Wednesday, April 17, 2013

Big Data on the Relative Value of Culture

Last week took a look at Big Data of the art market. This week takes a first step in comparing the financial value of art and the economic significance of the art market. The results are somewhat surprising and rather sobering.
The graph to the right shows annual sales in the art market as a percentage of Gross Domestic Product (GDP). The dotted black line indicates worldwide sales as a percentage of world GDP. The percentage dipped slightly with the economic downturn in 2009, recovered a bit in 2010, and then stayed roughly the same through 2012. Note that the percentage is relatively constant at about 0.10% but has not quite recovered to the level of 2008.
The solid lines indicate annual art sales, as a percentage of the respective GDP, in the nations with the largest share of the worldwide art market.
·     The green line indicates that the percentage for the United States roughly tracked the percentage for world art sales and decreased slightly over the five-year period.
·     The purple line indicates that China had the same percentage as the United States in 2008 but declined less in 2009 and increased more through 2011. Although the percentage for China fell with a market correction in 2012, art sales in China increased slightly relative to the GDP over the five-year period.
·     The blue line indicates that the United Kingdom has consistently had a significantly higher percentage than for world sales and for sales in the United States and China. The percentage for the United Kingdom decreased significantly more with the economic downturn but then recovered at the same rate as the percentage for China with a corresponding correction in 2012.
A sense of spending on art relative to the size of economies brings perspective to the perceived value of culture, especially in contrast to financial reporting on the art market.
1.   In contrast to the record-eclipsing prices for individual paintings, worldwide spending on art, as a percentage of GDP, not only has not increased over the past five years but has decreased slightly.
2.   The United States has greater sales of art than China or the United Kingdom, but art sales in the United States rank lower as a percentage of GDP.
3.   In China, spending on art increased dramatically over the past five years, but the sales as a percentage of GDP increased only slight over all.
4.   Annual art sales in the United Kingdom have not recovered since the economic downturn in of 2008 and 2009, and consequently the United Kingdom now ranks third in worldwide market share. As a percentage of GDP, however, art sales in the United Kingdom remain significantly higher than in China or the United States.
In conclusion, while the financial value of art seems to indicate an increasing value of culture, the economic significance of the art market remains relatively unchanged.

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