An Art Glut Is About To Tank The Market. Collectors Should Invest Anyway.

Investing in art is about so much more than ROI.

- Magnus Resch

AS USUAL, THE most recent Art Basel Miami Beach, in December, was a glittering, celebratory spectacle of wealth and creativity. Champagne flowed, well-heeled crowds mingled, and seven-figure sales made headlines. It was almost enough to belie a simple fact. The art market is already in a recession; it just doesn't realise it yet—or won't admit it.

As someone who has spent years immersed in the art world—as a collector, a teacher at Yale University, and an author—I've seen the data firsthand. In a 2018 Science paper I co-authored, which examined information on 500,000 artists across millions of transactions, my fellow researchers and I uncovered a striking truth. Financial success stories in the art world are reserved for an extremely small group. In fact, just 20 artists—names such as Jeff Koons, Andy Warhol, and Damien Hirst—dominate more than half of the contemporary-art market's auction value. (The art world is notoriously opaque, with private deals nearly impossible to track, so for researchers like me, auction results offer the clearest window into the upper echelons of the market.) For the remaining 99.9 per cent of artworks, monetary returns are the exception rather than the rule. Consider this. Of the roughly 80,000 enthusiasts who visit Art Basel Miami Beach annually, less than three per cent actually make a purchase. For all its glamour, the art world is a precarious ecosystem.