How does the consumption decision is made when dealing with Art?
Does traditional microeconomic theory apply?
The Consumer in microeconomic theory is faced with the Consumer Problem when deciding on what to consume.
The Consumer Problem assumes that an individual has his own set of preferences, which he tries to satisfy through consumption of a good or a set of goods. This Problem assumes that consumers are rational individuals and as such their preferences have two defining properties:
– Completeness, asserts that a consumer is able to rank two goods, for example x>y, according to his preferences, for all available pair of choices in the set of alternatives that he is confronted with.
– Transitivity, states that a consumer which ranks x>y and y>z can transpose such ranking for the two goods not related, x>z.
The consumer, from being rational will then be able to rationally assess all alternatives of consumption, rank each one according to the impact that each has on its own utility and decide on which one to consume, always having in mind the maximization of its own utility, subject to his Budget Constraint.
The vast majority of consumption goods are consumed so as to satiate utilitarian preferences, characterized by completeness and transitivity which allow consumers to rationally decide on consumption. Art on the other hand is a type of good that satisfies not only utilitarian preferences but goes further, satisfying aesthetic preferences.
Restricting my analysis to Visual Arts, these comprising all Art which may be seen, such as Painting, Photography, Cinema and remaining, indeed, recent studies concluded that Art produces an aesthetic reaction from an individual. Eric Kandel a neuropsychiatrist, Nobel Prize winner, in The Age of Insight, identified through scientific testing’s such aesthetic dimension of Art; an individual when confronted with a piece of art will react emotionally, areas of the brain which are linked to emotions, such as happiness, fear, sadness, become active.
This aesthetic dimension of Art, while satisfying its correspondent preferences, confers to this type of good an irrational dimension, linked with emotions, impulses, sentiments.
According to António Damásio a neurologist, in Descartes’ Error: Emotion, Reason and the Human Brain, emotions bias the decision making process of an individual through a specific mechanism defined by Damásio as the Somatic Marker Hypothesis (SMH).
This interference of emotions makes it difficult if not impossible for a consumer to rationally decide on his consumption, not being able to assess all different alternatives that satisfy a certain aesthetic necessity that a consumer may have.
As Art is in itself subjective, aesthetic preferences of a consumer continue to be individual preferences, directly linked with the individual taste of the consumer. A painting x that for A is touching, for B can be revolting, so the individual characteristic of preferences maintain in this dimension. Still, properties such as completeness and transitivity become highly doubtable when confronted with the psychological impulse that a piece of art can have on a consumer, rationality being highly debilitated.
In fact, the consumption decision in this type of market does not follow the traditional Consumer Problem theory. On the contrary, general consumers are controlled by irrational criteria coming from their own subjective tastes and emotions, which makes a rational decision as theorized in microeconomics, impossible.
Art comprises not only Visual Arts but other types, in all of these areas these aesthetic interests from consumers playing a role in consumption, a psychological component which results in irrationality being present in all.
One can argue that in specific fields of Visual Art such as Painting, Sculpture, Photography, nowadays Art is seen, not only as a consumption good but also as an investment. From this condition speculation arises, prices being set and consumption/investment being decided without a complete set of information. This speculative property of these fields of Art amplifies the irrationality behind the consumer behaviour when deciding on buying a piece of art.
Nevertheless, when looking at the final consumer, Art, should it be an investment or a consumption good will always have as criteria for the investment/consumption decision its aesthetic impact on the Investor/consumer. This type of preferences are highly subjective, irrational, and hence difficult to model.
Art can thus be used as an argument for the thesis that Rationality as assumption on consumption decision is unrealistic and naïve.
Jaime Marques Pereira, Nº 716