The Da Vinci Effect

People don't trust their own judgment. Given an object stripped of all information and context, they rarely know what its value is. They instinctively look for clues, hoping to suss out some extrinsic guide to its intrinsic value. Take art, where the effects of this phenomenon are most exaggerated. Very few people have the training or aesthetic eye to render a judgment about a painting. We peek at the little card in the gallery that tells us how to interpret what we're seeing and, most critically, who the painter was.

In 2005, a group of art dealers bought a 500-year-old work of art. Thought to be the work of one of Leonardo Da Vinci's disciples, it was damaged and painted-over but, perhaps due to its age or lineage--Britain's King Charles I once owned it--still fetched $10,000. Yesterday it sold for $450 million.

What changed? In the interim, art scholars decided it was probably by the great master himself. (That they are increasingly able to enjoy a sliver of the profits when they certify the provenance of these paintings casts scholars' revisions in not the most reassuring light--but that's not our immediate concern here.) Same painting, kicked around for centuries and never much coveted. A good painting, possibly, but not one that immediately shouts the name of its artist--until it was in everyone's interest to see Leonardo's hand in the strokes. Most of the news stories focus on the fact that no painting has ever been sold for as much (or even half as much). But think the real story lies in the difference between the 2005 and 2017 valuations. No painting will ever increase in value over such a short period of time--and that had nothing to do with the art itself.

This is what accounts for the whole "whale" culture in beer, too (or whalez if you like). If a beer is made by Cantillon, it may fetch a few thousand dollars. Girardin or Boon? A tenth the price, maybe less. Real lambic fans have their own preferences, but I don't know any that believe Cantillon is ten times better than its peers. But Cantillon is considered a very special brand by the community who will pay a thousand dollars for a bottle and therefore the value is a thousand dollars. That Boon Mariage Parfait or Girardin Gueuze might be preferred in a blind tasting is beside the point. The value is what other people say it is.

I wrote about this phenomenon over the summer on my visit to New England and so I probably don't need to belabor the point. I mention it because I find, as ever, the propensity to outsource one's judgment to the crowds mystifying--especially in America. Aren't we the land of individualism, home to the iconoclasts? Isn't looking at your neighbor to find out whether you like something ... odd?

I get that the purchaser of the Da Vinci probably did so because he thought it was a good investment. (Not as good as it was in 2005!) But trend-following and whale-hunting in beer isn't about investment. People pay those exorbitant amounts because they ultimately want to drink the beer. The price is supposed to guarantee quality. But quality abounds, and I can get you a $20 bottle of beer from De Garde, Upright, or Block 15 that will equal the experience of anything you spend on a Cantillon. And yet the truth of that statement is not going stop people from spending the amount of a vacation in Brussels on a bottle of beer.

Humans are curious creatures.

Postscript
This relates tangentially to a more recent post about identity. Say what you will about whale culture, but the Tree Houses, Hill Farmsteads, and Toppling Goliaths of the world have figured out ways to communicate value at a deeply profound level. It elevates their entire portfolio, even if only a few rare releases will ever fetch the highest prices. (See also this fascinating article about how Wall Street bros discovered Other Half and now consider its rarity a way to signal cachet among their peers.) In a similar vein, Sam Adams Utopias, once considered the rarest beer in America, now has a hard time even making it onto the secondary market--and when it does, barely sells above the sticker price. Boston Beer, with its spiked sodas and sugary ciders, is no Leonardo da Vinci to the beer geeks.