What Is Value?

The Fundacio Joan Miró is located quite a ways up a hill in Barcelona. Years ago I was dropped off there by a cousin who, knowing I had no phone, didn’t return for 10 hours. I was ready to leave after 30 minutes. The artist Joan Miró wasn’t even close to full-day interesting to me when I walked in. But that day did more than teach me Miró’s ideographic language and make me love his work. I now know that day was the start of me rethinking everything I believed about value.

We often intuitively have a feeling for the value of something. What it should cost. What a fair price is. But those feelings change based on context and vary widely person to person. The hardest part of the intuition to let go of is the knowledge of what something cost to make. Consider this dialogue about how an artist prices his art, from the movie Great Expectations:

“Do you charge by the inch or by the hour?”

“What?”

“How do you price your art? By its size, square footage, or the time it takes to make the art?”

“I’ve actually never sold a painting.”

Even if we don’t have a feeling for the value (meaning cost or price) we often think we know what the value to others is. In business model territory, the Value Proposition describes what customers gain from your product. What they value may be different from what you value. Actually, it’s probably generally different than what we think and we can only know through observation, data analysis, and interviews.

Related to pricing, something you’ll hear is a belief in “value,” vs “perceived value.” The way I usually hear these two seemingly similar terms explained is that “value” is something objective, like the cost of the materials required to make a product (so a cost-plus pricing model), whereas “perceived value” comes from the beliefs of the customer, which may have nothing to do with the cost of something. But this distinction seldom makes sense.

There is no difference between value and perceived value. Customers, assuming they have the money, buy what they value at or at less than the price at which they value it. Otherwise, they have the option to wait until something changes or not buy at all.

My next encounter with art and value was a few years later in the Paula Cooper Gallery in New York. There was an exhibit of Dan Flavin’s work (all white fluorescent bulbs when I visited). This was a much more direct split of the cost-plus model of value. Flavin worked with fluorescent light bulbs. While he did arrange them in a different way on a wall (or that is, his installation guy did), his materials plus labor for one of his pieces might average a hundred dollars today. The works sell for 1,000 times that and up.

Over the years, I’ve spent a lot of time talking to people about Flavin’s fluorescent bulb art. Once, a collector offered to explain an exhibit of his to me. Instead I ended up on a five-minute explanation of what Flavin’s work meant to me. I also mentioned that I thought of recreating his work on my own walls (it’s fluorescent light bulbs after all) and realized that I had just said one of the worst things to a collector. The reply: “There are people who do that… They’re called forgers…” There was no consideration of the fact that I could replicate the effect of a pricey Flavin for my own appreciation and not to fool others.

At other times I heard gallerists describe an artist’s work and the story behind it only to be waived away (in my view rightly too) by a potential collector who just didn’t find the story all that interesting. When all of the value resides in the story, the story must be valuable to the potential buyer.

An extreme example is the sale and resale history of the painting Salvator Mundi, which went from £30 in 1649, being rediscovered and sold for £45 in 1958, $10,000 in 2005 to being again identified as a da Vinci, resold at $75M in 2013, then $127.5M, and most recently $450M in 2017. Why the price increase? What is different about the painting’s value? Everything from increased value of the artist, to pride, to wealth generated by a global market for petroleum.

With art, since the value is in the story that belongs to this one piece of art, a replica does not have anything close to the value of an expensive piece. There’s a city in China called Dafen where artists produce, by hand, replicas of famous works of art. There you could buy a copy of Salvator Mundi for a price much closer to what was paid for it in 1958. The story of the replicas’ production is pretty amazing itself. But not to buyers.

My rethinking of value started with the world of art but has extended everywhere else. The art world just happened to be a place where it was easy to see issues of value (as seen in the pricing of art) more dramatically.

In Fundacio Joan Miró, it was the three large paintings in the series titled Painting on White Background for the Cell of a Recluse that did it for me. If you haven’t seen them, they are each composed of a single line on a massive canvas. 

Years ago I did buy a piece of artwork. A highly conceptual piece — there’s actually nothing to it except for the certificate — by an artist named Alejandro Cesarco. I won’t bother to describe the concept.

I love it.