The economics of fine art


The economics of fine art

Robert Del Naja, also known as Banksy, is a street artist whose work is mostly graffiti. For the past decade, he has been working on the streets, creating artworks on familiar streets and walls. Banksy only entering the fine art auctioning market recently, where his artwork, Girl With Balloon, is sold for 1.4 Million dollars at the Sotheby’s auction house. To many's surprise, the artwork shredded itself after the auctioneer announced its owner.

The ironic part is, the artwork is now worth more. 

The fine art industry was not always like this. Before the 1900s, most artist still approaches their subject matters in a realistic manner, everything is representational, and the imagery is supposed to be the stimulus to trigger an emotional response to the viewer. However, during the early 20th century, the movement dada came along and refined the fine art world. Dada suggested that anything could be art. A sideways urinal could be placed in a museum, a mustache could be put on Mona Lisa and that is a unique, original piece of art. Around the same time, abstract art has emerged and representational artworks are no longer favored by the public. Within decades, art is completely redefined, where an act, a blob of color, arrangement of lead squares on the ground could be in a museum. Without these movement pushing the art industry, the shredded Girl With Balloon will worth no more than the paper and the frame it is mounted on. 

The fine art industry is subjective, and the market elasticity varies from artist to artist. Taking Bansky's shredded art, for example, the reasons why it is sold for so much originally is because of Bansky pre-existing popularity. On the demand/supply curve, fame is the equivalent of the demand curve, and the price of the artwork will be determined only on demand since there is only one unit available. For a more established artist, their product's elasticity is inelastic. (Think about what would happen if Starry Night were to be auction off to a private collector.) However, as an armature artist, the demand is elastic, since the customer's demands change dramatically, depending on the quality of their work. The reason why Bansky's art is worth so much more now is because of one factor that contributes to the shift in demand, the preferences of the consumers. The auction participants now prefer the shredded Girl With Balloon more than other artworks that will be auctioned, which cause the equilibrium price to rise.

The fine art industry is definitely an interesting market to analyze. Each artist can be modeled by a demand-supply curve yet the elasticity of their products varies greatly. 

Comments

  1. AnonymousApril 3, 2019 at 9:32 AM

    I was always wondering on how artists make money from their artwork. It is not doubtful that famous artists would sell their artworks in a high price, but I never imagine the artworks, like the shredded Girl with Ballon would have such a large demand. Thank you for sharing this with us, Austin! I think another reason that Girl with Ballon is so popular among buyers is that its uniqueness. The uniqueness also means that it is the only copy in the world, there is a random chance to let the shredding occur, and other artists are highly unlikely to reproduce this art piece. So, in terms of the supply and demand model in economics, the supply is so low in a way that creates a high demand. In addition, I think the artwork market is pretty unpredictable because you would never imagine the shredded Girl with Ballon is highly demanded.

    ReplyDelete
  2. AnonymousApril 7, 2019 at 9:31 PM

    This was a really interesting post and I was able to learn a lot about the details behind the art industry. When I looked into the topic further, I found out why the Girl with With Balloon's worth increased after being shredded. For example, the person who bought it is still paying the same amount because she will become a part of art history. Furthermore, after being renamed Love in the Bin, the artwork has gained much fame and has been recognized as the first piece of art ever created live in an auction. This fame and attention given to the artwork increases its value as the importance the art community has put on the artwork has increased because of the stunt.

    Source : https://www.bbc.com/news/uk-england-bristol-45829853

    ReplyDelete

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