Editor's note: The following article was rekeyed and reprinted on May 16, 1998 in Resource Library with permission of the author. Prepared for the column Dunbier on Fine Art Valuation, Dr. Dunbier writes on issues regarding the valuation of fine art. If you have questions or comments regarding the article, please contact Lonnie Pierson Dunbier in Scottsdale, AZ, at ldunbier@mac.com.
Fame and Money
By Roger Dunbier, PhD
The paintings of famous artists fetch the highest prices. Not always true, but so close to always that quibbling about exceptions is time wasted. Not wasted, however, are efforts to improve understanding of the mechanism of fame and better yet how to take advantage of it in the fine art marketplace.
We at ENCompass Fine Art have spent thousands of hours of human and computer time to obtain a measurement of the dynamics underlying prices realized for pictures sold at auction. It is our belief that traditional reliance upon auction results can be improved upon and in some cases replaced by hard-unbiased data generated far from the auction house floor.
In its essence, our method is based upon obtaining the best possible measurement of durable reputation, which generates in overwhelming measure the desire for acquisition. This desire of course creates the one or more "under-bidders" who push prices up at auction. The greater the perceived distinction attributed to the artist in the minds of the bidders the greater the price realized, everything else being equal. The obvious problem is how to measure these perceptions of reputation.
Our answer is the accumulation, tabulation and assessment of published material about individual artists over time wherein the public's changing estimation of distinction is formed.
As in every other art form, opinions are created more by reproductions and editorial assessment than by actual contact with the art work [or performance, etc.]. Books containing references to or pictures of pictures constitute the principal and most durable underpinning of reputation--the "sine qua non" of fine art values.
To illustrate the difference between our methodology and auction-centered evaluation, an analogy is apropos.
A tray of assorted pastries to taste is presented to the guest. "Ah yes--good, very good, excellent, not so good, better, etc." This enjoyable activity is quite comparable to an auction price-reliant evaluator leafing through an auction catalog or an index of auction results. He or she should be aware that hundreds of other pastries are not on the tray--these "pastries" being those artists who have not appeared in auction year after year. "Oh well, you can kind of guess what they must be like." So on and on.......mainly in the dark.
Now our approach goes into the kitchen. What are the ingredients that go to produce each individual pastry--that is, all pastries, not only what goes onto the tray? What goes into each one that makes it so special? And of course, after all of this and not being crazy, we too taste them also in the same way as the above, combining the (our) ingredient analysis with the auction house "pastry tray." Now this last tray is of course the most current auction house price estimates and prices realized.
We enter into our database descriptions and estimates, etc. from seventeen auction houses that publish catalogues and final prices. With this data and numbers obtained from our art-literature tabulations, we are able to produce a numeric starting point for computerized price estimates. These estimates are accomplished through what is now a time-tested technique known as "computer modeling." In formulating these models, a number of mathematical curves have to be created and then brought together to produce price estimates that correlate with and indeed predict actual market prices.
One of these curves is the element of size. Paintings of smaller size fetch less than those having a larger surface area. However, pictures half the surface dimension--everything else being equal--do not necessarily bring half the price. This discrepancy is because the effect that size has on price is not one-to-one but a relationship that rests on a curve, in fact on several curves.
Here, once again artist celebrity works its way into the picture [pun intended]. In a work of merit that is without celebrity, all pictures in the same medium by artists of comparable skill would increase and decrease in value along the same curve.
With celebrity, however, and with diminished size--meaning diminished price--the collecting of pictures merges with another avocation, that of collecting autographs. Hypothetically one could envision a 20 x 24 [480 sq. in] being diminished to 4 x 6 [24 sq. in.] or one-twentieth the area. The price for the same painting is almost without exception considerably more than one-twentieth the price of the larger painting.
Drop the hypothetical.
In May, 1993, Sothebys sold a 4 x 6 Bierstadt oil painting for $25,300, and it was not even a western landscape! Somebody has a very nice original Bierstadt, not much of one in relation to his best known monumental efforts, but it was and is a Bierstadt and certainly more than an autograph but beginning to verge on one. At this size, the unanswerable question is how much of the twenty-five thousand is picture and how much is autograph, the price the public always seems willing to pay for famous names: "Oh, yes Mr. Trump, I just bought a Bierstadt."
Believe me this motivation happens all the time; it is not an isolated case. In fact, it's most egregious examples are not to be found among collectors of painters who died a hundred years ago but among those still living. Its most exaggerated manifestations are in the lesser mediums particularly prints where those insidious words, "numbered original," come into play. Here "fad" is heaped on literally manufactured fame where one of thirty is made to be scarcer than a true original, a unique product of the artist's hand.
"Buy one of these--only thirty available anywhere--and you can be the only one in Seattle to have this new print by so and so who is the rage of the wine and cheese set in New York--blah, blah".
A good case could be made that here the buyer is an out and out autograph collector because the only truly original thing on this manufactured product is the penciled signature and that insidious snare--the number, often added later with no close attention to actual number and with consideration primarily to marketing.
Don't get me wrong; it is not my purpose to undermine art market prices. Most original quality work is already too low. It is also not my proposal to require paintings for sale to have a fine art equivalent of "Nutrition Facts" labeling attached to each picture for sale although the idea is intriguing. Substitute the following:
Calories.....Picture Size
Total Fat.....Artist Name Value
Saturated Fat.....Dealer Hype
Cholesterol.....Medium
Sodium.....Condition
Protein.....Framing
Vitamin A.....Provenance, If Any
Etc......Etc.
People were eating a very long time before this kind of labeling was instituted, and it will be a very long time in the art market before it is mandated there.
Meanwhile the art buyer should use all the tools available beginning with that instrument between the ears to isolate the elements that combine to produce value. How much of the price I am paying is artist name? How much is condition? How much is zing? And not least, how much is out and out hype? The auction house estimates sometimes and the prices realized most often contain too much of the latter.
My advice is: get into the kitchen and find out what is going into the price of the product.
© 1998 Roger Dunbier
About the Author:
From 1982, Dr. Roger Dunbier (1934-1998) combined his professional
economics training, research skills, and love of art to develop an easily
accessed, 'all-in-one-place' repository of factual information so that buyers
and sellers of American art could make decisions based on hard-core data
rather than just marketing hype. With ever-more sophisticated computers,
programmed by Charles Lefebvre, his long-time associate, Dunbier built an
artist record database, which by the time he died 16 years later, had 17,000
names linked to their respective auction prices, literature and biographies.
Today the result of his dedication lives on as the foundation of AskART.com,
an internet site since 2000.
Dunbier's innovation of computer systems began in 1963, when he pioneered computer mapping on what were then relatively primitive computers. In 1967, he utilized concepts of 'arbitrage' and 'comparables' in designing the first real estate Multiple Listing System. Its direct descendent remains in use by realtors across the United States, and he later applied the same underlying principles in building his artist database. (right: Roger Dunbier, photo courtesy Lonnie Pierson Dunbier, derived from a larger image at http://tfaoi.org/am/16am/16am17.jpg)
Dunbier was born and raised in Omaha, Nebraska. His interest in American art was natural because his father, Augustus Dunbier, (1888-1977) was a prominent landscape, still life and portrait painter and art teacher, whose studio and classroom were in the family home. Although Roger showed few 'right brained' skills, he did have other talents. He graduated first in his class and Summa Cum Laude from the University of Omaha in 1955 with majors in economics and history. He then received a Marshall Scholarship, which led to enrollment at Oxford University in England from 1955 to 1959. During that time, he was on the Oxford University basketball and track teams, and was a member of the British National Basketball Team. In 1961, he received a Doctorate of Philosophy, Economic Geography from Oxford. His dissertation, The Sonoran Desert, Its Geography, Economy, and People, was published by the University of Arizona Press in 1960, and subsequently used as a text book for college geography courses.
After formal education, Dunbier held full-time professorial positions for several years at the University of Omaha and the University of California-Irvine. He lived most of the remainder of his life in Phoenix and Scottsdale, Arizona, and had economic-geography related jobs including CEO of his management consulting firm that prepared demographic and locational studies; and President of Metro Press, Inc., publisher of over 100 computer generated area directories for Metro Phoenix. In 1991, he married Lonnie Pierson of Lincoln, Nebraska.
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