All an artist has to do to get rich is die — or so some think. But a study reported in the magazine Artsy, says that belief isn't precisely correct.
Research by professors Robert Ekelund and John Jackson from Auburn University on the 'Death Effect' on the price of art suggests that prices do rise as an artist ages, but they actually fall at his death.
The forces of supply-and-demand curve most elegantly in the case of art.
As you might expect, the price of an artist's work tends to rise as his career matures. Since he is the only creator of his work, he has a monopoly on it. He can decide how much and how often it will be produced. He can decide how often it will be sold.
Since every finished work of art increases the supply, more of an artist's work on the market will lower prices. Artists don't want that to happen and neither do buyers.
If the artist produces less art, but the demand from buyers stays the same, supply is restricted and prices rise.
Prolific artist Pablo Picasso, for example, created a museum for his work, assuring that some pieces could never be purchased. This restricted supply.
Many artists unintentionally create a restriction on supply during their lives. They might produce less work for a few years. They might change artistic styles (which also changes the fan base or demand for their work.) This also restricts supply.
But, when an artist dies, supply ends. You would think the death effect would be in full play. Not so.
In fact, it is the impending death of an artist that raises prices, not the death of an artist, say researchers.
Researchers studied auction prices of 17 prominent post-war artists who died between 1987 and 2013. The study revealed that prices tended to increase by 6 percent each year during the five years leading up to the artist's expected death.
But, here is the catch. There was a drop of 26 percent in value in the year the artist died. This is because sellers flood the market to cash in — and increase supply– before an artist dies. Prices then begin to rise once more in the following years if the fan base remains steady.
One good example of supply or scarcity in art are paintings by Leonardo da Vinci. Only 21 works are known to exist. One of these has been repeatedly lost and found since it was painted in the 1500s: Salvator Mundi (Savior of the World). Sixty years after da Vinci's death in 1591, Salvator Mundi was sold for 30 pounds (about $8,000 in today's money) to cover the debts of King Charles I of England. In 2017, having been rediscovered, it fetched $450 million in an auction at Christie's — a uniquely steep curve over 500 years.