Painting and Sculpture for Sale. Asking Price: $300 million. How can a handful of artworks be worth more than all the homes in Georgetown?

Pablo Picasso’s painting ,Les Femmes d’Alger,  and  Alberto Giacometti’s sculpture, Pointing Man, will be among the highlights of the upcoming May auction season in New York. These masterpieces, which are being offered at Christie’s on May 11th, could sell for more than $140 million each, breaking the previous record for a work of art sold at auction.  Just a couple of days later, during the prime hours of the Post-War and Contemporary Evening Sale, Christie’s will auction Mark Rothko’s Number 36 (Black Stripe) which has an estimate of $50 million.  Rivals Sotheby’s and Phillips will also be offering works of art from Blue Chip artists who command prices well in excess of $50 million.

While critics observe that art’s value cannot be measured by sales prices alone and that art has an incalculable humanitarian, cultural, and educational dimension, there is no disputing that art is a big and growing business.  A 2012 study by the New York City Economic Development Corporation: “The Importance of NYC’s Auction Houses: Warhol and Picasso vs. 15 CPW and The Plaza” emphasized the important role of auction houses as a catalyst for art business and art travel to New York. The study also provided a comparison of the staggering prices paid for art to trophy buildings in Manhattan, like 15 Central Park West, where these paintings and sculptures are likely to find a home.

In this post we tried to compare the staggering prices paid for art to District Measures. Here’s what we came up with:

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While the auction market for art is a two-way battle between New York and London, D.C. is home to some of the most prestigious art museums in the world. Public museums like the National Gallery of Art and the Hirshhorn are among the most visited art institutions in the world.  D.C. is also home to private gems like the Kreeger, a Philip Johnson designed modern day version of the Frick which houses numerous Picassos.   Speaking of Rothkos, the Phillips Collection near Dupont Circle has four significant works by the Russian born abstract expressionist master in its Rothko Room.  Baltimore and Richmond museums also have world renowned collections. The Baltimore Museum of Art has one of the six Giacometti Pointing Man sculptures. The Frances and the Sydney Lewis collection of Art Nouveau and Art Deco furniture, at the Virginia Museum of Fine Arts , is world class. If a single Eileen Gray chair  sold for $30 million, who knows how much their collection is worth.

To return to my initial question- How can a few artworks be worth more than all the residential properties in Georgetown?

The answer goes something like this.  The supply of artworks that command prices over $100 million is extremely limited even compared to very valuable residential properties in Georgetown or New York.  Couple this limited supply (yes the Giacometti is an edition of six) with the intense demand for these artworks among the world wealthiest individuals and $100 million becomes the new norm for artworks.

What exactly is the data?

Most art-related price estimates and sales data in this post is from Christie’s. The $ 300 million Gauguin sale was a private transaction reported in numerous news articles. DC residential property tax data is from the D.C. Office of Tax and Revenue.  D.C.  Residential sales data are from Washingtonpost.com blogs , the D.C. Recorder of Deeds, and DC Urban Turf.

For more information on the upcoming auctions visit Christie’s,  Sotheby’s and Phillips.

Bob Zuraski contributed to this post

How Green is the District? Part 1: When it comes to transportation, it seems very green.

Bob Zuraski contributed to this post.

An article in today’s Washington Post, “Metro’s new rail cars are ready for riders on Tuesday” prompted us to look into the commuting patterns of D.C. residents.

To do this we analyzed data from the U.S. Census. As usual, we compared the District to other parts of the nation. Additionally, we highlighted commuting methods that are friendly to the environment and contribute to lower carbon emissions. These include public transportation, bicycling and walking.

Here’s what the data looks like:

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  • D.C. ranked second highest among these cities in terms of public transportation use with 38 percent of residents commuting by public transit, exceeded only by New York City.
  • D.C. also had the second highest percent of commuters who walked to work at 12 percent compared to 15 percent for Boston.
  • Portland took top prize among these cities for the percent of residents who biked to work, followed by Seattle and D.C.
  • Even though cities like Portland and Seattle are often recognized as leaders for green initiatives, when it comes to transportation residents there still rely on cars.
  • D.C. and New York are still leaders when it comes to green transit.

Stay tuned for Part 2 of How Green is the District ?

Note: I disagree with the findings of an earlier Economist/Siemens Report “US and Canada Green City Index:  Assessing the environmental performance of 27 major US and Canadian cities” which ranked D.C. only 13th  for transportation. The study stated “the city’s public transport network is shorter than average, at 0.4 miles per square mile, compared with the average of 1.1 miles.”  It is not clear that this measure of public transit coverage factors in where people actually live (does the study’s calculation of public transit per square mile include park areas where residents don’t live? ) nor does this measure distinguish among means of public transit, faster subways compared to slower buses. At the end of the day, rather than focusing on hypothetical measures of availability, the statistics should reflect how residents actually commute.

What exactly is the data?

The data is from the U.S. Census Bureau American Community Survey.  A great report on alternative commuting patterns that focuses on walking and cycling is Modes Less Traveled—Bicycling and Walking to Work in the United States: 2008–2012 American Community Survey Reports, by Brian McKenzie, issued May 2014. The Economist/ Siemens study can be accessed here.

Are Mom and Pop Shops Disappearing in D.C.?

The recent spate of announced openings of new retail stores, including many high-end retailers at City Center and hip eye glass retailer Warby Parker, will no doubt help fill a void in the District’s retail landscape. These new stores will attract tourists on vacation shopping sprees and retain spending (and tax revenue) that might otherwise have occurred outside the District. At the same time, the proliferation of branded stores has changed the retail landscape in the District and in the nation. It is apparent to any casual observer that Mom and Pop stores are declining.

In this post we measure this changing retail landscape by looking at data on retail store size from the U.S. Census. There are seven categories, ranging from small Mom and Pop stores with 1 to 4 employees- to large big box retailers with more than 250 employees.

Here’s what the data looks like.

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  • There has been a sharp decline in Mom and Pop and family run stores in D.C. The pace of decline has outpaced the nation.
  • At the opposite end of the spectrum, there has been a 50 percent increase for both stores with 100 to 249 employees and for stores with 250 or more employees. This far outpaces the comparable figures for the nation at 9 and 20 percent, respectively.
  • It is important to note that small stores with fewer than 20 employees still comprise the vast majority, more than 85 percent of all retail stores, but their numbers are declining.
  • To some extent D.C. may also be catching up to the nation in terms of numbers of large big box retailers whose presence had been relatively scarce here.

Here’s a sample of the type of stores that are disappearing in D.C. and the stores who are taking their place.

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Butchers (meat stores), Auto dealers and Book Stores are all disappearing. Pet, Furniture, Cosmetics and Convenience stores are increasing in D.C. This trend is bound to generate varying opinions among readers. As revenue forecasters we are asked to predict what the future will look like. My prediction is that there will soon be a saturation point and consumers will want a more varied retail landscape.

What exactly is the data?

The data is from the U.S. Census Bureau: County Business Patterns.

Bob Zuraski contributed to this post

Innovation and the Tech Sector in D.C. , what factors matter?

Policy makers across the nation realize the importance of innovation and technology as drivers of economic growth and they increasingly set their economic development goals to encourage innovation and the development of the tech sector in their jurisdictions.  How does the District measure up in terms of innovation?   As a proxy for innovation we looked at statistics on patent issuance in major metropolitan areas in the nation.

Here are some key results:1

  • In 2013, the D.C. area ranked 16th among 374 metropolitan areas in the nation in number of patents issued, down one position in the ranking from 2012.
  • San Jose (Silicon Valley) by far outpaced all other areas with patents issued totaling approximately 13,000 in both 2012 and 2013.
  • Following San Jose there appears to be a tiered structure that has number two ranked San Francisco through number seven ranked Seattle in a second tier with over 4,000 patents.
  • A third tier of the top 25, which includes D.C.,  has the number of patents ranging from just over  1,000 for Denver to approximately 3,800 for Chicago.
  • The remaining metro areas all had fewer than 1,000 patents.

We then looked at the same statistics for the top 16 over a longer time frame, from 2003 to 2013, to see if any trends emerged.

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  • Measured in terms of growth, the District fared better, ranking 6th highest among major metro areas with a 72 percent change in the number issued.
  • All major cities showed strong growth over the ten year period. The lowest ranked, Detroit, still had growth of over 30 percent, underscoring how important innovation and technology are in today’s world.
  • Once again, the Bay Area around San Francisco and San Jose still ranked in the very top, even by this measure. It is no surprise that the economy is booming there and the dot-com era appears to be back.

What else can we glean from the data?

It is not apparent that the cost of doing business or taxes are the dominant drivers for where the innovation process occurs. It may affect where the products and services that embed these innovations are manufactured . The top three markets San Jose, San Francisco, and New York  have high tax burdens and high costs of doing business.  It seems that the eco-system surrounding these areas, including the presence of world class universities and research institutions in the tech areas, and the ability to attract the most talented individuals in their fields also play an important role in where tech firms and innovators choose to locate.

Economists are increasingly examining  how social and demographics factors also impact innovation. A recent and fascinating study,  “Religion and Innovation”  by Roland Bénabou, Davide Ticchi and Andrea Vindigni  examined cultural and religious factors that might explain attitudes towards risk taking and innovation. Another study  “Cities and The Creative Class” by Richard Florida found social diversity, tolerance and acceptance of new ideas to be positively correlated with innovation.

 What exactly is the data: Data on patent issuance is from the United States Patent Office . The study by Richard Florida can be accessed here.  “Religion and Innovation”  by Roland Bénabou, Davide Ticchi and Andrea Vindigni is a working paper. An abstract can be found here.

Bob Zuraski contributed to this post

Profile of high income earners in D.C., New York and California: What makes them differ and why does it matter to us?

In a recent District Measured blog we analyzed the income distribution of D.C. residents. We wanted to expand on this analysis by looking at income characteristics of high income individuals in the District compared to their peers in other states in the nation.  New York and California were chosen for this comparison because of a similar concentration of high income earners. High income earners, or wealthy individuals, are defined here as tax filers with Federal Adjusted Gross income greater than $ 1 million. Though small in numbers, they account for a disproportionately large share of overall income in these states and in the nation.

In D.C., in tax year 2012, they accounted for less than 0.5 percent of all filers but more than 22 percent of income. The share of overall income earned by these wealthy individuals varied from a low of 19 percent in California to a high of 25 percent in New York. For the U.S. as whole the share was 15 percent.  These statistics clearly reveal that the concentration of income among wealthy filers is substantial and this has become the subject of intense debate and research.

Wealthy individuals generally derive income from various and often volatile sources of earnings related to the stock market and business profits. This makes our job of forecasting income tax revenue both difficult and interesting.  In analyzing these different sources of income, we need to consider if specific sources of income are more important in the District and therefore need to be examined more closely when looking at broader macro-economic trends.

Here’s what the data for a typical millionaire tells us:

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In the District, a millionaire has a relatively higher share of income associated with capital gains and rental/partnership income.

  • Rental and Partnership income for a millionaire in the District, at $233,000, was nearly ten percent higher than the U.S overall and considerably higher than both California and New York.
  • Income from Capital Gains as share was also highest for a District millionaire, at $369,000, followed closely by New York at $348,000.
  • In contrast, Wages and Salaries are a relatively smaller source of income for District millionaires, at a “low” of $225,000. The District does not have the same concentration of high-paying finance and tech jobs, with large salaries and bonuses, that are a much larger source of income for wealthy residents in New York and California.
  • Dividends were a larger source of income in the nation overall, than in the states shown here.
  • Other Income, which includes interest income and other sources, was a smaller source of income for all places.

Note: Given the volatility of these income sources, we also looked at 2010 and 2011 data to see if the relative differences in share of earnings among the states varied significantly from those shown above. The share of capital gains declined in all these places in 2010 and 2011; 2012 was a particularly strong year for capital gains realizations due to federal tax law changes.  The decline in the share of capital gains income was similar for all places. However, Rental and Partnership income remained a much higher source of income for the wealthy D.C. residents compared to these other areas.

What exactly is the data? 

For each area the average millionaire is computed by taking the share of each source of income and multiplying that share by one million dollars. The shares computed are therefore averages for each one million dollars of income and not the total amount of income.  As with all data that is averaged, there could be great variation among millionaires. We use the words income and wealth interchangeably here because wealthy individuals derive income from assets as well as labor.  Data in this report is from the Statistics of Income (SOI) data published on the IRS website.  The data can be accessed by clicking here.

Bob Zuraski contributed to this post

The District’s birth rate was 6th highest in the Nation. For adult-aged women, births tend to occur later in life compared to women in the Nation. High housing costs could be a factor.

1The District has enjoyed strong population growth in the past 10 years even as growth appears to have slowed in 2014.  What accounts for this rapid growth? In this blog we examine one of the components of population change–births. We will discuss the other components–migration and deaths–in subsequent blogs.

According to recent statistics published in the National Vital Statistics Report “Births: Final Data for 2013”, the District’s birth rate, defined as births per 1000 population, was sixth highest in the Nation in 2013. There were 9,338 births in the District which measured against a population of approximately 645,000 translates into a birth rate of 14.4 births per 1000 residents. This compares to an average of 12.4 births per 1000 in the Nation. Ten years ago in 2003 the District’s birth rate was 13.5 compared to 14.1 for the nation.

Looking at the statistics in more detail reveals interesting differences in the age of women when births occur in the District compared to the Nation.

2Births occur later on in the lives of adult women in the District.

  • For ages 35 and over, the District ranked first in terms of birth rates. The top 10 States were largely concentrated in the Northeast. Connecticut, Massachusetts, New York and New Jersey were consistently ranked in the top 10 for ages 35 and over.
  • Alaska, Hawaii, Maryland and California also had high birth rates among women in these age brackets.
  • For ages 40 and over the District’s birth rate was twice the national average.
  • For the nation overall there has been a secular increase in births occurring later in lives of women. The rate for women aged 40 to 44, has doubled from approximately 5 percent in 1990 to over 10 percent in 2013.
  • We do not have long-term historical data for this age group in the District but in 2008 the birth rate was 16 percent in the District compared to 9.8 percent in the U.S. In recent years, the growth in the birth rate for this age group has far exceeded the national average.

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In contrast for adult women aged under 35, the opposite occurred and the District ranked almost last for this group.

  • Interestingly the District’s ranking dropped rapidly for the cohort aged 30-34 while several Northeastern States: Connecticut, Massachusetts and New Jersey were still ranked in the top 10.
  • It is important to note that the District also ranked highest in the nation for births among non- adult aged women even though birth rates have been declining for this group over the past 20 years. For women aged 15-17 the birth rate was 23.9, almost twice the national average, and for those aged 10-14 the 1.6 birth rate was more than twice the national average.

Various factors are often cited to explain differences in birth rates among age groups of women. These factors include, among others, socio-economic, ethnic, educational attainment, and cultural factors. A body of economic and demographic research has recently emerged examining how high housing costs may also affect and delay household formation decisions.  A study by William A.V. Clark for the California Center for Population Research, finds that high housing costs can delay the first birth by as much as three to four years. As noted in the study, the relationships between these factors and causation effects and directions can be very complex.  For instance do higher housing costs cause people to get more advanced degrees and therefore delay household formation in order to be able to afford housing, or is the direction of causation the opposite way? All this suggests that the effects of housing prices on demographics and ultimately tax revenues need to be watched very closely.

What exactly is the data? Birth rate data is from Martin JA, Hamilton BE, Osterman MJK, et al. Births: Final data for 2013. National vital statistics reports; vol 64 no 1. Hyattsville, MD: National Center for Health Statistics. 2015. The report can be found here.  Evidence on the effects of housing prices and household formation is from William A.V. Clark, and can be found here.

Bob Zuraski contributed to this post

Diverging Trends from the Nation in DC’s Population aged 18-34.

A recent article in the Washington Post “A wave of mostly white voters is reshaping the politics of D.C.,”  highlighted the changing landscape brought about by sweeping demographic shifts in the District and the implication on local politics. As noted in the article, the changes are most significant in the population aged 34 and under. Some of the trends seen in the District for this younger segment of the population are markedly different from the nation as a whole. These differences are evidenced in recent data from the U.S. Census and the Minnesota Population Center.

Here are some key diverging trends:

Young people in the District are increasingly made up of white non-Hispanics. This is in sharp contrast to the nation where the young are increasingly non-white. Whites in this age group could soon be a minority in the U.S., the opposite is occurring in the District.

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The median earnings for full time workers in this is age group in the District increased significantly from 1980 to 2013 growing from almost $38,000 in 1980 to over $54,000 in 2013. In contrast, earnings for this age group in the U.S. declined from $36,000 to $34,000 over the same period. It is important to note, however, that poverty rates for those without jobs remained high.

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Other measures of economic well-being also increased . The share of the District’s younger residents who live with their parents has decreased since 1980. The trend in the nation is the opposite—the share of boomerang kids is at all-time high at 30 percent.

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Finally yet another measure that increasingly separates DC’s 18-34 year olds from the rest of the nation is how they commute to work. Thirty one percent of DC residents commute by car. This is down from 40 percent in 1980. In the U.S., the share has held consistently above 80 percent.

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 What exactly is the data?  Data in this blog has been provided by the U.S. Census and the Minnesota Center for Population and is available by clicking on the following link.   The site is designed and developed by Social Explorer. Check out the site for more interesting statistics and to compare DC to other areas.