Peter Levin’s Rethinking Markets

May 20, 2008

Chagall v Cezanne

Filed under: Art, Markets — Peter @ 7:16 am

I was a panelist yesterday discussing art markets, at the Christie’s education center. Great group of people, and really lovely of Marisa Kayyem to invite me. One of the more interesting moments was in our discussion of the primacy of market prices as a measure of value for a work. I had put up a slide noting that ‘centrality’ was the commensurative measure for fine art: that pieces that were closer to the ‘center’ of categories would be considered more important, and hence would command higher values. Someone rightly asked me about the fact that sometimes ‘centrality’ for experts (i.e., art historians) differed from ‘centrality’ for the public; and shouldn’t I clarify the distinction between market value and cultural value.

This led to a surprisingly common discussion - the distinction between Marc Chagall and Paul Cézanne. Chagall is well-liked by the public, and when his pictures comes to auction, they sell well. All the time. Cézanne is considered ‘challenging’, and his art tends to command less high prices. Of course there are large numbers of variables here: the quality of pieces that come to auction, private sales, number of works produced. And yet, Cézanne is considered much, much more central by experts. Chagall is more highly valued by the market.

I am not very articulate about it yet, but there is a funny way that art world participants both completely believe and completely reject ‘the market’ as a measure of value. Following art sales is like tracking baseball scores for many (most?) people; seeing Mark Rothko’s paintings sell for records after such a lull in sales in the 80s, or the rise of Lucien Freud are tracked carefully by participants in the high-end art world. Still, Chagall v. Cézanne - the market sometimes rewards popularity more than important artists. Those former market markers are to be tracked, the latter to be dismissed.

So I (snarkily) suggested that if you believe the market, then, well, really believe it - if prices for Chagall are higher than Cézanne, maybe art historians are simply wrong. Uproar (well, art historians don’t really uproar - more like polite murmur). But what’s interesting is this selective use of the market as an indicator of value when it confirms expert valuations, a sort-of belief in it when it changes somewhat expert valuations (let’s reconsider Klimt!), and a disbelief in it when it contradicts expert valuations. I don’t yet have a complete grasp on why this is, the circumstances under which it operates, or how it really works.

4 Responses to “Chagall v Cezanne”

1. brayden Says:
   May 20th, 2008 at 9:57 am

   This is a fascinating area for potential research I think, exploring the relatedness of expert valuations, evaluative schemas, or whatever you’d call them and pricing. It’s pretty clear there’s not a one-to-one correlation but I’m not sure, like you, but it seems reasonable to think that the prices of challenging items are greater than they would be if they had gone unnoticed by the critics.

   Another way to think about it is to consider the sensemaking of prices. Prices are not, in almost any market, straightforward measures of value. They need to be interpreted by experts and others who are looking for information about the value of assets. So when a valuable piece of art sells for a high (but not record) price or when a free agent signs a baseball contract below the expected amount, the experts have to weigh in with their opinions as to what the price actually means. In this sense, price always requires interpretation. This view of price would be something like Hayek*Weick.

2. Peter Says:
   May 20th, 2008 at 11:07 am

   First, theoretical interaction terms = zen. Made my day.

   Second, I think it’s also worth noting that when prices are lower than specialists’ expectations they often talk about the piece as not having achieved its price, or matured to its price, rather than it not being worth the estimate.

   I’m on board with the sensemaking and information value of prices. But the specifics matter more - when and under what circumstances will market values confirm, dis-confirm, or alter art world values?

   I’m leery about the separate spheres of value arguments (per someone like Waltzer in Spheres of Justice), and I know Daniel Beunza has written about ‘value’ v. ‘values’ in various guises. I’m also a little invested in Viviana Zelizer’s view of circuits of value (whereby the social gives the economic value rather than the economic draining value from the social).

   I think the next step is a series of defensible hypothesis or something more structured.

3. Andrew Says:
   May 23rd, 2008 at 10:33 am

   Sort of in this vein: http://nymag.com/news/features/45324/

4. Peter Says:
   May 23rd, 2008 at 10:59 am

   You’re a prince for pointing this out. Thank you.

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