<img decoding="async" class="wp-image-1599676 size-full-width" src="https://observer.com/wp-content/uploads/sites/2/2025/11/Clare-McAndrew-1.jpg?quality=80&w=970" alt='Professional portrait of Clare McAndrew, founder of Arts Economics, wearing a black blazer and white shirt. The image includes “Observer 2025 Art Index” branding with her name and title “Founder & Cultural Economist, Arts Economics,” on the right side.’ width=”970″ height=”647″ data-caption=’The founder of Arts Economics discusses how globalization, new wealth demographics and online sales are reshaping the balance of power in the art world. <span class=”media-credit”>Paul McCarthy, Courtesy of Arts Economics</span>’>
Clare McAndrew, featured on this year’s Art Power Index, has done what many thought impossible: she quantified the art market. As the founder of Arts Economics and author of the annual Art Basel and UBS Art Market Report, McAndrew has become the industry’s de facto oracle, translating the art world’s opaque dynamics into data points, patterns and insights. When her report lands each spring, its results ripple across the market—from charting the health of global sales, identifying emerging regions and revealing the settlement behind the numbers.
Over two decades, McAndrew has redefined how the art trade understands itself, applying the rigor of economics to a sector often governed by instinct and perception. Her analyses have shown how concentrated wealth, demographic change and globalization have remodeled the market’s power structures, and how resilience increasingly comes from its peripheries, not its peaks.
This past year was a pivotal one for the global art economy, marked by softening sales at the top end, a surge of activity in the sub-$50,000 segment and a generational shift driven by Gen Z and women collectors. New technologies, direct-to-artist sales and global diversification are transforming the market’s infrastructure, she reports, while also questioning how the boundaries of art are defined as luxury goods and collectibles enter the fold. McAndrew has emerged as an economist who helps markets evolve by revealing how confidence, perception and access shape value in ways that pure data cannot.
What do you see as the most transformative shift in the art world power dynamics over the past year, and how has it impacted your own work or strategy?
Sales in the art market for many years have been driven by an intense focus on a very small number of artists at the high end, which has escalated their prices, while creating higher barriers to entry for new artists and a winner-take-all type market scenario, where the works of the most famous artists are demanded the most, while emerging artists and the galleries and businesses that support them find it harder to generate sales and build careers. Alongside this, as most of what the mainstream media reports on is the multi-million dollar sums paid for this very small number of artists’ works, new buyers are led to believe that the art market is out of their reach, and that you can only get a quality work of art if you have a budget of over $1 million or so, when in fact there are so many other less publicized artists and works available at much lower prices.
These really high-priced sales were critical in driving the recovery of the market from the pandemic, particularly sales of ultra-contemporary and contemporary art, which outperformed other segments by a significant margin. However, a significant shift over the last year is that these are the two areas that have now slowed down the most. The segment of artworks sold for over $10 million has softened both in terms of volumes and value, and some of the bigger businesses have come under more pressure than some of the smaller ones. While this might not radically transform the market’s power dynamics overnight, it has at least shifted the focus away from that very narrow high end and the tiny share of artists it supports. Although some of the recent narrative around the market has been negative—focusing on a lack of eight- and nine-digit sales—there have actually been a growing number of transactions taking place, albeit at lower price levels, which is a positive development.
As the art market and industry continue to evolve, what role do you believe technology, globalization and changing collector demographics will play in reshaping traditional power structures?
My latest report on global collecting highlights the increasingly significant presence of female artists in the market and the growing influence of women as collectors, facilitated in part by shifts in the distribution and growth of wealth. Our research also uncovered the growing dominance of young Gen Z collectors, who were the most active across many of the fine art and collectibles segments. As wealth shifts towards these segments (including large vertical and horizontal transfers of inherited wealth), their preferences will become more dominant and how they want to buy and engage with the market will have a greater impact.
In terms of globalization, one of the key factors supporting the current size and ongoing development of the market is its increasingly global infrastructure, with sales of art literally all around the world and the emergence of a number of new art markets developing over the last 20 years in Asia, the Middle East, Africa and other regions. The global distribution of the art market has altered substantially.
From the 1960s, when Paris lost its central position in the art market, the U.S. dominated sales alongside the U.K., with London and New York accounting for at least three-quarters of the market during the 1980s and 1990s. One of the biggest changes came around 2004/2005 when China emerged as a global player, and with a huge boom in sales there while the rest of the world was suffering in the fallout from the Global Financial Crisis (GFC), making it (temporarily) the biggest market in the world in 2011 (albeit by a small margin). This was made all the more remarkable by the fact that until the death of Mao in 1976, it had been illegal to even own or exchange works of art in China. This injection of sales and the much more global nature of the art market have really protected its aggregate value from downside risks and helped it bounce back much quicker from crises and recessions.
In the market recession in the early 1990s, when it was so solely dominated by the U.S and Europe, it took almost 15 years for the market to get back on its feet, but post-GFC and post-Covid, the bounce back has been much quicker as sales are diversified across so many different regions and segments.
Looking ahead, what unrealized opportunity or unmet need in the art ecosystem are you most excited to tackle in the coming year, and what will it take to make that vision a reality?
There are so many interesting questions to look into about where the market is going, but from a methodological point of view, for my research, one of them I’m trying to focus on going forward relates to defining the boundaries of the market.
I have concentrated most of my research on the traditional art businesses (auction houses and dealers), but there are now a lot more agents involved in the market—artists are selling more directly, with disintermediation enabled through social media and online selling, collectors selling directly to each other, plus other platforms and agents outside of galleries and auction houses. How we account for and measure these sales will become increasingly important in understanding the activity in the sector as a whole, especially when we’re trying to assess its economic and social impact.
There are also continuing changes in what’s being sold in the “art” market, with an expanding range of collectibles and luxury products being sold by dealers and at auction houses, or even within “art”—new digital mediums and channels for accessing these works. The traditional mediums still dominate by value for now, but that could change in the future, and how we measure and expand those boundaries will be a continuing focus for my research in collaboration with academics and experts in the art market over the next few years.
What inspired you to want to bring greater transparency and reliability to a field often described as opaque, mysterious or relationship-driven?
When I first started out, my earliest reports focused on artists, looking at ways they could build better careers (or even just earn a viable income) and how government policies might help or hold them back. I uncovered early in this research that one of the best ways for them to succeed financially was to have a healthy and active market for their work, so my research pivoted to the art trade.
It became clear from working with dealers and auction houses that when they were approaching governments asking for help or changes in regulations to boost the trade, the first questions they would get asked were things like how big is the market, and how many people does it employ. There was a glaring lack of any of this objective industry benchmarking data to answer those questions, which inspired me to try to fill those gaps.
While there is some good, large-scale public data on auctions and exhibitions, many of the transactions in the market are private, so we have to use a very mixed methodological approach, relying heavily on surveys, sentiment testing and other qualitative research methods (alongside quantitative analysis) to build a better picture of the market.
I have increasingly embraced the importance of more qualitative methods and subjective expertise, which is quite different than when I came out of academia and believed that quants, data and econometric modelling could solve most of the market’s problems. All of the metrics and analytical tools that have been developed in the last decade or two in the art market are very useful, as is the increasing amount of data available, but their practical applications in guiding specific decisions have real limits, especially for collectors. There is still nothing really to replace the much more subjective advice you might get from an artist or dealer or advisor to guide the choice of one work over another, so expertise and relationships are still important.
After years of analyzing cycles of boom, correction and resilience, what have you learned about how confidence and optimism—or lack thereof—shape the art market differently than traditional financial markets?
Confidence is critical in the art market, and it relates to one of its most important features—that it is essentially supply-driven. Even if there is really strong demand around, there will only ever be a limited number of total works available on the market at any particular point in time, for all deceased artists, but for living artists too, where there are limits on how much they can really “make to order” in the short run. Rather than being driven by the costs of production or the availability of inputs, art prices are driven by their scarcity value—the factor that increases their relative price based on their low or fixed supply. And because of this scarcity in the market, prices for certain works can catapult up to really high levels when they come onto the market, as buyers try to grasp the really limited opportunities to acquire them.
Things like commodities are traded virtually every second, but in the art market, it’s much slower, and many works have a long market cycle. It can be 20 to 40 years before a work appears again, and some never do. The fact that opportunities to purchase certain works are so limited adds to the scarcity value, and works that are fresh to market or have been kept in private collections for years, for example, can spark a frenzy of interest and generate huge prices when they come up for sale. Increased supply (works coming up for sale) can have a positive, upward effect on prices (and the value of aggregated sales), which is obviously very different from other asset markets where increases in supply drive prices downward.
What this means is that vendor confidence and optimism about the market is key—how potential sellers view the state of the market and whether or not they should put works up for sale really often determines what happens as much as or more than prevailing demand.
On the secondary art market, supply is often generated by some exogenous event (like one of the famous “d’s”—divorce, disaster, death or debt), but where there’s a choice on the timing of the sale, it will often be down to perceptions of the strength of the market. The market can literally talk itself in and out of cycles to some extent.
The top end of the art market is increasingly polarised, with a very small number of artists capturing a large share of value. What risks does this concentration pose for the long-term resilience of the broader market?
This has been an ongoing issue in the market with an intense focus on a very small number of artists at the high end, which has driven up their prices, while creating higher barriers to entry for new artists and a winner-take-all type market scenario. One way to reduce risk and search and validation costs for those buyers unfamiliar with the market is to only purchase well-recognized works or those by really famous artists.
By doing that, you’re basically relying on the established preferences of previously successful buyers who have already bought that artist’s work, reducing their risks and insecurities about relying on your own taste in making the right choice. Collectively, these risk-reducing techniques tend to reinforce the “superstar phenomenon” in the art market, whereby the works of the most famous artists (living or dead) are demanded the most and achieve by far the highest prices in the market, while emerging artists face ever higher hurdles in gaining entry. This isn’t new, and it’s not only in the art market.
In the 1980s, American economist Sherwin Rosen pioneered the study of the economics of superstars and believed that some superstar artists or ‘masters’ reached their position justly because they were more talented, but the differences in their talent versus those less successful were much less than the differences in success. He also felt that some were, in fact, no more talented than their less-recognized peers, but their greater success was driven by the need of consumers for common tastes and culture or to “consume as others are consuming.” The problem associated with the superstar ethos in the art market is not just that it drives up prices, but also that it can deprive other artists of the opportunity to work by concentrating demand.
Alongside this, a lot of the media focus on art is just on the multi-million dollar sums paid for a very small number of artists, so a lot of new buyers can think that the art market is out of their reach, and that you can only get a quality work of art if you have a budget of over $1 million or so, when in fact there’s a huge range of prices and great works available at much lower levels.
I have been looking, in my research, on collecting at the parallel issue in the infrastructure of wealth. In the art market, like other luxury goods, discretionary purchasing power is enabled by greater wealth, and that in turn empowers growth in sales. Over the last couple of years, more wealth has been concentrated in the top 1 percent of society and greater wealth inequality is often linked to stronger purchasing in luxury markets across regions and over time. A higher concentration of wealth in the top percentiles has been a key factor driving strong sales and rising prices at the top of the art market in the past.
While this is most obviously linked to more purchasing by the wealthiest in society, who are more active in luxury markets, inequality can also shift demand in lower wealth tiers. In some cases, more unequal societies can create heightened status competition and anxiety as people become more sensitive to their position in the social and economic hierarchy. This can lead to greater ‘conspicuous consumption’ among those in lower-wealth tiers too, as people try to keep up, or bridge the gap, by imitating the lux spending habits of the wealthy. While this can boost sales in the lower end of art and other luxury markets, it has a range of potentially negative complications, not least being more consumer borrowing and debt accumulation.
As inequality becomes more pronounced, it can also lead to giving up, rather than keeping up, if the perception of upward mobility seems less hopeful or just less attractive. In the extreme, increases in inequality could endanger the market’s potential for long-term development. If consumers in wealth tiers below the very top engage less—or never even start collecting—the market could narrow further and value concentrate more at the top, and this is a segment that recent years have shown to be highly susceptible to wider risks and growth limitations.
On a positive note, while the aggregate figures show that the market has declined by value for two years, the most positive developments have been the growth of sales at the lower and more affordable ends of the market, with the number of artworks sold for prices in the sub-$50,000 expanding, and evidence of success by both dealers and auction houses in reaching new buyers, giving the market a broader and more diversified base for sales. This doesn’t really get focused on, though, in the press, which tends to only look at the big figures, which are so skewed by the tiny, narrow high end.
With the rise of digital channels, new collectible categories and luxury products entering the ‘art’ market—and younger collectors looking beyond traditional fine art, do you have plans to adapt your research and reporting frameworks to capture these newer forms of value and transaction?
Yes, I’m going to be starting new research on the secondary collectibles market that I’m hoping to publish in 2026. It’s a huge market and there’s strong evidence of an expansion in interest in this area over the last few years, especially with young collectors. In my recent research on HNW collectors, about 60 percent of their spending by value over the last year was on fine art, and 40 percent was on collectibles. For Gen Z collectors, just over half of the average spend was collectibles, and their levels were more than five times any other generation group on things like collectible luxury handbags and sneakers.
While some of the diversification in spending might be a reaction to the uncertain environment we’ve been in, it’s also part of a longer-term shift in what people buy, but also how they access the market. Within the art market, we’ve seen a big advance in digital sales following the pandemic, with e-commerce increasing from 9 percent of total sales by value in 2019 to 25 percent in 2020. Although this did settle back a little, the change seems to be more permanent, with a share of 18 percent last year, below the peak, but still double the share of 2019 or any year prior to that. It’s interesting as this is coming alongside greater art fair attendance and gallery exhibition visits compared to prior to the pandemic, so while collectors still want to visit exhibitions and see works in person, when targeting a specific work to purchase, they have become increasingly comfortable with doing so online.
Online channels are key entry points to the market for new buyers too. They have been consistently identified as the main source of new buyers for auction houses, and almost half of the sales dealers made online in 2024 were to new buyers. The expansion of the volume of transactions over the last few years has been facilitated by greater reach through e-commerce, despite the fact that the highest-value sales remained offline.
Outside the traditional art market, there are also more sales taking place directly with artists, on artist-based platforms and between other private agents. Dealers are still the most used channels for buying art in the surveys we conducted on HNW collectors, but there was a big gain in direct sales with artists, with over a third having bought directly from the online, through social media or through a visit to their studios.
Want more insights? Join Working Title - our career elevating newsletter and get the future of work delivered weekly.
