Category: The Arts

The “afternoon effect” for artworks

by  Tyler Cowen in

One resilient puzzle identified in the literature is the “declining
price anomaly.” This effect was identified by Ashenfelter (1989) and is
an obvious repudiation of the law of one price. It refers to the
observation that as an auction proceeds, the prices of the lots
decline, even for identical goods (e.g., wines). Beggs and Graddy
(1997) established the existence of the “declining price anomaly” for
heterogeneous goods using data for Contemporary and Impressionist art
auctions. This has generated great interest and a number of papers now
report somewhat conflicting results in this respect, although the
majority still seems to find evidence in favor of this anomaly (see
Ashenfelter and Graddy 2003, and Ginsburgh and van Ours 2007.) In light
of this controversy, it is of interest to investigate whether or not
Latin American art auctions are also subject to the declining price
anomaly or the so-called “afternoon effect” (“morning after effect”
would be a more appropriate name in this context as Latin Art auctions
occur in two parts, the first starting late in the day, say 7pm, and
the second starting earlier the following day, usually 10am.) In line
with previous research (Beggs and Graddy 1997), we find strong evidence
that the “declining price anomaly” holds for Latin Art data, even after
controlling for auction and artist unobserved characteristics (dummies)
and a huge array of paintings characteristics, including reputation and
provenance.

Here is the link and yes I do believe this is true.  I believe it is mostly neuroeconomics at work, namely that we are more excited by new offerings than by familiar offerings.  Similarly, a painting that has been "shopped around" usually goes for a lower price than a comparable picture coming on the market for the first time in many years; admittedly it is hard to segregate out the selection bias here.  So if the same Jasper Johns print is being auctioned at 10 a.m. and 1 p.m., some people just don’t want to wait with their bids.  I wonder also if there is a theorem about how an asymmetric distribution of risk-averse bidders, fearing they might not get the work at all, could generate the same price pattern,

An alternative hypothesis — likely true in part — is that even "identical" artworks differ slightly in quality and the auction houses sell the better one first, if only to create a price precedent and excitement effect for the second one later in the day.

My favorite things Utah

by  Tyler Cowen in

Lately there has been too much travel, yes, but writings these posts is fun.  I am headed toward Sundance.  Here goes:

1. Author: Orson Scott Card’s The Ender Trilogy (start with Ender’s Game) is a modern landmark which will be read for years to come.  Next on my list is Wallace Stegner’s Angle of Repose.

2. Actor: James Woods, as he plays in Casino and Virgin Suicides, two fine movies.

3. Best Robert Redford movie: Out of Africa, schmaltz yes but I love it.

4. Film, set in: Butch Cassidy and the Sundance Kid comes to mind.

5. Novel, set in: Norman Mailer’s The Executioner’s Song.  The first half in particular is a knockout.

6. Can I have a category for kidnapping victim?  Jeopardy champion?

The bottom line: I love Utah.  I love its baked goods, its Mexican food, its sense of building a new world in the wilderness.  I love that it has a uniquely American religion and I find Salt Lake City to be one of America’s most impressive achievements.  I regard southern Utah as quite possibly the most beautiful part of the United States.  That said, I had a tough time filling out these categories and of course plenty of the usual categories are blank altogether.

My favorite things Arizona

by  Tyler Cowen in

There is Barbara Eden and Linda Ronstadt but what other directions can I find?  I’ll try not to resort to retirees, such as Joe Garagiola.  Here goes:

1. Jazz: Charles Mingus’s Ah Um is one of the ten jazz albums that everyone should own.

2. Country and Western: Marty Robbins is good but otherwise I draw a blank.

3. Movie director: Steven Spielberg.  In case you don’t already know them, Duel and Sugarland Express are two of his best movies.  I’m also an advocate of Artificial Intelligence, a brilliant movie about the moral superficiality of human beings.  E.T. was his nadir.

4. Real business cycle theorist: Ed Prescott teaches at Arizona State (which by the way  was just rated as having the hottest students of any school).  If you think through his oeuvre, Prescott has at least three major contributions: time consistency (1977 with Kydland), real business cycle theory, and his work on the equity premium with Mehra.  That’s impressive.

5. Painter and European emigre: Max Ernst lived for twelve years in Sedona.

6. Textiles: Navajo blankets from the 1880-1910 period rank among America’s greatest artistic contributions.  You can buy a first-rate piece for no more than $60,000.

7. Author: Zane Grey fits the category but he doesn’t count as a favorite.  Am I missing anyone important or is this simply not a literary state?

8. Movie, set in:  You have some real winners, including Psycho, Raising Arizona, and the still underrated Tombstone.  3:10 to Yuma I haven’t seen yet.

The bottom line: The list is spotty in parts but the peaks are very high.  I’m also of the opinion that the Northern Rim of the Grand Canyon is the single best sight I’ve seen, ever.  I also love The Biltmore Hotel but alas I am not at that particular lodging right now…

My favorite things Spain, literature

by  Tyler Cowen in

Again lots of peaks but lots of patches too; the distribution is uneven.  Here are a few offhand remarks:

1. Cervantes: Book two of Don Quixote is much better than book one, just in case you never got that far.  The Trials of Persiles and Sigismuda is a nice try but ultimately it fails at being the undiscovered classic.

2. Calderon: Life is a Dream.  The piece of Spanish literature you are most likely not to have read that you should read.  Every smart, well-educated person should know this book.

3. Lope de Vega: If not for the commies he wouldn’t be nearly so well-known.  He is still a good dramatist, though.

4. El Cid: More readable than you might think, and it makes you realize how close they came to being an Arabic society.

5. Miguel de Unamuno: I have some sympathies for him, but if someone tried to write this stuff today, could it even get published?  You could say the same about Jose Ortega y Gasset.  Some people say the two are polar opposites, but who outside of Spain really cares?

6. Federico Garcia Lorca: It might be wonderful on stage but I find it unreadable.

7. Javier Cercas: Soldiers of Salamis.  One of the best novels on wartime guilt, collective memory, and the ambiguous role of the author in a narrative.  Recommended, if you are willing to give it a suitably careful read.

8. Pérez-Reverte: It’s fun stuff, but I don’t know if it will draw attention twenty years from now.  Same with Shadow of the Wind.  If anything it is symbolic of the Americanization of European literature and I don’t mean that in a favorable way.

9. Albert Sanchez Piñol: I loved Cold Skin, originally written in Catalan.  His book on the Congo awaits me.

10. Javier Marias is good, especially A Heart so White. 

The bottom line: Call me provincial, but I see 1660-1980 as a slow patch, at least for a country of Spain’s historic stature. 

Maybe some will call for counting Orwell, Hemingway, and others inspired by Spain.  Will you argue for Pio Baroja?  Or perhaps The Family of Pascal Duarte?  In any case literary culture is strong here and I see the future as bright.  By the way, I’m always looking for recommendations in Spanish contemporary literature.  Is Julian Rios worth reading?

What is the right rate of capital gains taxation for art?

by  Tyler Cowen in

Sens. Pete Domenici (R., N.M.) and Charles Schumer (D., N.Y.) have been complaining for the past few years that the capital-gains tax rate of 28% for the sale of art and other collectibles, compared with only 15% for the sale of real estate and securities, unfairly puts art collectors at a disadvantage.

Here is the story.  Here are some fallacious views:

Reducing capital-gains taxes on art to the same 15% as real estate and securities makes sense only if one believes that art is just one more and equally important investment realm. "The government is interested in encouraging people to invest in businesses and the housing market and other areas of risk-taking that stimulate job growth and generate tax revenues, and art doesn’t really do that," said Joseph Cordes…

That view was seconded by Leonard Burman, director of the Tax Policy Center of the Urban Institute, who noted that lowering the tax on art sales could result in "shifting into art and collectibles money that should go to more productive things, which would be taxed as ordinary income. To some extent, people would do that." As an example of more productive use of capital, he suggested investing in a factory or apartment house.

That’s the well-known Junker Fallacy.  Buying art shifts money from one set of hands to another and it doesn’t discourage investment in factories or elsewhere.  (And if it did, investing in houses would involve the same problem, I might add.)  The recipient of the money, the art seller, can invest the money just as well as the spender might have.  Or in other words, the transfer of the arts doesn’t consume much in the way of real resources.  Admittedly there is a second-order effect: higher prices diverts more labor energy into the arts, although for Old Masters this effect is very small.  Or you might cite shipping and transfer costs for the art, noting that on that logic we should tax shopping carts at higher rates as well.

There is a good argument for the higher tax rate on art, namely that art yields otherwise non-taxable pleasures — the pleasure of hanging it on your wall — unlike say holding Chrysler stock.  Or you might think taxing art is another way to hike the tax burden on the rich.  But the cited argument just doesn’t fly.

Thanks to Donn Zaretsky for the pointer.

Jesus Corpos Aliberto

by  Tyler Cowen in

Jesus Corpos, from Ameyaltepec, is a local legend.  The story was that he went insane and was holed up in a hotel somewhere in Mexico City, painting brilliant amates, and otherwise sitting in a room talking to himself for the last twenty years.  Supposedly he spent each day filling in notebooks with zeros to represent the millions he could have earned from selling his amates.  But the people who related those details also told me that crocodiles inhabited the (desert-like) region not long ago, a rabbit lives on the moon, and most of the region’s animals are also sentient gods. 

About a week ago, I heard word of Jesus Corpos.  An amate merchant from the distant San Pablito (state of Puebla) had told Marcial Camilo that he had delivered some paper to Corpos in Mexico City.  Hotel Buenos Aires.

I took a cab to this dingy locale and pushed my way past the locals congregating at the entrance and eating blue corn tortillas.  It turns out that Corpos was there, living in a small closet with no light and room for no more than a bed; the stench was overpowering.  The hotel owner was putting him up to help out.  Upon request, Corpos stepped out of the room with a large roll of amates; from the sight of it the roll had not been opened for five to ten years.  He was polite and soft-spoken.

They were in fact remarkable works, but I was unable to meet Corpos’s asking price of 7 million pesos per amate (about $700,000).  He told me to return when I had the money.  I thanked him profusely and left.