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Tom Simpson never quite understood why, as a young child, he was dragged to endless art galleries. But years later, the UWA Business School PhD candidate has developed a new appreciation for art—and is even developing a new way to value collectable art pieces.

“I grew up surrounded by a decent amount of art – my mother was a bit of a collector, and when I was still little she would drag me to galleries; I think I mostly hated it, but I suppose something must have stuck on some level,” Tom says.

“Decades later I was living in London and saw Richard Wilson’s artwork 20:50 , the only permanent installation at Saatchi gallery. 20:50 is just a big pool of oil in the basement, just sitting there, being oil, dark and reflective. It’s the sort of thing that I would’ve thought was incredibly stupid if I’d only  read about it, but when it was right there in front of me something clicked, I guess, and I became cautiously interested in this stuff again.”

Not only did Tom become interested in art again. He also decided to find more accurate ways of pricing valuable art and real estate – where each item in the market is unique.

“The art market and real estate market are examples of this: one house is not like another house, one painting is not like another painting.  So you have to find ways to control for all those differences between individual items,” Tom explains.

“I want to develop high-quality indeces that (1) control for the individual differences between sold items and (2) incorporate additional sources of information, such as information from passed-in auctions, and don’t just rely on prices realised at successful auctions. My research should be useful in allowing economists active in both the real estate and art markets to gain some new technologies for index construction.”

“All models are wrong but some are useful”

Helping Tom in his research was a recent trip to the University of Queensland, where he attended the AFAANZ (Accounting and Finance Association of Australia and New Zealand) Finance Theory PhD course. Tom also received the Izan ADFEN (AFAANZ Doctoral Education Network) Scholarship.

Attending the Finance Theory PhD course, Tom explains, will help him as he investigates the value of art. As an added bonus, the scholarship he won is named after Professor Izan , who served as Deputy Dean of the UWA Business School for many years.

“It was great to receive a scholarship in Izan’s name – she’s one of the top research academics in the history of the UWA Business School, so that was a real honour,” Tom says.

With such a rigorous PhD project, it’s lucky Tom is used to studying hard. Two years ago, he completed his MSc Finance and Economics at the London School of Economics and Political Science (LSE).

“The experience was, in a word, brutal.  The last six months I was there I was studying around 15 hours a day, and during exam periods the library at the LSE was seriously hellish – I’ll never forget that feeling of walking into a room and just being assailed by waves and waves of other people’s tension and self-loathing. That said, the programs itself was excellent.

“Finance and Economics is the LSE’s toughest finance program (out of around half a dozen courses), and it mostly emphasises mathematics and econometrics. My dissertation supervisor, Christian Julliard, was a big fan of a quote by the famous statistician George Box: “All models are wrong but some are useful.”  I think that was something that really stuck with me, that even people who deal with high level econometrics are still keen to maintain a sense of humility and realism about the power of their models.”

Into the future, Tom is keen to expand his work in financial economics. He’s previously investigated the Australian resources sector, and is currently—together with UWA Economics researchers Ken Clements and Jiawei Si —looking at the relationship between health, wealth, and the diversity of food in a person’s diet.

Media references

Karen Della Torre (UWA Business School)                                          (+61 8) 6488 8538
Verity Chia (UWA Business School)                                                    (+61 8) 6488 1346