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Abstract:
This thesis explores factors that determine the price for Australian art sold at auction. Using a large data set that comprises over 20,000 sale observations of Australian art works sold between 1995 and 2003 characteristics associated with the artist, the work and auction are included in a series of hedonic models. In addition to modelling the overall market, differences within defined market segments for Indigenous and Non-indigenous art are explored. The role of artist identity and critical acclaim, the period in which art works are created and the event of an artist death are areas of specific focus within the analysis along with an investigation of the risks and returns associated with Australian art investment. Not surprisingly it is found that artist identity is a crucial factor that drives price. The works by artists who are sufficiently acclaimed to be recorded in the Grove Dictionary of Art (2005), or who have represented Australia at the Venice Biennale or who are represented in Australia’s pre-eminent public gallery, the National Gallery of Australia, are associated with higher prices compared to other artists who are less well known and not reflected in these proxy measures of artist success and reputation. When specific artist identifier variables are incorporated into the hedonic modelling we witness the importance attached to particular acclaimed artists in driving price. It is not surprising then, that we find when the identities of these well-known artists are incorporated, the overall explanatory power of the hedonic models used throughout the thesis improves considerably. The most highly valued Non-indigenous art works are found to be created prior to 1900 although the market for Contemporary art produced post 1980 is associated with relatively high prices compared to the general trend that reflects falling prices as we approach the present time period. Distinctive differences also emerge between Indigenous and Nonindigenous art as we consider the period in which works are created and the influence this has upon price. Almost 90 per cent of Indigenous art sold at auction has been created since 1970 and it is works from the 1970s that command the highest prices for Indigenous art sold at auction. This is not unexpected given the rise of Indigenous Art in the early 1970s coinciding with the emergence of the Papunya Tula art movement. The death of an artist also proves to have a different influence upon price when we compared Indigenous and Non-indigenous art. For Non-indigenous art there is clear evidence of a death effect upon art prices which is akin to a nostelga effect, where prices typically rise around the time of an artist’s death before falling back somewhat with the passing of time. Although for some noted artists who have been dead for a long time prices are shown to rise further with the passing of time and as such historic works become more scarce. For Indigenous art the influence of a living artist’s conditional life expectancy upon price proves to be of greater relevance in explaining price whereas the artist ages and the term of their life expectancy reduces prices tend to rise. The analysis within this thesis finishes with the construction of a number of art price indices where it is found that returns to investment in Indigenous art are generally higher and less risky compared to Non-indigenous art. Australian art generally and Indigenous art in particular is found to have a relatively weak correlation with the stock market suggesting that Australian art has a role to play in a balanced investment portfolio especially taking into account the aesthetic utility that can also be derived as a result of holding art. The research contributes to understanding how the auction market for Australian art operates with emphasis paid to the distinctions and similarities observed within the sub-markets for Indigenous and Non-indigenous art. Insights from this research have the potential to inform public policy on a number of issues including the effect of resale royalties upon the operation of the auction market, and how indigenous economic development may be facilitated through a strong market for Indigenous art.
