Art in Dollars and Sense

Chuk Moran
14 min readSep 24, 2020

People say they love art, but rarely put their money where their mouth is. What’s up with this?

In pondering this question, I read Bill Grampp’s Pricing the Priceless, a tour of ideas from neo-classical economics applied to art. This book is a treasure trove of straightforward economic summaries of various aspects of art. It concludes with typical 1980’s Republican arguments to the effect that taxes supporting nice things (such as art) are morally wrong. (Most reviews highlight these final chapters, but I suggest ignoring them. Cost-benefit analysis studies can be really dumb. If Grampp had written these chapters about the environment you’d be very angry. Health care faces very similar questions and obviously the US has not figured it out.)

Here I’ll review the best content of the book in three main categories: the “value” of art, the business of making art, and the various ways to support art generally.

Benefits of Art

Do people like art? Why? What’s the value of art? What is value?

Some People Like Art

Because people spend money on art, they must somehow enjoy it. Yeah?

Grampp explains that when people have little money, they spend very little on art. If they start to make more money, they will quickly get less satisfaction from buying more of the same stuff they already buy. (Imagine you make twice as much as you did 15 years ago and now you are buying twice as many Doritos. Not twice as much fun.) People get diminishing returns from same-same and will find more satisfaction from an increasing variety of goods. (This makes me think of Costco.)

Art is one of many novel goods, and if folks begin to pay for some art, they discover other different kinds of art at higher and higher prices, which they may well buy if their incomes continue to rise. This theory resembles Maslow’s hierarchy of needs and is a normal explanation of luxury goods (62).

Grampp also offers an explanation based on taste: through some education in the arts, one develops taste for art, and thus a greater ability to enjoy art. If such an education is an investment in human capital, Grampp judges it a poor one! The person gains an ability to consume a luxury good. While this can be fiscally responsible for those who can leverage their taste to increase their income (e.g. become an art dealer or become better at teaching high school English), it won’t pay off for most people and so should be seen as a niche interest (like car modification or cat fancy).

This may be the most important idea I cover here, so I’ll share a page of straight nectar from this fetid fruit:

You are reading an economist writing in the 1980s. How does it feel? Woke? Sensible? This is page 75.

I don’t know if you’ll like this premise, but Grampp then hits hard with an implication from this explanation that is very important. With changing incomes, the audience base changes, and thus taste and therefore also content! If you’re looking at a bunch of expensive art that’s all rubber ducks, depravity, or shockers, it’s probably made for the nouveau riche.

The good thing about Grampp in this book is that he’ll drop relevant art history in like it was obvious and you should have thought of it yourself first. Page 60.

Before you walk away thinking that “it’s fine to value art,” Grampp points out that there are lots of other things to get into besides art, such as sports and travel. I hate to admit it, but we’re essentially talking about the pleasures of those rising in wealth (or spending as if they were). These people could just as easily get into golf or wine as art.

Artworks as assets

Some art you can buy and then sell later. You might even make a profit!

Most artworks decline ruinously in value, quickly not being worth the upkeep, and soon not even worth the storage space (7). Museums and private collectors do a bad job keeping their art. Such a bad job they often don’t notice when their art is stolen because tracking inventory isn’t worth the effort! Almost all of the art produced in a year will be worth very little in the future and so collectors will usually not come out ahead with their purchases. Dealers are much more shrewd.

Of all paintings sold at auction, on average they appreciated better than bonds but worse than stocks, at least in one study. So the fanciest of paintings are decent investments. Regular art your cousin makes is not a good investment.

I notice that many institutions value the content of art quite little. Indeed, starting with user-generated content in web 2.0, you can see how the “anyone can make art” attitude translates into “make us art for free and we’ll make money selling ads around it” and eventually “ok if your art is really driving traffic, we’ll give you a cut of the ad revenue.”

The market’s valuation of a particular work of art is quite confusing and Grampp is unable to provide much insight. There seems to be a correlation between painterly fame and the price paintings by that artist, but it’s not that strong(31–33).

However Grampp also offers a charming list, which he claims to have heard from a curator at the Louvre:

The market value depends on whether the painting is hung in the Louvre or in a lesser museum, where it is hung and how often, what is its condition, if it has been repainted or otherwise restored or has been altered, where it was
before it came into its present ownership, how certain the attribution
is and if it ever has been changed, whether the painting is interesting at
present to art historians or whether the painter is, whether other works of his have been at auction and what price they brought, in whose private collections the painter is represented, whether he is being spoken of in the popular as distinct from the professional art journals (ARTnews as distinct from The Burlington), and if dealers are promoting or disregarding him. (27)

Grampp points out that if we could really treat artworks as assets, museums should recognize that storing a Picasso in the basement is like stuffing cash under the mattress; Grampp suggests that they record this and consider renting pieces out for income (180–183).

I will point out that Grampp’s thesis is that art is economic, but he does not do a good job establishing that art is traded like other assets. It seems to me this is a clear limitation of economic analysis in this domain: art is not very much like “an asset.”

Art establishes character

Grampp shies away from this anthropological aspect of art: many collectors are motivated by status. They find works previously owned by famous people to establish some character for themselves. The face work here is clear: whoever owns classy and creative art will appear to be classy and creative.

Personally, I tend to ignore face work, but find this explanation of art and why most people are involved in it (and how much they’re involved) compelling.

At a national level, owning nice art establishes the legitimacy of a government and the reputation of a people for producing real contributions to human society. Some have even suggests national art helps establish the rule of law (225). Grampp says it would be more efficient to use police and prisons to establish rule of law. Alright, noted, dude.

For a city or region, exhibited art can help drive tourism, which Grampp dismisses completely as a race to the bottom (247).

The westward movement of art. Page 231

Art’s hard to define value

Exhibiting art provides an education to artists and inspires people of all kinds to think and feel differently.

To me, the real value of art is specific to the piece. There’s very little value in paintings generally, but a specific painting may make someone feel comfortable, fashionable, calm, or motivated. It may tie the whole room together, make an excellent gift, or just be something to make this year of boring first world comfort distinct from the last.

In many cases, the very fact that the art was made by people you know can be inspiring and gets the people going.

If you look for the value of specific artworks, it’s also possible to see all kinds of other benefits to the art that might not be typical for the genre in general. A particular song may have value promoting social justice or selling a house, but it would be hard to argue that art in general accomplishes much for these ends. Because this book is about “art” in general, it ignores these omnifarious values of art because they do not sum to a uniform value for any and all art. This “uniformity assumption” makes sense for building a really simple economic account, but seems like another major limit to trying to understand art in dollars and cents.

The Artist’s Hustle

In some cases, artists are hustlers. They maximize outcomes and do whatever it takes to get that maximized outcome with minimum input. Towards this end, Grampp notes that artists must follow existing taste, shock the crowd a bit to stand out, promote a style they happen to specialize in, and perhaps include friends and family (who will work at lower rates).

However, to a large extent, artists are not homo economicus and do not maximize. Grampp suggests that such artists are vain or treat their work as leisure. I think he misses that people just aren’t that organized and don’t think “how many hours of enjoyment can I get per hour of input” or “how much can I make from doing this work?” They make art for all kinds of other reasons, and almost never because they are trying to maximize their income.

Grampp grounds his “artists are hustlers” narrative in spicy comments made by various successful artists late in their career, which is interesting, but definitely cherry-picking and unrepresentative of average working artists.

Organizations Supporting the Arts


I’ve heard many references to patronage for the arts wherein people imply that rich people acting properly will pay artists to make art just simply for art’s sake. Grampp dispels this illusion soundly by pointing out that “what art historians call “patronage” usually turns out on closer view to be simply buying” (41).

Patrons traditionally offered a stipend that depends on output (43). The artists they supported typically produced portraits of the patrons and their kin (47). Patronage models often involved teaching the rich person’s kids (investment in taste) and producing specific works that could establish reputation for the patron. Simply keeping an artist on staff would probably bolster the patron’s reputation ipso facto. But we romanticize this as someone with money straight up throwing it away to help out an artist, which Grampp says is not a historical reality. He later argues this would actually be a better tax model because it pays the producer rather than subsidizing the consumers! (Some countries do this.)

Some good details on arrangements of patronage. Page 47

Anyway, Grampp only examines some patronage models, because there is better historical evidence around them (eg Renaissance Italy). It’s possible that very different patronage existed somewhere, but it doesn’t really make sense now (or ever) to expect that rich people are just burning their money helping out artists because they think they’re cool. People do talk like this is a thing and should happen more.

If you want to learn more about art patrons today, I’d recommend Peggy Guggenheim: Art Addict. She was buying into a lifestyle, which could be a cool model too, though the patron could also buy into fancy cars or travel or shoes or a million other luxury delights.


Strangely Grampp says almost nothing about dealers or private galleries. The logic of his argument would suggest that those treating art as a commodity are the only sane ones, but he doesn’t discuss how these market actors actually operate. Too bad!


Grampp shines with his critique of museums. Why do art museums exist? Grampp points out that the original reasons for most museums do not match their current goals.

Many art museums were founded by a rich dude who was interested in converting his financial capital (money) into social capital (reputation). In many cases, he wanted to help ordinary people see art more and wanted to make a nice home for artworks he loved in quite a personal way.

So there is a gap between the original intention for museums and their current goals. They were supposed to benefit commoners by giving them access to art. They were not supposed to be research institutions, but actually they are and provide a very important service to the art market — which is to help appraise things and establish significance for various aspects of a work. People working in museums tend to have a different goal, which is to excel. This basically means outdoing their peers on the things their peers find meaningful. Grampp points out that all non-profits have some wiggle room with interpreting their mission, at least relative to firms which just exist to make money (168).

Grampp thinks art museums are too big! He cites research on museum fatigue that shows people tend to get bored quickly and stop paying much attention to the art they see. Smaller is better (174–175). Interestingly, it’s quite common that the piece of art a visitor spends the most time with is the last one they look at.

Revenue comes largely from donations, government support, and the café and gift shop. Museums typically make three times more on the café and gift shop than they do on admission (184)! This actually sounds pretty normal and I think we can again thank caffeinated drinks for keeping human society chugging along. Art museums are not actually very popular and the ranking of most popular museum types is topped by zoos, then history museums, then museums at historical sites. Actual ticket sales are so unimportant that museums often over-count attendance in order to help them raise money from government and foundations, even though this means they are lying to themselves about how many commoners visit and about how much money they make from tickets (190).

Grampp points out that top museum donors often include oil companies and other behemoths that art-lovers will probably otherwise hate. So the museums also run a PR business through sponsorships.

Who goes to museums? Grampp explains that if people really like art, museums should be showing them art for a cost and coming out ahead. But people barely like art, and the people who like art and go to museums are largely upper middle class, often working in professions closely related to the arts (195). Many students go to museums as well and it’s common to present this as a way to help the poor, but the issue is really more about “get ’em while they’re young” as students with an interest in the arts will later become solid customers and even donors (199). Grampp points out that students visiting museums are not really all poor, though this is hard to measure as they often have wealth in the family; they may be living as “poor” students temporarily.


The worst rants of the book address government support for the arts. Grampp presents a typical Republican outlook that no taxpayer should ever pay for something they don’t specifically ask for, and therefore we should have very little government and thus pay less in taxes. Grampp calls this “tax justice” at one point and I think it’s a great name for the cause, as it is so clearly distinct from social justice (216, 268).

Looking just at actual government support for the arts, Grampp points out that organizations tend to get government support in order to fund their own work. The dollar amounts they get sum to very little per taxpayer, so the arts budget items are rarely worth trying to cut. Grampp calls this “rent-seeking” as the arts organizations are trying to get a deal from government where they get money just for existing. This is also a typical Republican argument and has been used to defund all kinds of things including basic research.

At the same time, Grampp points to many cases where government supports the arts because it needs art. The military is the top employer of musicians; government construction projects include lots of large commissioned pieces (207); governments often try to use art to establish their legitimacy and international reputation (225).

Ignoring the “tax justice” arguments, the takeaway is that government does support the arts in lots of small ways, government uses art for lots of its operations, and that subsidies on the demand side (eg making it cheaper for you to go to an art museum) are not as beneficial to artists as subsidies on the supply side (eg grants to artists). Canada does this a bit differently and directly subsidizes cultural producers of many kinds in order to nurture Canadian identity and culture, especially to differentiate itself from America. Given the dumpster fire that is American culture, that seems quite a good investment to me.


Cultural Industries

There are a lot of interesting things you can say about the economics of art. This book says just a few of them. Here are some even cooler notions not covered:

  • the small number of buyers and sellers of art make the fine art market oligopolistic
  • an artwork has some social status value, artistic value in the history of art, and an actual price. Galleries care about the first, experts the second, and buyers the third
  • the art market is a great place for money laundering and tax evasion
  • artworks have relatively high “uncertainty of value” compared to many things, because even a great artist can make a total dud
  • artworks as commodities can be distinguished in an infinite number of ways, whereas most commodities compete on just a few characteristics
  • prices of art tend to be fairly “winner-take-all” with the top hits making a lot of money and the next most popular having much less value. Income distribution among artists tends to be very unequal.
  • there is an excessive supply of artists, so they can often be hired for very low wages
  • most cultural items lose value really fast, and are worth nothing within a decade
  • artwork has high fixed costs, getting a studio and developing talent etc, while the marginal cost of making reproductions can be very low

If No One Chooses Art, Why Have It?

For me, the most interesting question about art is this: given that many of us like art and want to see more of it in the world, how should we organize to make this a reality?

Running a Burning Man theme camp has taught me that there are really just three approaches

  1. One person pays for everything
  2. Many people pay more than they realize to support an art project
  3. Many people support an art project intentionally

The third is very rare, and most groups use a combination of #1 and #2. It is possible to run things on the basis of #2 alone, but it’ll take much more time from the organizers. Running on #1 is great, but might become ugly as one person (usually a man) calls all the shots. Also the money-guy may burn out fast, given how expensive a hobby it is.

Those associated with an art project at Burning Man are compensated in social capital, which gets you everywhere in a world without money.

Grampp’s only answer is that people don’t care that much about art because they won’t put their money where their mouth is, so you should just accept that and play some golf. Not a very helpful conclusion for those with a taste for art in particular. At least there was a lot to learn along the way.