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A new financial metric for the art market

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  • Charlin, Ventura
  • Cifuentes, Arturo

Abstract

This paper introduces a new financial metric for the art market. The metric, which we call Artistic Power Value (APV), is based on the price per unit of area (dollars per square centimeter) and is applicable to two-dimensional art objects such as paintings. In addition to its intuitive appeal and ease of computation, this metric has several advantages from the investor’s viewpoint. For example, it makes it easy to: (i) estimate price ranges for different artists; (ii) perform comparisons among them; (iii) follow the evolution of the artists’ creativity cycle overtime; and (iiii) compare, for a single artist, paintings with different subjects or different geometric properties. Additionally, the APV facilitates the process of estimating total returns. Finally, due to its transparency, the APV can be used to design derivatives-like instruments that can appeal to both, investors and speculators. Several examples validate this metric and demonstrate its usefulness.

Suggested Citation

  • Charlin, Ventura & Cifuentes, Arturo, 2013. "A new financial metric for the art market," MPRA Paper 50186, University Library of Munich, Germany.
  • Handle: RePEc:pra:mprapa:50186
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    File URL: https://mpra.ub.uni-muenchen.de/57139/15/MPRA_paper_57139.pdf
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    References listed on IDEAS

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    Cited by:

    1. Dominik Filipiak & Agata Filipowska, 2016. "Towards data oriented analysis of the art market: survey and outlook," "e-Finanse", University of Information Technology and Management, Institute of Financial Research and Analysis, vol. 12(1), pages 21-31, June.

    More about this item

    Keywords

    Art markets Hedonic pricing Paintings Auction prices Alternative Investments;

    JEL classification:

    • A12 - General Economics and Teaching - - General Economics - - - Relation of Economics to Other Disciplines
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • Z1 - Other Special Topics - - Cultural Economics

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