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Quantifying the Value of Collecting: Implications for Financial Advisers

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Listed:
  • John E. Grable

    () (University of Georgia)

  • Kimberly Watkins

    () (University of Georgia)

Abstract

Abstract This paper documents the extent to which collectors—specifically, those owning collectible classic US postage stamps—experience an opportunity cost associated with expenditures on their collection. Results show, based on stamp price, S&P 500, bond, and T-bill rate data over the period 1969 through 2013, that collectible stamps tend to underperform stocks and bonds on a risk-adjusted basis. Using estimates based on the Modigliani measure (M2), it was determined that collectors incur an opportunity cost when selecting collectible stamps over more traditional investments. However, it is known that collecting as a hobby provides sociological and psychological benefits. This paper adds to the literature by illustrating how collecting also provides psychic return benefits that can be valued similarly to investment returns. In this study, the foregone return rate of stamp collecting for those who allocate a significant percent of available resources to their collection equates to between 3 and 13 % on an annual basis.

Suggested Citation

  • John E. Grable & Kimberly Watkins, 2016. "Quantifying the Value of Collecting: Implications for Financial Advisers," Journal of Family and Economic Issues, Springer, vol. 37(4), pages 639-648, December.
  • Handle: RePEc:kap:jfamec:v:37:y:2016:i:4:d:10.1007_s10834-015-9471-2
    DOI: 10.1007/s10834-015-9471-2
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    References listed on IDEAS

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    1. John Robinson & Steven Martin, 2008. "What Do Happy People Do?," Social Indicators Research: An International and Interdisciplinary Journal for Quality-of-Life Measurement, Springer, vol. 89(3), pages 565-571, December.
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    5. Kim, Woosoon & Walker, Matthew, 2012. "Measuring the social impacts associated with Super Bowl XLIII: Preliminary development of a psychic income scale," Sport Management Review, Elsevier, vol. 15(1), pages 91-108.
    6. Andrew C. Worthington & Helen Higgs, 2004. "Art as an investment: risk, return and portfolio diversification in major painting markets," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 44(2), pages 257-271, July.
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    Keywords

    Collecting; Stamps; Life cycle hypothesis; Hobby;

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