A 37-year-old artist who calls himself Penny Pinch says he’s an anticapitalist, but not the angry kind. His paintings feature flat-nosed men in buffalo suits. They’re in the bold, cartoonish street style of Keith Haring or the animated series “Adventure Time.” He was a musician and then a pastor before he tried his hand at art. He and his wife, who works for a Christian social service agency, have children ages 5 and 6. Last year he made $40,000 and his wife about $45,000, he told me.
This Friday, Penny Pinch the anticapitalist will be involved in something that might warm the hearts of a lot of capitalists, especially those who are interested in innovation. Sixty-one of his works will go on sale in an unusual auction in which the price starts high and then keeps falling until someone buys.
This type of auction, known as a Dutch auction, is typically used for flowers, fish and other perishable products, because it produces sales quickly. Not for art. Yet this is the second year Penny Pinch has sold works this way. Last year the stunt drew the attention of The Economist magazine. It’s the kind of thing you can imagine catching on if it works — whatever “works” means (raising money, raising consciousness, entertaining the clientele?).
Several aspects of this auction are interesting, including where he got the idea, why he’s going ahead with it, and the pros and cons of the Dutch style from the point of view of economists. I’ll start with the last part because this is an economics newsletter.
Auctions of all kinds are a huge part of our lives. The ads that appear in Google searches are placed through auctions among advertisers (by computers, of course, not someone with a gavel). A survey of the auction field in 2021 looked at auctions in “timber, construction and services procurement, oil and gas leases, online auctions, internet advertising, electricity, financial securities, spectrum, as well as used goods.” The authors, Ali Hortaçsu and Isabelle Perrigne, wrote that “it is quite striking” that six of the people awarded Nobel prizes in economics since 2001 have publications on auctions.
The kind of auction you choose should depend on what you’re selling: “horses for courses,” as Paul Klemperer, an auctions expert at Oxford University, likes to say. That’s what makes Penny Pinch’s auction this week unusual. A descending price auction seems like the wrong horse for this course. It’s over abruptly, which makes sense for everyday items but not so much for artwork, where art-loving bidders customarily ponder their willingness to pay as the price rises.
Penny Pinch told me that he enjoys the excitement of a Dutch auction for art, in which a bidder who comes in high can win a piece before anyone else even notices his or her presence. (The starting prices are being posted on Wednesday, and the auction will begin online on Friday. The price of each of the 61 works will drop by $100 each hour until it’s sold, so not exactly rapid-fire.)“For me the subversion is what’s interesting,” he said. “I really don’t care about the economics.” He produces a lot of paintings — around 250 a year for sale — which keeps prices low. It also means that a person who misses out in one auction will probably be able to score a piece later.
Because Penny Pinch has chosen not to put a reserve price on any piece, the price of one or more could go all the way to zero. That would be unacceptable to your typical professional artist. Many want to impress collectors that the value of their works is steadily rising, so if they sense any weakness in demand they tend to pull their stuff off the market. I asked him how he would feel if a work attracted no bids and somebody carted it off without paying anything. “Part of me secretly hopes it does,” he said.
I also asked him what makes him an anticapitalist. “I’m not trying to burn down the government or anything,” he said. “I like to live as simply as I can and consume as little as I can. With capitalism, one of the things that often frustrates me is that there’s winners, but there’s also losers. I would love in my own life, which is the only thing I have control over, for there not to be losers.”
The idea of a descending-price auction came not from him but from Allan Weinberger, the director and founder of A Very Serious Gallery in Chicago, where Penny Pinch shows his work. (One senses that Weinberger means “very serious” ironically.) In an email, Weinberger wrote that before opening the gallery he spent 10 years working in Google’s ad business. Previously he worked at Viagogo, an online ticket seller, and was a consultant for National Basketball Association teams on ticket pricing. So he knows the space.
“While Dutch auctions can be anxiety-inducing for both buyers and sellers, Penny Pinch and I have played out every scenario and we’re comfortable with any result,” including the possibility that a few works will “undersell,” he wrote.
As for anxiety, it depends on how quickly prices are lowered. If they’re lowered gradually, emotions don’t run higher than in an ascending-price (English) auction, Jan Krämer of the University of Passau in Germany, wrote to me in an email. That’s based on research he and his partners did for a 2014 paper, “Excitement Up! Price Down! Measuring Emotions in Dutch Auctions.”
Mark Tendall, an advanced lecturer who teaches undergraduate economics at Stanford, read about last year’s Dutch auction and got interested enough to buy one of Penny Pinch’s paintings for his office (albeit not by auction). This year he’s giving a webinar on auction theory in conjunction with the event. He said the Dutch auction eliminates the possibility that two or three well-heeled bidders with big egos will get into a bidding war to impress people. “There is something very democratic about this,” he told me. “Even the starting prices aren’t too high.”
In Weinberger’s email to me, he wrote, “For years, Penny Pinch and I have worked together to spitball unusual ideas, most of them are terrible.” This one might not be so bad.
Elsewhere: More Disabled People Are Working
The share of people with disabilities who are employed — 22.9 percent in November — is hovering around its highest level in Bureau of Labor Statistics records going back to 2008. (The average since June 2008 is 18.8 percent. The peak was 23 percent in August.) A continued shortage of labor has made employers more open to hiring disabled people, Bryon Bass, chief executive officer of the Disability Management Employer Coalition, wrote in an email. Long Covid slightly increased the number of working people who are disabled. Also, the Covid pandemic showed that “it absolutely is possible for us to work from home,” said Felicia Nurmsen, managing director for employer services at the National Organization on Disability. The option to work from home attracts some disabled people who otherwise might not seek employment.
Quote of the Day
“The ideal subject of totalitarian rule is not the convinced Nazi or the convinced Communist, but people for whom the distinction between fact and fiction (i.e., the reality of experience) and the distinction between true and false (i.e., the standards of thought) no longer exist.”
— Hannah Arendt, “The Origins of Totalitarianism” (1951)