Reference Papers

In this section you can find several papers concerning Art & Markets.

Art and Money (2009)

by William Goetzmann, Luc Renneboog, and Christophe Spaenjers 

Abstract

This paper investigates the impact of equity markets and top incomes on art prices. Using a longterm art market index that incorporates information on repeated sales since the eighteenth century, we demonstrate that both same-year and lagged equity market returns have a significant impact on the price level in the art market. Over a shorter time frame, we also find empirical evidence that an increase in income inequality may lead to higher prices for art, in line with the results of a numerical simulation analysis. Finally, the results of Johansen cointegration tests strongly suggest the existence of a long-term relation between top incomes and art prices.

Keywords

Art investments; Cointegration; Comovement; Equities; Income inequality; Longterm returns

JEL Classification: G1, Z11

Investment in Visual Arts: Evidence from International Transactions (2010)

by Benjamin R. Mandel

Abstract

This paper uses international trade data to discern between competing theories of visual art markets. We begin by documenting the growth and international distribution of painting, print and sculpture sales volumes over the past two decades. U.S. art exports and imports are highly concentrated in about 10 countries and the real value of cross-border transactions is very sensitive to importer national income. An import share that increases with income is consistent with art objects being either superior consumption goods or increasingly attractive investments. We use a stylized prediction of the permanent income hypothesis to discern which narrative is more pervasive in the data, and conclude that visual arts look most like consumption goods.

 

Keywords

art investment, permanent income hypothesis, painting, print, sculpture

JEL Classification: Z11

 

Myopic Bidders in Internet Auctions

by Rachel A. J. Pownall & Leonard Wolk

Abstract

Pownall and Wolk study the role of experience in internet art auctions by analyzing repeated bidding by the same bidder in a unique longitudinal field dataset. Their results show that experience significantly lowers the level of bids suggesting that bidders learn to avoid myopic behavior. Participating in more than ten auctions bring down average bids by between 10% and 20%. Their results imply that bidders learn to value the option of participating in future auctions over time. This has strong implications for auction platform operators who can benefit by understanding the inflow of new bidders. Their results are robust to bidder fixed effects.

 

Keywords

Auctions; Bidding; Experience

JEL Classification: –

 

The Price of Degenerate Art (2011)

by Kim Oosterlinck

Abstract

This paper analyzes, on basis of an original database of close to 3 000 canvasses sold during the war in Drouot, the main French auction house, the evolution of the art market in occupied France. Based on hedonic regressions, it shows that by all standards the market experienced a massive boom. Our index increases from a value of 100 in December 1940 to more than 500 in February 1943 after which a marked decline occurred up till November 1943. The paper also analyzes the impact on the market of a given state policy regarding acceptable taste. The paper shows that the price of the paintings viewed as “degenerate” by the Nazis mimicked those of the art market in general and this up till June 1944 when their price increases once more whereas the general index decreases slightly.

Keywords

Art market, Art investments, Degenerate art, Economics of occupation, Hedonic Regression, World War Two

JEL Classification: G1, N44, Z11