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Paintings and numbers: an econometric investigation of sales rates, prices, and returns in Latin American art auctions

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Nauro F. Campos
Renata Leite Barbosa

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Abstract

This paper uses a unique data set of Latin American paintings auctioned by Sotheby's between 1995 and 2002 to investigate several puzzles from the recent auctions literature. Our results suggest that: (i) the reputation of an artist and the provenance of the artwork, often omitted variables in previous studies, seem to be more important determinants of the sale price of a painting than more standard factors, such as medium and size, (ii) the opinion of art experts seems to be of limited use in predicting whether or not an artwork sells at auction, (iii) there is little supporting evidence for the widespread notion that the best or more expensive artworks tend to generate above average returns (the masterpiece effect), although (iv) there is strong evidence in our data for the declining price anomaly or afternoon effect (that is, when heterogeneous products sold sequentially follow a decreasing pattern of prices.) Copyright 2009 , Oxford University Press.

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File URL: http://hdl.handle.net/10.1093/oep/gpn020
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Publisher Info
Article provided by Oxford University Press in its journal Oxford Economic Papers.

Volume (Year): 61 (2009)
Issue (Month): 1 (January)
Pages: 28-51
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Handle: RePEc:oup:oxecpp:v:61:y:2009:i:1:p:28-51

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  1. Paul Klemperer, 2004. "Auctions: Theory and Practice," Economics Papers 2004-W09, Economics Group, Nuffield College, University of Oxford. [Downloadable!]
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  2. Orley Ashenfelter & Kathryn Graddy, 2003. "Auctions and the Price of Art," Journal of Economic Literature, American Economic Association, vol. 41(3), pages 763-787, September.
    Other versions:
  3. Charles R. Hulten, 2003. "Price hedonics: a critical review," Economic Policy Review, Federal Reserve Bank of New York, issue Sep, pages 5-15. [Downloadable!]
  4. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb.. [Downloadable!] (restricted)
  5. Sebastian Edwards, 2004. "The Economics of Latin American Art: Creativity Patterns and Rates of Return," NBER Working Papers 10302, National Bureau of Economic Research, Inc. [Downloadable!] (restricted)
  6. Chanel, Olivier, 1995. "Is art market behaviour predictable?," European Economic Review, Elsevier, vol. 39(3-4), pages 519-527, April. [Downloadable!] (restricted)
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  7. Susanne Schönfeld & Andreas Reinstaller, 2007. "The effects of gallery and artist reputation on prices in the primary market for art: a note," Journal of Cultural Economics, Springer, vol. 31(2), pages 143-153, June. [Downloadable!] (restricted)
  8. Jianping Mei & Michael Moses, 2005. "Vested Interest and Biased Price Estimates: Evidence from an Auction Market," Journal of Finance, American Finance Association, vol. 60(5), pages 2409-2435, October. [Downloadable!] (restricted)
  9. Chanel, O. & Gerard-Varet, L.A. & Ginsburgh, V., 1993. "Prices and Returns on Paintings and Exercise on How to Price the Priceless," G.R.E.Q.A.M. 93b01, Universite Aix-Marseille III.
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  10. 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. [Downloadable!] (restricted)
  11. Nerlove, Marc, 1995. "Hedonic price functions and the measurement of preferences: The case of Swedish wine consumers," European Economic Review, Elsevier, vol. 39(9), pages 1697-1716, December. [Downloadable!] (restricted)
  12. 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. [Downloadable!] (restricted)
  13. Gian Maria Tomat, 2002. "Durable goods, price indexes and quality change: an application to automobile prices in Italy, 1988-1998," Temi di discussione (Economic working papers) 439, Bank of Italy, Economic Research Department. [Downloadable!]
  14. Frey, Bruno S. & Eichenberger, Reiner, 1995. "On the rate of return in the art market: Survey and evaluation," European Economic Review, Elsevier, vol. 39(3-4), pages 528-537, April. [Downloadable!] (restricted)
  15. Benjamin J. Burton & Joyce P. Jacobsen, 1999. "Measuring Returns on Investments in Collectibles," Journal of Economic Perspectives, American Economic Association, vol. 13(4), pages 193-212, Fall. [Downloadable!] (restricted)
  16. Jianping Mei & Michael Moses, 2002. "Art as an Investment and the Underperformance of Masterpieces," American Economic Review, American Economic Association, vol. 92(5), pages 1656-1668, December. [Downloadable!]
  17. Susanne Schönfeld & Andreas Reinstaller, 2005. "The effects of gallery and artist reputation on prices in the primary market for art," Department of Economics Working Papers wuwp090, Vienna University of Economics and B.A., Department of Economics. [Downloadable!]
  18. Gerard-Varet, Louis-Andre, 1995. "On pricing the priceless: Comments on the economics of the visual art market," European Economic Review, Elsevier, vol. 39(3-4), pages 509-518, April. [Downloadable!] (restricted)
  19. Gian Maria Tomat, 2002. "Durable goods; price indexes and quality change: an application to automobile prices in Italy, 1988-1998," Working Paper Series 118, European Central Bank. [Downloadable!]
  20. Calin Valsan, 2002. "Canadian versus American Art: What Pays Off and Why," Journal of Cultural Economics, Springer, vol. 26(3), pages 203-216, August. [Downloadable!] (restricted)
  21. David Galenson, 2000. "The Careers of Modern Artists," Journal of Cultural Economics, Springer, vol. 24(2), pages 87-112, May. [Downloadable!] (restricted)
  22. Ashenfelter, Orley, 1989. "How Auctions Work for Wine and Art," Journal of Economic Perspectives, American Economic Association, vol. 3(3), pages 23-36, Summer. [Downloadable!] (restricted)
  23. Chanel, O. & Gerard, L.A. & Ginsburgh, V., 1992. "The Relevence of Hedonic Price Indices the Case of Paintings," G.R.E.Q.A.M. 92a19, Universite Aix-Marseille III.
  24. Alan Beggs & Kathryn Graddy, 1997. "Declining Values and the Afternoon Effect: Evidence from Art Auctions," RAND Journal of Economics, The RAND Corporation, vol. 28(3), pages 544-565, Autumn. [Downloadable!] (restricted)
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  25. Ours, J.C. van & Ginsburgh, V., 2003. "How to organize sequential auctions results of a natural experiment by Christie's," Discussion Paper 25, Tilburg University, Center for Economic Research. [Downloadable!]
  26. Baumol, William J, 1986. "Unnatural Value: Or Art Investment as Floating Crap Game," American Economic Review, American Economic Association, vol. 76(2), pages 10-14, May. [Downloadable!] (restricted)
  27. Ginsburgh, Victor & Mei, Jianping & Moses, Michael, 2006. "The Computation of Prices Indices," Handbook of the Economics of Art and Culture, Elsevier. [Downloadable!] (restricted)
  28. Throsby, David, 1994. "The Production and Consumption of the Arts: A View of Cultural Economics," Journal of Economic Literature, American Economic Association, vol. 32(1), pages 1-29, March. [Downloadable!] (restricted)
  29. R. Ekelund & Rand Ressler & John Watson, 2000. "The ``Death-Effect'' in Art Prices: A Demand-Side Exploration," Journal of Cultural Economics, Springer, vol. 24(4), pages 283-300, November. [Downloadable!] (restricted)
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