Marco Mundelius, a DIW expert, says the survey shows independent artists in Berlin earn less than half what self-employed people get in other professions.
Only in the film, radio and television were earnings "above average" for the self-employed in Berlin.
The DIW fears poverty levels are likely to increase among artists and those in other creative professions.
"Our research shows that many artists rely solely on the 'Kuenstlersozialkasse' - a German pension fund set up 30 years ago to help protect those in the arts and media.
"But as an instrument for securing members' pension requirements it's not enough," warns Mundelius.
In 2006, some 2.1 billion euros were generated by the more than 20,000 men and women working in the Berlin arts scene and by the 80,000 involved in other "creative" sectors.
As a workforce, this meant they represented 10 percent of the city's total overall employment and economic performance, said the DIW.