Art Market Blog – Comparing the Art and Wine Markets
The California Institute of Technology recently released the results of a study that they conducted into the effects of price on people’s perception of the quality and taste of a bottle of wine. Twenty volunteers were given a taste of five different wine samples which they were told were identified by their different retail prices ($5,$10,$35,$45,$90). What the volunteers didn’t know was that they only sampled three different wines, not five, and that the price they were told each bottle cost, and the actual price of the wine they were tasting, did not correspond, thus leaving each volunteer to make a judgment based on perception instead of factual information.
The results of the study were not unexpected as such but they were rather unsettling because they confirm the fact that humans can be easily fooled into thinking that something is better than it really is. According to the press release “When the subjects were told the wine cost $90 a bottle, they loved it; at $10 a bottle, not so much. In a follow-up experiment, the subjects again tasted all five wine samples, but without any price information; this time, they rated the cheapest wine as their most preferred”
I couldn’t help but see the relevance of this study to the art market where people seem to make the same assumptions regarding the quality and market value of an artwork. The problem is that there are no universally accepted standards for pricing art and no requirement for galleries or dealers to justify the price of the works they are selling therefore people automatically assume that the price that they are paying is justified and fair. As a result there is also the assumption that the price of is an indication of how good a work is and how “valuable” a work is.
With prices going through the roof I think that it is extremely important for everyone to be very wary of the prices being paid and to educate a many people as possible on the methods of valuing art and the factors that determine value.
**Nicholas Forrest is an art market analyst, art critic and journalist based in Sydney, Australia. He is the founder of artmarketblog.com, writes the art column for the magazine Antiques and Collectibles for Pleasure and Profit and contributes to many other publications.