This paper considers the question of how to measure and interpret the financial return to investing in collectibles. We review various methodologies for creating priced indexes and then discuss studies that explicitly calculate a rate of return to some set of collectibles. While most collectibles appear to yield positive real returns, the majority embody more risk and yield lower financial returns than stocks. Other characteristics of collectibles prices, such as covariance with other asset prices, are also examined.

https://pubs.aeaweb.org/doi/pdfplus/10.1257/jep.13.4.193

Measuring Returns on Investments in Collectibles

On the rate of return in the art market: Survey and evaluation

We survey more than twenty studies estimating rates of return of investments in single art objects and whole collections and evaluate the various approaches to art price movements taken so far. The majority of the estimates find lower returns for investments in art objects than for investments in financial assets. However, most existing analyses are restricted to auction data and neglect transactions cost and taxation. They partly focus on mechanistic calculations and disregard the distinguishing institutional and behavioral characteristics of art markets. We look into the possibilities to capture and empirically estimate psychic returns from owning art.

On the return of art investment return analyses.

In this study, 37 605 paintings by 60 well-known Australian artists sold at auction over the period 1973–2003 are used to construct a hedonic price index The attributes included in the hedonic regression model include the name and living status of the artist, the size and medium of the painting and the auction house and year in which the painting was sold The resulting index indicates that returns on Australian fine-art averaged 7 per cent over the period with a standard deviation of 16 per cent The hedonic regression model also captures the willingness to pay for perceived attributes in the artwork, and this shows that works by McCubbin, Gascoigne, Thomas and Preston and other artists deceased at the time of auction, works executed in oils or acrylic, and those auctioned by Sotheby's or Christie's are associated with higher prices [ABSTRACT FROM AUTHOR]

https://papers.ssrn.com/sol3/Delivery.cfm/ecor_237.pdf?abstractid=725897&mirid=5

Financial Returns and Price Determinants in the Australian Art Market, 1973-2003

In this study, 37 605 paintings by 60 well-known Australian artists sold at auction over the period 1973–2003 are used to construct a hedonic price index. The attributes included in the hedonic regression model include the name and living status of the artist, the size and medium of the painting and the auction house and year in which the painting was sold. The resulting index indicates that returns on Australian fine-art averaged 7 per cent over the period with a standard deviation of 16 per cent. The hedonic regression model also captures the willingness to pay for perceived attributes in the artwork, and this shows that works by McCubbin, Gascoigne, Thomas and Preston and other artists deceased at the time of auction, works executed in oils or acrylic, and those auctioned by Sotheby's or Christie's are associated with higher prices. [ABSTRACT FROM AUTHOR]

/pdf/financial-returns-and-price-determinants-in-the-australian-2hc1zc3ty2.pdf

Salina S. M. Woo

Papers

Modern Chinese Paintings: An Investment Alternative?