Are Some Art Works Truly Worth the Enormous Prices They Command?
Introduction
Art, in its intrinsic and extrinsic forms, has always held a unique place in the world of investments and personal expressions of value. The question often arises: are some art pieces truly worth the enormous prices that people pay for them? To explore this, we must consider the subjective nature of art value, the market dynamics of supply and demand, and the broader implications of art in the context of investment and personal sentiments.
The Psychology of Art Value
Technically, an artwork is worth whatever someone is prepared to pay for it. Over time, where artworks are considered an investment, the last price paid can be a significant indicator alongside the prices of similar works. This value, however, is often contentious. We might not "agree" with the price being paid or with the quality and significance of the work. Yet, as casual observers, we are not the ones paying the bill.
Additionally, the subject of art can change in preference, causing the value of certain artists to wane over time. Artists like Sir Lawrence Alma-Tadema, once wildly popular, saw their themes fall out of favor. Despite this, he remains an important figure in the history of British art. Similarly, French painter William-Adolphe Bouguereau maintained a similar status during his time. This serves to illustrate how taste and relevance can shift, impacting the value and market position of art pieces.
The Economical Perspective
By training, I am an artist. By genetics, I am a collector. By profession, I am an options trader. These roles have allowed me to reflect deeply on the value of artworks, the prices they carry, and the aftermarket dynamics that play a role in their valuation.
A piece of art is worth the price at which it last traded. This transaction valuation reflects the satisfaction of both buyer and seller, capturing a moment in the market. Therefore, the inherent worth of an artwork can be highly individual and subjective. For instance, I have a sculpture of a lion made by my mother, which is priceless to me, differing from its perceived value for others.
High-end art pieces like oil paintings may have their own dynamics. American pottery, while not considered a high-end item, can still have a clear market value. The Ohio Valley Pottery that I can price without additional research is a testament to the predictable nature of certain markets. The value of such items is well known, making them both useful and reliable investments.
However, some collections have inherent value beyond market dynamics. For example, my father's butterfly collection, though not fancy to the general public, holds significant scientific and historical value. These butterflies, recorded meticulously, provide valuable insights into the environment and evolution, making them precious to the scientific community and of incalculable worth.
The Investment and Tax Implications
While some may buy artworks with the expectation of quick returns, the market for fine art is highly volatile, and the slippage— the difference between the price paid and the price received upon selling—can be extraordinarily large. For instance, if one buys a Banksy with the intention of flipping it for a short-term profit, it is a risky and unreliable investment. Similarly, investing in works like Rothko through galleries like The Knoedler Gallery can be equally fraught. Stickley furniture is another example, where the market value was artificially inflated by dealers in the 1960s-70s. Today, the demand for Stickley pieces is lower, and the earlier inflated values may no longer reflect the current market.
The value of art is subjective and influenced heavily by economic factors, tax implications, and market fluctuations. For instance, the taxation of art can vary significantly based on the country, the artist, and the piece itself. Billionaires may find art to be a valuable investment, whereas the weekly wage worker might see its value differently. The valuation of art is not solely based on its aesthetic or intrinsic value but also on its investment potential and market trends.
Conclusion
Ultimately, the value of an artwork is a complex interplay of subjective appreciation, market demand, and economic factors. While some art pieces can command extraordinary prices, the true worth of an artwork lies in its ability to evoke emotion, its historical significance, and its practical or scientific value. Understanding these dynamics is crucial for both buyers and sellers in the art market.
Keywords: art value, price impact, investment art, subjective worth, tax implications