What price indigenous Australian art?

29 May 2009
Indigenous Australian art is a huge and fast-growing market, with pieces fetching high prices at auction. Aboriginal art depicts traditional, inherited forms of stories with a strong spiritual link to the artist's land and cultural history. But what do buyers – who are mostly non-Aboriginal – base their bids on? Does the back story matter, or are there other factors in play?

An analysis of sales of Aboriginal paintings at Sothebys Australia auction house over a three-year period shows that buyers are influenced by the artist's name, the medium used, the spiritual story of the work, and marketing variables such as lot number and inclusion in the auction catalogue.

The econometric analysis co-authored by University of Waikato economists Dr Steven Lim and Professor John Tressler, both collectors of indigenous art, shows that painting size, a long-lasting medium and a good write-up in the catalogue are significant factors in raising the price of a painting.

"The data confirms our expectation that well-known artists would command a price premium, but interestingly the size of the painting emerged as a significant variable," says Dr Lim. "The analysis showed that bigger pictures tended to be worth slightly less, except in the sample of the 13 most prolific and highest-valued artists. In their case the larger the picture, the higher the purchase price."

In all cases, the use of canvas, linen or slate as medium created a price premium of between 30% and 50% - presumably because these are long-lasting media compared with board, paper and bark.

Inclusion in the auction catalogue also proved to be a major price-booster. The authors found for every 10 words of catalogue description, the price increased by 3.6%. By comparison, each additional 10 words describing the work's spiritual significance or background was associated with a price rise of just 1.3%. But if there was a picture of the artwork in the catalogue, the seller could expect a massive 113.3% increase in the sale price.

Lot number also mattered: a painting at lot number 100 sold for 16% less than one at lot number one. Given that there tend to be about 500 lots in each auction, the economic effect can be significant.

"It would seem that while the background and spiritual significance of the piece does interest buyers, this is secondary to the way the painting looks," concludes Dr Lim. "It's hard to pin down the exact effects of marketing variables such as inclusion in the catalogue and lot number – it's a sort of chicken-and-egg scenario that in economic modelling we call endogeneity, but it appears that buyers are predominantly focussed on the aesthetics of Aboriginal art."