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Measuring Returns on Investments in Collectibles

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  • Benjamin J. Burton
  • Joyce P. Jacobsen

Abstract

This paper considers the question of how to measure and interpret the financial return to investing in collectibles. We review various methodologies for creating priced indexes and then discuss studies that explicitly calculate a rate of return to some set of collectibles. While most collectibles appear to yield positive real returns, the majority embody more risk and yield lower financial returns than stocks. Other characteristics of collectibles prices, such as covariance with other asset prices, are also examined.

Suggested Citation

  • 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.
  • Handle: RePEc:aea:jecper:v:13:y:1999:i:4:p:193-212 Note: DOI: 10.1257/jep.13.4.193
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    File URL: http://www.aeaweb.org/articles.php?doi=10.1257/jep.13.4.193
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    References listed on IDEAS

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    1. Byron, R P & Ashenfelter, Orley, 1995. "Predicting the Quality of an Unborn Grange," The Economic Record, The Economic Society of Australia, vol. 71(212), pages 40-53, March.
    2. Buelens, Nathalie & Ginsburgh, Victor, 1993. "Revisiting Baumol's 'art as floating crap game'," European Economic Review, Elsevier, vol. 37(7), pages 1351-1371, October.
    3. Ashenfelter, Orley, 1989. "How Auctions Work for Wine and Art," Journal of Economic Perspectives, American Economic Association, pages 23-36.
    4. Alan Beggs & Kathryn Graddy, 1997. "Declining Values and the Afternoon Effect: Evidence from Art Auctions," RAND Journal of Economics, The RAND Corporation, pages 544-565.
    5. Belk, Russell W., 1995. "Collecting as luxury consumption: Effects on individuals and households," Journal of Economic Psychology, Elsevier, vol. 16(3), pages 477-490, September.
    6. Anderson, Robert C, 1974. "Paintings as an Investment," Economic Inquiry, Western Economic Association International, vol. 12(1), pages 13-26, March.
    7. Beggs, A. & Graddy, K., 1996. "Declining Values and the Afternoon Effect: Evidence from Art Auctions," Economics Series Working Papers 99184, University of Oxford, Department of Economics.
    8. Baumol, William J, 1986. "Unnatural Value: Or Art Investment as Floating Crap Game," American Economic Review, American Economic Association, pages 10-14.
    9. Baumol, William J., 1985. "Unnatural Value: Or Art Investment as Floating Crap Game," Working Papers 85-25, C.V. Starr Center for Applied Economics, New York University.
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    More about this item

    JEL classification:

    • Z11 - Other Special Topics - - Cultural Economics - - - Economics of the Arts and Literature
    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis

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