Eleven of the 20 highest prices ever paid at auction have occurred since 2008, when the global economy all but collapsed. Less than a week after the Munch auction, Mark Rothko’s “Orange, Red, Yellow” sold for nearly $87 million.
Many economists say that art can’t be in a bubble because, frankly, it’s not much of an investment in the first place. Unlike stocks, an artwork’s price reflects numerous nonfinancial intangibles, like the pleasure of owning a painting or, perhaps more important, its ability to signal the owner’s vast wealth and erudition. While stocks can provide an ongoing payment stream (via dividends) and are traded in public markets, art collectors must pay to protect their investments. It’s also much harder for collectors to resell expensive art. Not only is the market opaque, but few artists have real long-term value — Jasper Johns and Andy Warhol are rarities. Sergey Skaterschikov, who publishes an influential art-investment report, says that no painting bought for $30 million or more has ever been resold at a profit.
Edvard Munch’s “The Scream,” which is probably seen in dorm rooms across America alongside Van Gogh’s “Starry Night” sold earlier this month for $120 million, and Adam Davidson argues in New York Times Magazine that the reason why art continues to sell for eye-popping prices is because it’s “part of the economy of a small subset of the super-superrich.” As long as there are super-superrich people, there will be people who will be able to buy art for lots of money. I’m not going to lie: I’ve thought about what work of art I’d buy if I ever became super-superrich. It’d be a Degas. But I’m probably more likely to give most of my money away and hide in a cabin in the woods before dropping a hundred million dollars for a painting.