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The Economics of Latin American Art: Creativity Patterns and Rates of Return

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  • Sebastian Edwards

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Abstract

In this paper I use a large data set to analyze two aspects of the Latin American arts: (1) the nature of artistic creative process, and (2) Latin American art as an investment. I use data on auctions to understand the relation between artists' age and the value of their work. The analysis on creativity suggests that Latin American artists have followed very different patterns from that followed by U.S. artists. There is strong evidence suggesting that American artists born after 1920 did their best work at an earlier age than their older colleagues; exactly the opposite is true for the case of Latin America. Indeed, the results reported in this paper suggest that Latin American artists born after 1920 did their best work at a significantly older age than their colleagues from earlier cohorts. The analysis of art as an investment is based on the estimation of hedonic price indexes, and indicates that Latin American art has had a relatively high rate of return indeed much higher than that of other type of paintings. The results also indicate that returns on Latin American art have a very low degree of correlation that is, a very low beta relative to an international portfolio comprised of equities. This means that adding Latin American art will lower the overall risk of an international portfolio

Suggested Citation

  • Sebastian Edwards, 2004. "The Economics of Latin American Art: Creativity Patterns and Rates of Return," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Spring 20), pages 1-35, January.
  • Handle: RePEc:col:000425:008675
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    Citations

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    Cited by:

    1. Nauro F. Campos & Renata Leite Barbosa, 2009. "Paintings and numbers: an econometric investigation of sales rates, prices, and returns in Latin American art auctions," Oxford Economic Papers, Oxford University Press, vol. 61(1), pages 28-51, January.
    2. repec:cpt:journl:v::y:2016:i:144:p:165-197 is not listed on IDEAS
    3. Agnello, Richard J., 2016. "Do U.S. paintings follow the CAPM? Findings disaggregated by subject, artist, and value of the work," Research in Economics, Elsevier, vol. 70(3), pages 403-411.
    4. repec:bla:scotjp:v:64:y:2017:i:2:p:191-225 is not listed on IDEAS
    5. 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;The Association for Cultural Economics International, vol. 30(1), pages 73-84, March.
    6. Heinrich W. Ursprung & Christian Wiermann, 2011. "Reputation, Price, And Death: An Empirical Analysis Of Art Price Formation," Economic Inquiry, Western Economic Association International, vol. 49(3), pages 697-715, July.
    7. Addison, Tony, 2006. "The International Mobility of Cultural Talent," WIDER Working Paper Series 108, World Institute for Development Economic Research (UNU-WIDER).
    8. Michael Hutter & Christian Knebel & Gunnar Pietzner & Maren Schäfer, 2007. "Two games in town: a comparison of dealer and auction prices in contemporary visual arts markets," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 31(4), pages 247-261, December.
    9. Aylin Seckin, "undated". "Art as an Investment under High Inflation: an Empirical Study on Turkish Paintings," EcoMod2006 272100081, EcoMod.
    10. Richard Agnello & Xiaowen Xu, 2006. "Art Prices and Race: Paintings by African American Artists and Their White Contemporaries," Working Papers 06-06, University of Delaware, Department of Economics.
    11. repec:ebl:ecbull:v:26:y:2006:i:3:p:1-13 is not listed on IDEAS
    12. Joonwoo Nahm, 2010. "Price determinants and genre effects in the Korean art market: a partial linear analysis of size effect," Journal of Cultural Economics, Springer;The Association for Cultural Economics International, vol. 34(4), pages 281-297, November.
    13. Federico Etro & Elena Stepanova, 2017. "Art Auctions and Art Investment in the Golden Age of British Painting," Scottish Journal of Political Economy, Scottish Economic Society, vol. 64(2), pages 191-225, May.
    14. Richard J. Agnello, 2006. "Do U.S. Paintings Follow the CAPM? Findings Disaggregated by Subject, Artist, and Value of the Work," Working Papers 06-02, University of Delaware, Department of Economics.

    More about this item

    Keywords

    Economics of art; auctions; Latin America; art as an investment;

    JEL classification:

    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • O54 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Latin America; Caribbean
    • N26 - Economic History - - Financial Markets and Institutions - - - Latin America; Caribbean
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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