When someone tells you they have an “objective” method of judging value, run!

One of the reasons I find disputes concerning the authenticity and provenance of works of art so fascinating is that the art market often magnifies the subjectivity and volatility that all markets are subject to. In practice 20 years ago I often deposed investment bankers at great length on their methods and judgments in valuing companies. I was always amazed at the subjectivity that went into numbers that got translated into hard dollar amounts that investors treated like objective, indisputable measures of value. Now, in a fascinating piece in the New Yorker, David Garan writes about

Canadian forensic art expert named Peter Paul Biro, who, during the past several years, has pioneered a radical new approach to authenticating pictures. He does not merely try to detect the artist’s invisible hand; he scours a painting for the artist’s fingerprints, impressed in the paint or on the canvas. Treating each painting as a crime scene, in which an artist has left behind traces of evidence, Biro has tried to render objective what has historically been subjective. In the process, he has shaken the priesthood of connoisseurship, raising questions about the nature of art, about the commodification of aesthetic beauty, and about the very legitimacy of the art world. Biro’s research seems to confirm what many people have long suspected: that the system of authenticating art works can be arbitrary and, at times, even a fraud.

Of course, as Garan writes, the desire to replace subjective judgment regarding the authenticity of artworks with some “objective” scientific method is longstanding:

The desire to transform the authentication process through science—to supplant a subjective eye with objective tools—was not new. During the late nineteenth century, the Italian art critic Giovanni Morelli, dismissing many traditional connoisseurs as “charlatans,” proposed a new “scientific” method based on “indisputable and practical facts.” Rather than search a painting for its creator’s intangible essence, he argued, connoisseurs should focus on minor details such as fingernails, toes, and earlobes, which an artist tended to render almost unconsciously. “Just as most men, both speakers and writers, make use of habitual modes of expression, favorite words or sayings, that they employ involuntarily, even inappropriately, so too every painter has his own peculiarities that escape him without his being aware,” Morelli wrote. He believed that not only did an Old Master expose his identity with these “material trifles”; forgers and imitators were also less likely to pay sufficient attention to them, and thus betray themselves. Morelli became known as the Sherlock Holmes of the art world.

To many connoisseurs, however, the nature of art was antithetical to cold science. Worse, Morelli made his own share of false attributions, prompting one art historian to dismiss him as a “quack doctor.”

But Garan’s article reveals that Biro may not be all he’s cracked up to be. Neither are objective methods of valuing business.