of art in question but also to how that work of art fits within an aesthetic movement and/or historical context. Impressionism upended conventional artistic practice, and Impressionist artists continue to realize top prices at auction, even as desirability of late has swayed more towards modern and contemporary art. In much the same way, the Pop Art movement’s importance in art history directly correlates to the value ascribed to artists from that movement.
4. Quality, Not Quantity
An even further subjective determination than price is the quality of a particular work by a particular artist. There’s a reason not every Warhol screenprint is given the same blanket auction estimate; not all Warhols are created equal. The quality and style of a work of art can influence its price, as well as the condition of the piece overall. Preservation is an important factor in determining value.
Trust the Experts
Ultimately, a specialist in modern and contemporary art can provide the most accurate estimate of a work of art. Specialists uniquely understand the fluctuations, variations, and trends in the art market, and can recommend the most appropriate estimate for your modern and contemporary art.
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