Art Market Blog – Art Market Confidence Index Seriously Flawed
On the 28th of January Artprice launched their Art Market Confidence Index ® which is apparently able to give a real time reading of people’s confidence in the art market for both the present and the future. According to the Artprice website “Artprice aims at conducting a survey among its 1,3 millions members, mostly art market active players, around 4 questions. The representative sample varies all the time. Only the last 1000 responses will be used to process the latest values of the AMCI (by Artprice). For each of the four questions, there will be 3 choices given (positive, negative or neutral) and as many qualitative variables. The responses are broken down into categories which form the results. The Art Market Confidence Index is drawn from the average percentage of positive answers minus the negative ones and calculated for each of the 4 questions.”
The questions (Copyright Artprice) in the survey are:
Q: According to you, would now be the appropriate time to buy art works?
A: Yes, No, Indifferent
Q: Is your financial situation better or worse than it was three months ago?
A: Better, Worse, Stable
Q: In the next three months will you expect the economic climate to be:
A: Favourable, Unfavourable, Identical
Q: What do you expect art prices will be in the next three months:
A: Rise, Fall, Stable
Although the idea is good, the execution and approach is seriously flawed for the following reasons:
1. The survey is only 4 questions long which is not long enough to allow people to really get into the right mindset for answering such questions and develop their thoughts and responses. The Michigan Consumer Sentiment Index that the art price art market confidence questionnaire is supposedly based on contains approximately 50 core questions, as opposed to the four in the Art Market Confidence Index, each of which tracks a different aspect of consumer attitudes and expectations.
2. The art market has shown to be nonreactive and even immune to many of the movements of the economy and other investment markets which means that even if people’s opinions were accurate they are really not relevant.
3. The only way to gauge the way people feel about the art market is by their actions, not their opinions. People’s opinions are often neither accurate nor truthful.
4. The art price art market confidence surveys people from all over the world whose opinions will differ based on the economy and financial situation of their own country causing the results of the survey to be far too varied and based on totally different art markets.
5. The Art Market Confidence survey fails to cause people to justify their answers making the survey exremely susceptible to inaccuracies. In each area of the Michigan Consumer Sentiment Index, consumers are not only asked to give their overall opinions, but are also asked to describe in their own words their reasons for holding these views whereas with the Art Market Confidence Index there are no such questions.
As far as I am concerned if you are going to produce such an index then it should be done properly. All that this Artprice index is doing is causing un-necessary panic along with destructive and inaccurate speculation and prediction.
**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.