Price and the Perceived Value of Art: Open Thread
The bit in particular that sprung to mind this morning was this exchange:
Patsy: [looking at what Edina bought]: Are you mad?The AbFab bit sprung to mind after reading this short article by Anna Somers Cocks, General Editorial Director of The Art Newspaper, entitled: We Like Art Less When Its Price Goes Down. Actually, I think this walking-into-the-room-backwards approach to discussing what folks should expect from the bear market was rather clever of The Art Newspaper, but all the same, it's good food for thought:
Edina: Well you don't have to like it, that's not the point, Darling
Patsy: Well how much did this lot set you back?
Edina: Well, I just spent as much as I could, Darling. It cost me hundreds of thousands of pounds.
Patsy: Ah well, in that case, it's fabulous.
Now it’s scientifically proven: we really do enjoy expensive things more. In an experiment conducted by Antonio Rangel at the California Institute of Technology, the brains of 20 volunteers were scanned using functional magnetic resonance imaging while they tasted five different wines costing $5 to $90 a bottle. But Rangel fibbed, telling them that the cheap wine was the most expensive, or giving the same price to two different wines.Yes, yes, that's all well and interesting, but here's what I suspect was the true take-away message of the piece, lobbed into the room softly:
The scanner showed consistently that the flow of blood to the part of the brain that registers pleasure, the medial orbitofrontal cortex, increased when the price was declared to be high, not according to the quality of the wine. In case this got attributed simply to the ignorant palates of the volunteers, Rangel repeated the experiment with members of the Stanford University wine club and got widely similar results.
What this does is to explain the effect first described by the economist Thorstein Veblen in 1899 when he noted that certain goods become more in demand as their price rises. Diamonds and luxury cars are an obvious example of this, but so is art, especially contemporary art.
Rangel’s discovery will be relevant when the recession hits. Here at The Art Newspaper, we have survived two recessions, 1990 and 2000, and we know that a fall in the art market follows a bear market, but always with a certain time lag (in the past this has been as long as nine months, but we think the cycle will speed up now).Of course, I might be reading too much into the fact that the article was short and didn't seem to provide much to support its headline...and Anna did wrap it all up nicely, even coining a phrase in the process:
The speculators will try to unload their art, but will have difficulty doing so because the art market not only falls but freezes, except for the rarest and most widely admired works. This is for two reasons. The thousands of people who still have money to spend choose not to do so until they are certain that the market has bottomed out. But they are almost certainly also affected by what we should call the Veblen-Rangel effect from now onwards: they actually find works of art less attractive as their price goes down.But whether the point was to open up a discussion about the 800-lb. gorilla in the room or to merely explain why folks should be conscious about the irrationality of the "Veblen-Rangel" effect, it does offer a good launch pad for a discussion about perceived value. What in particular I'm curious about (having just worked an art fair) is: If art is less attractive when its price goes down, why do some collectors work so hard to get as big a discount as they can?
Just kidding. I understand the difference.
Consider this an open thread on the connection between price and the perceived value of art.