Paying the Price – The Cost of Artwork

In May of 2006, Christie’s auction house sold 57 pieces for a combined profit of $348 million. While a Mark Rothko sold for $50 million, a Lucien Freud fetched a cool $33 million – and this dude is still alive. At the time, it was the most ever paid for a living artist at the time. In 2008 Lucian Freud’s “Big Sue” painting sold for $33.6 million.

In a recent New York Times piece posed the question “Can Art Be Priceless in Times?”. The short post received several prominent responses from respected art journalists, editors, historians, professors and economist. According to the post, This month, a painting by Picasso, “Nude, Green Leaves and Bust” became the most expensive painting ever sold at an auction. The winning bidder had to shell out $106.5 million. This surpasses his “Dora Maart” painting which went for $95.2 million in 2006.

Denis Dutton, a professor of philosophy at the University of Canterbury in New Zealand and author of “The Art Instinct: Beauty, Pleasure, and Human Evolution” and the editor of Arts & Letters Daily weighed in saying, “Generally speaking, art is a poor long-term investment. Though the popular media concentrates on a tiny class of aesthetic objects that have risen spectacularly in price – like Van Goghs or Picassos, for example – most works of art tend to decline in value from their first point of sale.” He went on to add, “The high prices commanded by top-end works of art are often ridiculed as somehow crazy or even obscene. Why is paying $100 million for an ugly downtown office building acceptable, while the same sum paid for an object of enduring beauty is a scandal? I rather find reassurance in the idea that in at least some of its forms, beauty can be a traded – and sublimely expensive – commodity.”

Kathryn Graddy, an associate professor of economics at Brandeis University, had this to say about the high price of art, “The art market is alive and well. Should we be surprised? Frankly, there are not a lot of other attractive assets out there. Yields on Treasury bonds are at all time lows, the current risk-reward profile of the stock market appears to be less than ideal, and gold prices are at dizzying heights.” Graddy adds, “While many people may be in economic distress, the very top echelon of wealthy individuals are doing just fine, and it is this very top fraction of the distribution that drives this end of the art market.”

Professor of art history and philosophy at the State University of New York at Stony Brook and author of both “The End of Art” and “A Critical History of Twentieth Century Art” Donald Kuspit had this to say, “The name is the high-priced, desirable, one-of-a-kind commodity, not the work, which has a certain incidental relationship to it. This has to do with the celebrity culture: artists have been absorbed into its spectacle. Their creativity has been appropriated by it, making every celebrity seem like a great artist in the making, and every artist a celebrity in the making, aspiring to make spectacular art.”