Don Thompson's book The $12 Million Stuffed Shark: The Curious Economics of Contemporary Art is an enjoyable extended case study in human irrationality and behavioral economics, focused on contemporary art.
The term contemporary art is not used here to mean art-by-living-artists. Rather, Thompson looks at pricing for the art you find in contemporary art museums, which is often characterized by challenging everyday notions of what is art. A prototypical contemporary artist is Andy Warhol, with his prints of Marilyn Monroe photographs and Campbell soup cans. Or today's Damien Hirst, the Brit who sold a dead shark suspended in a tank for $12 million.
I love going to contemporary and modern art museums because I laugh, I cry, my mind is boggled at what they are calling art these days. And because there is no obvious craftsmanship barrier to much of contemporary art, I often leave feeling like I too can be an artist, that the way I arrange the cups on the kitchen shelf is an aesthetic choice, the play of shadows becomes engaging, and I start to see everything I do as an artistic endeavor.
For me, going to a modern art museum is a bit like the sense of wonder you get when you go to a children's science museum, where the swinging of a pendulum or the pressure of a shaft of air suddenly awakens your awareness that there's magic all around us, and that we too can be scientists anytime anywhere exploring the natural world.
So I definitely value contemporary art and its role in public life. But I think it's crazy that an installation of a pile of candies should cost a museum hundreds of thousands of dollars.
Thompson's book romps through the players: the dealers, the auction houses, the collectors, the critics. Not surprisingly we-the-people play a very minor role - like any market this is a dollar democracy and you have to pay to vote. Valuations are driven by a small in-crowd that decides what is hot.
Personally, I’m suspicious of any market where quality can’t be objectively measured or at least generally agreed upon by a large body of experts. In general, it seems that valuation becomes more volatile and capricious the higher up you go on the Maslow hierarchy of needs: there is an inherent value to a banana or a house that a ceramic statue of Michael Jackson lacks. And yet there are some very rich people in this world, and they can only eat so many bananas or live in so many houses. But the smaller the market is, the more likely that market is to be highly influenced by a few personalities and their peculiar utility curves. As for me, I wouldn’t pay two grand for a painting of colored dots signed by Damien Hirst. Unless I thought I could sell it for ½ million to someone else…