The Market for Contemporary Art Is a Little Bananas

Last fall an artist duct-taped a banana to a wall, and the piece sold for $6.24 million. As an economist who also runs the 800-piece contemporary-art collection at Booth, can you explain what made that work so valuable?

Contemporary art is the weirdest market I’ve ever seen. I’m supposed to understand markets, but it took me a decade to work it out.

Most forms of culture—such as movies or music—are close to public goods. The art world is almost unique in that the primary way in which people make a living is by selling the object exclusively to an individual owner. It’s most analogous not to other forms of culture but to luxury watches. 

Another unusual thing about the art world is that many people have little idea of what they’re buying. They need someone to tell them it’s good, and the people who certify these pieces are also the people who sell them. We rely on experts. The amount of herding that happens in the contemporary-art field is surreal.

On top of that, many people purchase art for status reasons—they want to own a Warhol, for example. And the art world has another trick, which is that it doesn’t make all goods available to everyone. A gallery rations art out to people who’ve bought from it before. Art becomes this incredibly elitist good.

During the pandemic, the supply of buyers went up like crazy. Anything you could buy while sitting in front of a computer did incredibly well, including art. Meanwhile, contemporary art has become a globalized good just as there have been huge increases in global inequality. In the past 10 years, galleries started setting prices with an eye toward the superrich. Now there are all these collectors floating around the art studios of recent graduates, paying huge amounts of money because they’re basically buying lottery tickets. There’s been a downturn over the past year or two, but it still feels out of equilibrium. 

It’s just a pity that the banana has become a focal point. There’s more than enough attention paid to the bananas of the world, and there will be more than enough given to the Leonardo da Vinci painting that eventually sells for $500 million. But there’s almost no attention paid to so many other works, by hundreds of thousands of artists trying to make a living. 

I have nothing against truly great pieces of art selling for a lot of money. Plenty of works that sell for huge sums—such as Kerry James Marshall’s Past Times, which brought $21 million—are worth every penny. But the really great pieces have some level of abstraction. They present a new way of looking at the world. The banana doesn’t do that. Irony is kind of cheap. 

Canice Prendergast is the W. Allen Wallis Distinguished Service Professor of Economics at Chicago Booth.