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Pricing Genius: The Market Evaluation of Innovation

Author

Listed:
  • David Galenson

    () (University of Chicago)

  • Simone Lenzu

    () (University of Chicago)

Abstract

Economists have neglected a key issue for understanding and increasing technological change, in failing to study how talented individuals produce innovations. This paper takes a quantitative approach to this problem. Regression analysis of auction data from 1965-2015 reveals that the age-price profiles of Jackson Pollock and Andy Warhol – the two greatest painters born in the 20th century – closely resemble the age profiles of the two artists derived both from textbooks of art history and from retrospective exhibitions. The agreement of these sources confirms that the auction market assigns the highest prices to the most important art, and examination of the artists’ careers reveals that this art is the most important because it is the most innovative. These results lend strong support to our understanding of creativity at the individual level, with a sharp contrast between the extended experimental innovation of Pollock and the sudden conceptual innovation of Warhol.

Suggested Citation

  • David Galenson & Simone Lenzu, 2015. "Pricing Genius: The Market Evaluation of Innovation," Working Papers 2015-10, Becker Friedman Institute for Research In Economics.
  • Handle: RePEc:bfi:wpaper:2015-10
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    File URL: https://econresearch.uchicago.edu/sites/econresearch.uchicago.edu/files/Galenson%2C%20David%20-%20Pricing%20Genius%20-%20The%20Market%20Evaluation%20of%20Innovation%20-%20072315.pdf
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    1. Pricing Genius: The Market Evaluation of Innovation By: David Galenson (University of Chicago) ; Simone Lenzu (University of Chicago)
      by maximorossi in NEP-LTV blog on 2015-08-10 23:10:36

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    1. repec:eee:reecon:v:72:y:2018:i:1:p:86-100 is not listed on IDEAS

    More about this item

    JEL classification:

    • J01 - Labor and Demographic Economics - - General - - - Labor Economics: General
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General

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