It is a question of a great importance, how lucrative are art investments? As this kind of investment becomes more and more popular, independent academic researchers tend to compare art returns with returns of the other assets. In most of the academic studies it is assumed that the price of art is a suitable proxy for its true value, of course after adjusting and including biases.
Most of the academics (e.g. Ashenfelter, Graddy, Gérard-Varet, Pesando, Worthington), focus on price determinants, which influence the returns. The rational price is established based on the physical properties: size, material, themes, condition, and authenticity. The second group of the price determinants includes the artist’s reputation, oeuvre and merit, genre, aesthetic features. They are followed by the external influences, such as place, time, conditions of sale, sales channel, taxation, rates of return of the other assets. Last but not least, the taste and preferences have an impact on prices, especially in long run. Continue Reading