The artist is dead… long live the artist! How real is the death effect?

[19/01/2021]

The art world, or should we say, the art world’s more cynical flank, has become accustomed to referring to the impact of an artist’s death on the value of his/her works as the death effect. So today we ask… do artists’ prices systematically skyrocket after their demise?

Kilchurn Castle, Loch Awe. H. Mcculloch Lot 1207671

Horatio Mcculloch, Kilchurn Castle, Loch Awe, 1854

The ‘death effect’: a cynical calculation or a misconception?

The starting hypothesis seems logical: when an artist dies, his or her creativity also ends. As the market stops being fed by new works, those in circulation are subjected to greater demand and hence their prices inflate. When an artist dies, the market becomes agitated with some owners rushing to sell, and others rushing to buy. The volume of trades therefore increases immediately after the death of an artist in a temporary mood of urgency. But it subsequently returns to a more stable level, leaving the artist’s price curve looking like a hump in a flat road.

The myth of a ‘death effect’ has no doubt been added to by a certain number of rare and high-profile cases of artists who had early-career successes and who died suddenly, leaving an often small, but highly-valued body of work. In these cases, dealers and collectors have often bought en masse, driven by speculative motives or the perhaps a fear of missing out. In reality, when you look at all the factors that need to be taken into consideration when purchasing an artwork, there is no reliable way of predicting the posthumous value of the work of an artist who achieved recognition just before a premature death.

CA Matthew WONG

Chronological Progression of Matthew WONG (1984-2019) ’s auction turnover: No bids before his tragic death in 2019, but more than $21 million in auction turnover in 2020

 

Rome, From Mount Aventine. W. Turner lot 8879040

J.M.W. Turner, Rome, From Mount Aventine

While alive, the 19th century British landscape painters Joseph Mallord William TURNER (1775-1851) and Horatio MCCULLOCH (1805-1867) both enjoyed similar successes on the secondary market. After their deaths, their posterity radically diverged. Turner became the iconic landscape painter of his period, while McCulloch was almost forgotten (although not completely). It seems that the tipping point occurred right after their deaths: buyers acquired a large number of Turner’s paintings (77% of his works offered the year of his death) compared with 42% in the case of McCulloch. This popularity gap was also reflected in the prices: the value growth of Turner’s paintings rose +122% in 1851, while the value of McCulloch’s works fell by 32% in 1867. And this price differential is still visible today! Why were their markets so different after their respective deaths after being so similar when they were alive? The prices of their works at the time of their deaths seem to have been shaped by the relationships each artist had with certain dealers, such as the unavoidable Mr Agnew, who alone bought nearly 28% of all Turner’s paintings offered for sale after his death.

An artist’s death is not therefore – on its own – a factor that will trigger a flurry of market activity, unless accompanied by other market factors. That said, the imminent death of an artist nowadays seems to constitute a fairly reliable market booster.

Speculation on Death

In November 2000, a study conducted by economics researchers Robert Ekelund, Rand Wessler and John Keith Watson appeared in the Journal of Cultural Economics titled The ‘Death Effect’ on Art Prices: A Demand-Side Exploration. The topic was further discussed in an article titled The Economics of American Art by Ekelund, Jackson and Robert D. Tollison, in 2017. Using data from US auctions and a sample of Latin American artists between 1977 and 1996, the authors observe that a death effect is indeed observable… but only for very old artists who are still alive, and essentially in the five years preceding their deaths. The logic is straightforward: the older an artist, the less he/she produces, so there is no risk of flooding the market with works which could potentially undermine the artist’s price power… or the values of the pieces already owned by collectors.

At the same time, bidders appear to buy works by ageing artists because they believe they will be worth more after the artist’s death. This assumption turns out to be erroneous: on average, while market prices do increase steadily during the five years preceding the death of an artist, they fall in the year of his/her death usually leaving the price curve looking like a hump in a flat road.

In The Economics of American Art, Ekelund and Jackson tested their hypothesis by examining 6,188 auction results of paintings created by 17 Post-War American artists who died between 1987 and 2013. They found an average steady price rise of 6% p.a. in the five years before death, followed by a roughly equivalent decrease in the year of their death, giving an average contraction of 26%. Subsequently, however, the prices do generally tend to rise again. These patterns seem to be true elsewhere in the world. Take, for example, the growth in turnover of internationally listed artists, over 99 years old.

Read ArtMarketInsight article : Five very important painters over 99 years old

SHINODA Toko is a Japanese artist born in 1913. Her art borders on calligraphy and abstract art. It is interesting to note that, since 2015, despite a relatively stable number of lots sold, her auction turnover has increased significantly, peaking in 2020 with a new record at $81,250 hammered by Christie’s in September. At nearly 108 years old, Shinoda’s prices are continuing to rise despite the fact she has never stopped painting.

CA Toko Shinoda

Toko Shinoda, 2000-2020 Turnover progression

This would appear to defy the above-mentioned logic. But in the art world, demand for an artist’s work is influenced by numerous factors such as critical reception, exhibitions and the institutions that own his or her works. The offer, on the other hand, is based on a single factor: the artist (and his or her dealers).

The artist as a monopoly

If the offer depends only on the artist, he/she is of course in a monopolistic position. In strictly economic terms, nothing can be more reassuring for a collector than knowing that an artist’s death may be imminent as it ensures the supply will become limited. However, according to Ekelund, Weiss and Jackson, this assumption is wrong. In reality a number of other factors can affect the supply immediately after an artist’s death, not the least of which is precisely the belief that prices will rise after the artist’s death as it prompts owners to place a lot of works on the market. Another is of course the artist’s gallery or representative who may decide to announce several exhibitions… and flood the market. The heirs and/or beneficiaries may want to organize a studio sale… with the same effect. In short, the unpredictability of the supply after an artist’s death simply makes it impossible to predict the death effect.

There is therefore no guarantee that the value of a work will be greater immediately after the death of its creator. There are too many variables in the equation for death alone to be decisive. There may be a likelihood that values will increase in the 5 years before an artist dies, but a) who knows when an artist will die? and b) the statistics we have don’t necessarily reflect the realities of a market that will always (i.e. longer after the artist’s death) be hungry for masterpieces. So at the start of this year 2021, let us unreservedly wish all artists a long and prosperous life!

 

Ref : Robert B. Ekelund, Rand W. Ressler, and John Keith Watson. 2000. “The “Death-Effect” in Art Prices: A Demand-Side Exploration.”, Journal of Cultural Economics, 24, no. 4: 283-300. – Robert B. Ekelund, Jr., John D. Jackson and Robert D. Tollison, The Economics of American Art: Issues, Artists, and Market Institutions, Oxford University Press, 2017 – G. Kosmopoulou, D. De Silva, R. Pownall, “Trading Patterns and the Death Effect on Artwork Prices”, Fifth Annual NSF Conference on Network Science in Economics, Indiana University, April 2019 (presented by Robert Press)