Economics of the arts and literature

The field is coded as JEL: Z11 in the Journal of Economic Literature classification system used for article searches.

While other economic goods, such as crude oil or wheat are generic, interchangeable commodities (given a specific grade of the product), there is only one example of a famous painting such as the Mona Lisa, and only one example of Rodin's well-known sculpture The Thinker.

While copies or reproductions can be made of these works of art, and while many inexpensive posters of the Mona Lisa and small factory-made replicas of The Thinker are sold, neither full-size copies nor inexpensive reproductions are viewed as substitutes for the real artworks, in the way that a consumer views a pound of Grade A sugar from Cuba as a fully equivalent substitute for a pound of Grade A sugar from United States or Dominican Republic.

As there is no equivalent item or substitute for these famous works of art, classical economist Adam Smith held it was impossible to value them.

In 2007, a single accountant with a $10 calculator can add the sums in 20 minutes, but you still need two hours and twelve actors for the Molière play.

Also, the amount of labour needed to produce an item does not explain the big price differences between works of art.

Some major financial institutions, banks and insurance companies, have had considerable return rates on investments in art works in the 1990s.

Throughout many art auctions, the source of the money of the bidder is often hard to identify or the works are purchased by an anonymous buyer.

Law enforcement officials say that the high amount of secrecy has become a drawback, as it leaves the process available to money launderers.

According to the FBI and Interpol, “in comparison with other trade sectors, the art market faces a higher risk of exposure to dubious financial practices” because “the volume of legally questionable transactions is noticeably higher than in other global markets.”[2] Some famous artworks such as the Mona Lisa painting are not reproducible (at least in the sense of creating another copy that would be seen as equivalent in value), but there are many cultural goods whose value does not depend on a single, individual copy.

Anticipated gains from synergy and market power have not been realised, and from the early 2000s there has been a trend towards organisation along sector lines.

Out of so many pieces in the public domain, they make a selection based on their expertise, thus adding value to the mere existence of the items.

On one hand the museum has, for conservation reasons, an interest in exhibiting as few items as possible, and it would select lesser known works and a specialized audience, to promote knowledge and research.

On the other hand, the exhibition argument requires showing the major pieces from different cultures, to satisfy the demands from the public and to attract a large audience.

Owners get tax deductions or subsidies for restoration, in return for which they accept restrictions on modifications to the buildings or provide public access.

The labour market for artists is characterized by: The term "star system", coined by Sherwin Rosen, is used to explain why a small number of the artists and creators in the market, such as the celebrity A-list actors and top pop singers, earn most of the total earnings in a sector.

Rosen's 1981 paper examined the economics of superstars to determine why "relatively small numbers of people earn enormous amounts of money and seem to dominate the fields in which they engage".

As the producer understands this using a famous director, actor or singer affects demand, they are prepared to pay a lot for a name considered a sign of quality (a star).

Indeed, authors like Adler and Ginsburgh have given evidence that star status is determined by chance: in a musical contest, results were highly correlated with the order of performance.

This randomness has been used to explain why the labor supply in the sector remains excessive: given the extreme gains of a star, and an irrational behaviour, or particular preferences, with respect to chance, unsuccessful artists keep trying, even when they are earning their money mostly in a different trade, such as waiting tables.

On the other hand, a scene painter for a music theatre company may see themself as a craftsperson who is paid by the hour for doing painting.

A concert pianist playing a piano concerto with a full orchestra . Orchestras are one of the largest musical ensembles , as they can contain as many as 100 musicians. In the 2010s, most orchestras receive income from ticket sales, donations and government funding. The latter two sources of income are required because ticket sales alone do not provide enough income for most groups.
Painter Alejandro Plaza at work on a canvas. Once this painting is complete, it will be a unique good, for which there is no exact substitute
Actors rehearsing for a play in 1951. Despite the numerous technological advances in between 1951 and the 2010s, in the 2010s, it would still require the same number of actors to perform this play. For this reason, scholars argue that some cultural industries are not getting more efficient the way other industries, such as accounting and banking, are; these latter two industries require far fewer workers in the 2010s due to the development of computer programs.
Fine art such as paintings are typically sold at auctions .
The Otsuka Museum of Art in Japan.
In many countries, historic buildings such as cathedrals are considered to be "heritage buildings" and as such they are protected against demolition or substantial modifications.
Sherwin Rosen states that top stars have such high earnings because their movies sell more copies
A painter whose canvases hang in major museums and a professional set painter for opera or theatre are both skilled painters who do painting for a living. However, the former is more likely to view their paintings as part of their artistic expression and identity, whereas the latter is more likely to view themself as a craftsperson.