The economics of aesthetics and record prices for art since 1701

Pricing art and the art of pricing: On returns and risk in art auction markets

“…Constant-quality art prices increased annually by a moderate 2.49% (6.24%) in real (nominal) USD over 1957-2016. Our results are lower than those reported by Goetzmann (1993), Korteweg et al (2016), Mei and Moses (2002), Renneboog and Spaenjers (2013) and Spaenjers et al (2015) but higher than those of Pesando (1993). An important reason is that Goetzmann (1993), Mei and Moses (2002) and Spaenjers et al (2015) use selective samples comprising only higher-end artworks and, thus, are less representative of the entire art market.…”

“…Our results are lower than those reported by Goetzmann (1993), Korteweg et al (2016), Mei and Moses (2002), Renneboog and Spaenjers (2013) and Spaenjers et al (2015) but higher than those of Pesando (1993). An important reason is that Goetzmann (1993), Mei and Moses (2002) and Spaenjers et al (2015) use selective samples comprising only higher-end artworks and, thus, are less representative of the entire art market. To comprehend the price fluctuations in modern art auction markets, we examine the investment performance over different holding periods, including bubble and bust periods, as well as for various subsamples based on a stratification of price levels for samples based on the medium (oil and acrylic paintings, watercolours and gouaches and drawings), art movements, transactions by auction house reputation, transactions categorised by artist nationality, art market segments (local vs. international) and paintings created in various phases of an artist's career cycle.…”

“…To put our return-risk results into perspective, we focus on Goetzmann (1993), Pesando (1993), Mei and Moses (2002), and Korteweg, Kräussl, and Verwijmeren (2016) who use a repeat sale regression method to compute index returns, and Renneboog and Spaenjers (2013) and Goetzmann, Mamonova and Spaenjers (2015) who report hedonic index returns. Our returns are closed to those reported by Renneboog and Spaenjers (2013) who show annualized real returns of 3.97% with a volatility of 15.21%, by Spaenjers, Goetzmann, and Mamonova (2015) who document an annualized real return of 3.40% with a volatility of 15.20% for repeat sales over the period 1900-2013, by Mei and Moses (2002) who disclose an annualized real return of 4.90% for repeat sales over the period 1875-1999 with a volatility of 42.80%, and by Korteweg, Kräussl, and Verwijmeren (2016) who correct for sample selection and report an annualized real return of 6.30% in the 1960-2013 period with a volatility of 11.40%. The differences in volatility largely depend on sample sizes.…”

Organizational and epistemic change: The growth of the art investment field

“…The graph shows strong price rises since the late 1950s. The figure also shows the timing of transactions that set a new world record price (in nominal GBP) for art at auction, based on Spaenjers et al (2015). We see many more of these record-breaking transactions in recent decades.…”

Art Auctions and Art Investment in the Golden Age of British Painting

“…For an alternative price index, see the recent work by Spaenjers et al . (). Related applications of quantitative methods to the economics of art can be found in Graddy and Pownall () and Goetzmann et al .…”