THIS IS NOT AN ARTICLE ABOUT ART MARKET INDICES. But it kinda is.

While researching Art indices, I stumbled upon one of the most surprising and enjoyable articles I had read in a while: A New York Times review of Geraldine Keen's book "Money and Art: A Study Based on the Times‐Sotheby Index"". 

Entitled "In Sotheby‐land the graphs go up," the article was written in November 1971 and was a sharp critic of Keen's book and a general outcry on the treatment of art as a financial instrument. A strikingly topical article, as questions regarding art as an investment and the relevancy of art indices are still subjects of debates today. 

Who is Geraldine Keen and what was her book about?

Geraldine Keen was a mathematician and statistician who was recruited by the London Times in the late 1960s to spearhead a collaboration between the newspaper and Sotheby's Auction House. The partnership gave birth to the first index in the history of the art market: The Times-Sotheby's Index. 

This initiative was instigated by Sotheby's then auctioneer and chairman, Peter Wilson, who led a major rebranding and repositioning strategy of the auction house during that period. Peter Wilson is a figure to know. He played a major role in reshaping the auction market by introducing multiple initiatives, such as currency converter boards, telephone bidding, guarantees, glamorous black-tie events and flashy evening sales among many others. His principal goal was to shift the way people saw art, mainly from a decorative object to an exclusive, investment-worthy asset to possess. 

The birth of Art as a financial instrument 

During a 1966 appearance on the BBC's Money Programme, Wilson declared that "Works of art have proved to be the best investment, better than the majority of stocks and shares in the last thirty years."

A year later, The Times-Sotheby's Index was initiated, with the help of Geraldine Keen, and proceeded to be published once a month between 1967–1971. It consisted of sales charts of different artists and categories that (unsurprisingly) performed extremely well, even beating the stock market. The purpose of the index was to showcase that art was a compelling financial asset and to prompt people to invest in it.

All the graphs are up! The charts indicate that between 1950 and 52, Renoir was up 405%, Monet 1,100% and  Sisley 1,150%”. Ah, the good old times. 

This revolutionary initiative of showcasing artworks as stocks, backed with the credibility of being published in a serious newspaper, consolidated the idea of art as a financial investment and transformed the art market ever since. 

Why Art Indices were and still are controversial

In her book “Money and Art: A Study Based on the Times‐Sotheby Index” Geraldine Keen explains her methodology in composing the indices and her views on the performances of different market sectors including Impressionists, Old Masters, Chinese ceramics. 

What the article of the New York Time contested back then is still very relevant today: The data and the methodology used to compose the indices had major flaws and were not representative of the performance of the overall art market. 

Today, when it comes to data, a quick google search can give a clear idea of its importance across industries. Unfortunately, the art market is not known for being the most transparent when it comes to access to information, and a complete and representative data set is still difficult to obtain in this industry even today. 

This is mainly due to the inherent structure of the art market. While most available data comes from auction houses sales results, sales done by private dealers, which account for more than 50% of the art market, are not published because...well, they are private. There is no incentive or regulatory body to enforce art galleries and private art dealers to make their sales numbers public.  

As a result, most art indices use data sourced from auction houses sales, which itself suffers from selection and survivorship biases, and is not representative of the reality of the market. 

As for the methodology, the heterogeneous aspect of art makes it that even artworks from the same artist cannot be used as a proxy of future performance. Consequently, most indices such as the Mei Moses Art Index and Artprice Global Index use the repeat sales methodology, which tracks the individual performance of an artwork sold more than once at auction. This can be problematic as it could take many years (sometimes decades, sometimes never) for an artwork to come back on the market, thereby making the pool of data available even smaller than it already is. This methodology also doesn’t account for artworks of the same artist or sector that are not selling, potentially giving a misleading impression that a particular market is hot, when it might not be the case. 

Much more can be said about art indices applications, challenges and remaining unresolved-since-1970s issues. Still, the data collection and processing methodologies and tools are getting more sophisticated and promising over the years. In the meantime, art indices can be useful and informative when it comes to assessing market sentiment of an artist or a sector, or measuring absolute and relative performances, as long as one is aware of their shortcomings. And while art indices can be used as a tool to help make informed decisions, a thorough case-by-case research remains the recommended strategy when it comes to considering an artwork for, say, more than its aesthetic qualities. 

I leave you with this deliciously premonitory excerpt of Grace Glueck’s 1971 New York Times article on the subject:

Remember when “art appreciation” meant simply the study of art for its—you should pardon the expression—esthetic value? Well today, thanks in no small part to the efforts of Sotheby & Co., the international art auction house, the term now also refers to the monetary value of art—that is, its propensity to rise in price. (In Sotheby‐land, the graphs always go up.)

In fact, so popular now is the second usage that I suppose we can look forward to new college “art appreciation” courses, taught in schools of business administration rather than fine arts, where the fusty old professor praising the transcendence of the spirit over flesh in Rubens's paintings gives way to the swinging statistician waxing eloquent over the steady ascendance of Rubens's prices. Human nature being what it is, such courses would certainly be a bigger campus draw than those old fashioned studies where art is merely regarded as a reward in itself.

You can find the full article here: https://www.nytimes.com/1971/11/07/archives/money-and-art-a-study-based-on-the-timessotheby-index-by-geraldine.html

Additional used sources:

A brilliant article by Tiernan Morgan on the topic and source of reference for this article: https://hyperallergic.com/476003/your-money-is-safe-in-art-how-the-times-sotheby-index-transformed-the-art-market/

An interesting article about the legendary Peter Wilson: https://www.theartnewspaper.com/review/peter-wilson-the-man-who-invented-modern-auctioneering

Ahlem Baccouche

MADE IN BED Business & Art Market Editor