The Economics of Art; the Art of Economics
Add contemporary art to the long list of topics that have been illuminated by economics research. Don Thompson of York University, Toronto has studied this market and in his new book, “The $12 Million Stuffed Shark”, examines why art prices reach such staggering heights. Just weeks ago, Damien Hirst auctioned his “Beautiful Inside My Head Forever” collection for nearly two hundred million dollars: enough to buy 272,108 metric tons of rice. Professor Thompson graciously agreed to an interview:
Photo by diametrik on Flickr
What made you study economics in the first place?
It was probably one of those undergraduate surprises; I took a micro course, enjoyed it, took a course in European Economic History and loved it, took a macro course, and launched on a career.
Has being an economist changed the way you appreciate art?
No, you still lust after art that touches your soul that, you want to live with and wake up to. However, knowing the prices of art affects how you look at it, particularly in a contemporary art museum. The “if one like that sold for $20 million there must be something there I haven’t seen, I’ll look harder and reach hard” syndrome is hard to avoid.
Is the economics of contemporary art like other areas of economics, or did you have to build it from the ground up?
I spent a year working on The $12 Million Stuffed Shark because I did not understand how artists got selected to rise to the highest levels (being sold in Sotheby’s or Christie’s evening contemporary auctions), or why prices were 10 or 100 times what seemed reasonable in the absence of scarcity. And because of my profession and personal curiosity, I wanted to learn more.
November 13th, 2009 at 3:48 pm
How can anyone seriously justify spending that kind of money on a piece of art? When there is so much trouble in the world like people starving it just doesn’t make sense…
September 4th, 2011 at 2:29 pm
I do wonder if part of the reason for the boom in contemporary art is that with great increases in unequal wealth distribution, there is so much money chasing stores of value. Art provides this by being unique, non-reproducible (easily)and has value by common agreement (as have currency notes). Since the supply of old art is limited, the contemporary art market has stepped in to fulfil that requirement. And as bankers guarantee that your currency notes are not fake, so do galleries guarantee that you are buying something valuable. And as long as all in that wealth holding group agree that it is valuable, the art serves as tokens of wealth that can be exchanged wiithin that group, and can be exchanged for other assets thus maintaining some liquidity.