The art market: Features of investing in works of pictorial art

Authors

  • Анна Ильинична Водопьянова National Research University Higher School of Economics, 20, Myasnitskaya Ulitsa, Moscow, 101000, Russian Federation https://orcid.org/0000-0001-8010-0543
  • Людмила Аркадьевна Леонова National Research University Higher School of Economics, 20, Myasnitskaya Ulitsa, Moscow, 101000, Russian Federation https://orcid.org/0000-0002-9583-8310
  • Анна Евгеньевна Новак National Research University Higher School of Economics, 20, Myasnitskaya Ulitsa, Moscow, 101000, Russian Federation https://orcid.org/0000-0003-3576-9568

DOI:

https://doi.org/10.21638/11701/spbu05.2018.105

Abstract

This paper estimates the attractiveness of investing in paintings relative to the stock market. The art market is analyzed in the context of heterogeneity in order to identify main trends, including an analysis of the number of lots sold and sales prices for different countries using an extensive sample of open results of painting trades (data obtained contains about 500,000 observations). Heterogeneity of the market is shown even in a separate segment of paintings. The composition of artists in quantitative characteristics, even within isolated groups, is extremely heterogeneous. Based on the sample of re-traded paintings, the effect of the relationship between price and the moment of sale of a painting (the survival model) is analyzed. The probability of selling a painting is estimated depending on the length of the lot placement. With the help of the accelerated life model, factors influencing the speed of the sale of the picture are estimated. The analysis was carried out for different regions of sale and different nationalities of the authors of the paintings. Results obtained can be used when considering investing in art as a tool for portfolio diversification.

Keywords:

fine art market, works of art, alternative investments, oil paintings, survival model

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Author Biographies

Анна Ильинична Водопьянова, National Research University Higher School of Economics, 20, Myasnitskaya Ulitsa, Moscow, 101000, Russian Federation

student

Людмила Аркадьевна Леонова, National Research University Higher School of Economics, 20, Myasnitskaya Ulitsa, Moscow, 101000, Russian Federation

PhD in economics, Associate Professor

Анна Евгеньевна Новак, National Research University Higher School of Economics, 20, Myasnitskaya Ulitsa, Moscow, 101000, Russian Federation

Senior Lecturer

References

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Translation of references in Russian into English

Agnello R. J. Investment Returns and Risk for Art: Evidence from Auctions of American Paintings. Eastern Economic Journal, 2002, vol. 28, iss. 4, pp. 443–463.

Ashenfelter O., Graddy K. Art Auctions. CEPS Working Paper. No. 203. 2010. 16 p. Available at: http://www.princeton.edu/ceps/workingpapers/203ashenfelter.pdf (accessed: 07.06.2016).

Ashenfelter O., Graddy K. Art Auctions: A Survey of Empirical Studies. National Bureau of Economic Research Working Paper № 8997. 2002.

Baumol W. J. Unnatural Value: or Art Investment as a Floating Crap Game. American Economic Review, 1986, vol. 76, no. 2, pp. 10–14.

Beggs A., Graddy K. Anchoring Effects: Evidence from Art Auctions. Economic Review, 2009, 99 (3), pp. 1027–1039.

Candela G., Figini P., Scorcu A. E. Price Indices for Artists — A Proposal. Journal of Cultural Economics, 2004, vol. 28, iss. 4, pp. 285–302.

Frey B. Art Markets and Economics: Introduction. Journal of Cultural Economics, 1997, no. 21, pp. 165–173.

Graddy K., Hamilton J., Pownall R. Repeat-Sales Indexes: Estimation without Assuming that Errors in Asset Returns Are Independently Distributed. Real Estate Economics, 2012, 40 (1), pp. 131–166.

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Вестник Санкт-Петербургского университета. Экономика, 2018, 34 (1)

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Published

2018-03-30

How to Cite

Водопьянова, А. И., Леонова, Л. А., & Новак, А. Е. (2018). The art market: Features of investing in works of pictorial art. St Petersburg University Journal of Economic Studies, 34(1), 095–112. https://doi.org/10.21638/11701/spbu05.2018.105

Issue

Vol. 34 No. 1 (2018)

Section

Economics of Industries and Sectors

License

Articles of the St Petersburg University Journal of Economic Studies are open access distributed under the terms of the License Agreement with Saint Petersburg State University, which permits to the authors unrestricted distribution and self-archiving free of charge.