Figurative vs. Abstract: Economic Valuation of Ultra-Contemporary Paintings at Auction

The Ultra-Contemporary art market, despite its market recent reemergence, has rapidly gained traction over the last two years. This thesis aims to investigate the economic impact of painting styles – specifically abstract and figurative – within this burgeoning market segment. Historically, abstract art has dominated the market, becoming a favorite among buyers since its rise in the early 20th century. However, recent reports suggest a shift towards figurative art, with a growing prevalence in both primary and secondary markets. This trend raises questions about the current popularity of painting styles and the preference of buyers in the Ultra-Contemporary market. The research addresses a significant gap in academic literature, which has largely overlooked the Ultra-Contemporary market, focusing instead on well-established market sections. By exploring the economic ramifications of painting styles, this research aims to bridge this knowledge gap and provide a comprehensive understanding of how these styles influence the valuation of artworks. This is particularly relevant as journalistic sources have highlighted the resurgence of figurative painting, suggesting a shift in market dynamics that needs academic exploration. To address this research question, this thesis employed a hedonic regression analysis to examine how abstract and figurative styles impact the economic value of Ultra-Contemporary art. The findings indicate that while the overall regressions were significant, the individual style variables – abstract and figurative – were not statistically significant in determining the price of artworks. However, the auction house and the nationality of the artists significantly influenced prices, with figurative art showing a comparatively lower p-value, suggesting a higher impact on prices than abstract art. These results imply that while there is a dominance of style, the style itself does not significantly impact auction prices within the Ultra-Contemporary market. This thesis also highlights the role of market dynamics and external factors, such as macroeconomic turbulences and inflation, which have turned the art market into a buyer’s market. This shift is characterized by increased financialization and speculation, with buyers favoring prominent or trendy artists for future resale profit. In conclusion, this thesis contributes to the understanding of art valuation by examining the influence of painting styles within the Ultra-Contemporary market. It underscores the complexities of assessing the artwork’s value and the relationship between economic and non-economic factors, providing valuable insights into contemporary market dynamics and trends.