"The Physical Impossibility of Death in the Mind of Someone Living," by Damien Hirst.
On today's Planet Money: Why a dead shark costs $12 million, and a photo of steel wool that looks like a tornado costs $1,265.
In other words, we wade into the economics of the art world.
Here's a slide show with some of the works we talk about in the podcast:
This Ansel Adams photo sold for $722,500 at an auction this week — a record for a work by Adams. When an artist is just starting out, and isn't famous enough to command huge sums at auction, who decides how much a work of art is worth?
Image via Associated Press
Matthew Albanese, builds models out of everyday materials. That tornado is made out of steel wool; the grass is parsley.Ed Winkleman owns a New York gallery that has shown Albanese's work. He says there are three basic criteria for pricing emerging artists' work: size, complexity and materials. A big, intricate oil painting costs more than a small, simple drawing.This Albanese photo can be yours for $1,265 (frame included).
Image courtesy of the artist and Winkleman Gallery, New York
If you're a famous artist — like, say, Damien Hirst — the basic pricing used for emerging artists goes out the window. Some really rich people want to own Hirst's "The Physical Impossibility of Death in the Mind of Someone Living" — also known as a shark in formaldehyde. So they bid against other really rich people, and the price goes up to a reported $12 million.
Photo: Regina Kuehne/KEYSTONE/AP
William Baumol, an NYU economist, analyzed sales records from auction houses over 200 years. He found that art rarely beats out stocks and bonds as an investment; he published the results in a paper subtitled "Art Investment as Floating Crap Game."Baumol is an amateur artist, by the way. This is one of his works. He says he occasionally sells his works to colleagues for a few hundred bucks.
Image courtesy of the artist
Just because some rich guy pays $12 million for a shark today, it doesn't mean some other rich guy will pay $13 million tomorrow.An artist named David Roberts painted this in 1861. Back then, his works were "the delight of kings," according to one critic. Roberts died in 1864, and his work largely fell out of favor. Seventy years later, a painting of his sold for 10 guineas — almost nothing.