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Investment in Paintings: A Short-Run Price Index

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Author Info

  • Marilena Locatelli Biey
  • Roberto Zanola

Abstract

This paper analyses the performance of a speculative investment in paintings during the period 1987–1995 by applying a modified repeat sales technique to a sample of 1446 repeat sales. Since this period is characterised by a boom and a non-boom sub-period, a price risk term is introduced to estimate influences that only affect a painting's value upon its sale, by isolating shocks that can cause realised returns to stray from expectations. The main finding is that from 1987 to 1991 an investment in paintigs performs well if compared with alternative forms of investment, such as U.S. stocks, U.S. 30 year government bonds and gold; by contrast, from 1992 to 1995 returns are lower, with the exception of 1993. Copyright Kluwer Academic Publishers 1999

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Bibliographic Info

Article provided by Springer in its journal Journal of Cultural Economics.

Volume (Year): 23 (1999)
Issue (Month): 3 (August)
Pages: 209-219

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Handle: RePEc:kap:jculte:v:23:y:1999:i:3:p:209-219

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Web page: http://www.springerlink.com/link.asp?id=100284

Related research

Keywords: auction; capital asset price index; painting; repeat sales; speculative investment;

References

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  1. Goetzmann, William N, 1993. "Accounting for Taste: Art and the Financial Markets over Three Centuries," American Economic Review, American Economic Association, vol. 83(5), pages 1370-76, December.
  2. R. Carter Hill & J. R. Knight & C. F. Sirmans, 1997. "Estimating Capital Asset Price Indexes," The Review of Economics and Statistics, MIT Press, vol. 79(2), pages 226-233, May.
  3. G. Candela & A. Scorcu, 1997. "A Price Index for Art Market Auctions," Journal of Cultural Economics, Springer, vol. 21(3), pages 175-196, September.
  4. Anderson, Robert C, 1974. "Paintings as an Investment," Economic Inquiry, Western Economic Association International, vol. 12(1), pages 13-26, March.
  5. Chanel, O. & Gérard-Varet, L.-A. & Ginsburgh, V., . "The relevance of hedonic price indices," CORE Discussion Papers RP -1222, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
  6. V. Ginsburgh & A.-F. Penders, 1997. "Land Artists and Art Markets," Journal of Cultural Economics, Springer, vol. 21(3), pages 219-228, September.
  7. Goetzmann, William N & Spiegel, Matthew, 1995. "Non-temporal Components of Residential Real Estate Appreciation," The Review of Economics and Statistics, MIT Press, vol. 77(1), pages 199-206, February.
  8. Ginsburgh, V. & Buelens, N., 1992. "Revisiting Baumol's "Art As Floating Crap Game"," Papers 9204, Universite Libre de Bruxelles - C.E.M.E..
  9. Case, Bradford & Quigley, John M, 1991. "The Dynamics of Real Estate Prices," The Review of Economics and Statistics, MIT Press, vol. 73(1), pages 50-58, February.
  10. Stein, John Picard, 1977. "The Monetary Appreciation of Paintings," Journal of Political Economy, University of Chicago Press, vol. 85(5), pages 1021-35, October.
  11. Pesando, James E, 1993. "Art as an Investment: The Market for Modern Prints," American Economic Review, American Economic Association, vol. 83(5), pages 1075-89, December.
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Citations

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Cited by:
  1. Ünsal Özdilek, 2013. "Visual autocorrelation of prices," Journal of Cultural Economics, Springer, vol. 37(2), pages 203-223, May.
  2. Helen Higgs & Andrew Worthington, 2005. "Financial Returns and Price Determinants in the Australian Art Market, 1973-2003," The Economic Record, The Economic Society of Australia, vol. 81(253), pages 113-123, 06.
  3. Marinelli, Nicoletta & Palomba, Giulio, 2011. "A model for pricing Italian Contemporary Art paintings at auction," The Quarterly Review of Economics and Finance, Elsevier, vol. 51(2), pages 212-224, May.
  4. Federico Etro & Laura Pagani, 2012. "The Market for Paintings in the Venetian Republic from Renaissance to Rococò," Working Papers 2012_10, Department of Economics, University of Venice "Ca' Foscari".
  5. Nicoletta Marinelli & Giulio Palomba, 2009. "A Model for Pricing the Italian Contemporary Art Paintings at Auction," EHUCHAPS, Universidad del País Vasco - Facultad de Ciencias Económicas y Empresariales.
  6. Helen Higgs & John Forster, 2014. "The auction market for artworks and their physical dimensions: Australia—1986 to 2009," Journal of Cultural Economics, Springer, vol. 38(1), pages 85-104, February.
  7. Andrew Worthington & Helen Higgs, 2006. "A Note on Financial Risk, Return and Asset Pricing in Australian Modern and Contemporary Art," Journal of Cultural Economics, Springer, vol. 30(1), pages 73-84, March.
  8. Laura Onofri, 2009. "Old master paintings, export veto and price formation: an empirical study," European Journal of Law and Economics, Springer, vol. 28(2), pages 149-161, October.
  9. Andrew C. Worthington & Helen Higgs, 2003. "Risk, return and portfolio diversification in major painting markets: The application of conventional financial analysis to unconventional investments," School of Economics and Finance Discussion Papers and Working Papers Series 148, School of Economics and Finance, Queensland University of Technology.
  10. Richard J. Agnello, 2002. "Investment Returns and Risk for Art: Evidence from Auctions of American Paintings," Eastern Economic Journal, Eastern Economic Association, vol. 28(4), pages 443-463, Fall.
  11. Luis Antonio Palma M. & Luis Fernando Aguado Q., 2010. "Economía de la cultura. Una nueva área de especialización de la economía," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 12(22), pages 129-165, January-J.

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