Art and Economics

Art and economics probably aren’t the most natural of bedfellows. In my latest attempt at pretending to be sophisticated, and as part of a summer trip gallivanting around Barcelona, I ended up visiting (among all the other wonderful culinary and cultural delights) the city’s Museum of Contemporary Arts (MACBA).

The ground floor of MACBA is taken up with an exhibit by Andrea Fraser, called “L’1%, c’est moi”, which tries to present information and musings about the art world, with particular focus on individuals that have obtained and developed large personal collections of art. Unsurprisingly, Fraser’s angle is one of how those individuals with their own art collections are, for want of a better word, dubious (both in terms of their ethics and in terms of how they have been able to afford to obtain their art collections).

Indeed, one of the more wide-reaching points that Fraser tries to make is that an increase in inequality (it is unclear is Fraser is referring to wealth or income inequality) has enabled those individuals to build their collections. To that end, one of the “artworks” included in the exhibit was a short report, presumably put together by Fraser herself, that purports to demonstrate that rising inequality has benefited art collectors. In other words, Fraser is claiming that increasing inequality has enabled art collectors to benefit from increases in the value of their art collections.

However, Fraser’s “analysis” is pitiful at best. For a start, it is widely acknowledged that (income) inequality now is at roughly the same level as it was about 200 years ago (see, for example, here), yet Fraser chooses to focus solely on the past 50 years to try to bolster her claim that inequality is exceptionally high. Fraser does not extend her analysis back far enough in time to enable the conclusions she makes to be supported by the evidence. In fact, this is borne out by the graph on page 3 of Fraser’s report (reproduced below) showing that income inequality has been pretty much constant 50 years – hardly a marked increase in inequality at all.

Inequality

Moreover, the graphs Fraser included in the MACBA exhibit indicate that her understanding of statistical analysis does not extend even as far as the well-known maxim that “correlation does not imply causation”. To be fair to Fraser, a few economic researchers also don’t understand this concept particularly well. Nonetheless, in using the graph shown below, Fraser tries to support her claim that increases in inequality are leading to increases in the value of art.

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She does not, it seems, realise that there are plenty of other alternative reasons for the observed relationship – for example, it could be that the increase in the value of art is itself causing, or that both an increase in the value of art and the share of income obtained by the top 0.01% is driven by a common third factor (such as, for example, the rate of return on other investments).

The potentially absurd inferences that can be obtained by relying just on correlations can be seen even better in the graph below. The black dashed lines show the growth in the number of prisons and museums in the US over time, while the solid red line shows the US prison population. If one were to rely on correlations to make inferences, one would draw the conclusion that one way to reduce the US’ prison population would be to decrease the number of museums in the US. This shows the sheer ridiculousness of drawing conclusions from simple correlations alone.

20160725_122742

Hence, it’s clear that Andrea Fraser really should have put a bit more thought/work into the “analyses” she included as part of this exhibition.

PS. As a bonus piece of artsy mumo-jumbo economics, here is a description of an artwork by Adrian Melis. Enjoy

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