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The Economics of American ArtIssues, Artists and Market Institutions$
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Robert B. Ekelund Jr., John D. Jackson, and Robert D. Tollison

Print publication date: 2017

Print ISBN-13: 9780190657895

Published to Oxford Scholarship Online: July 2017

DOI: 10.1093/oso/9780190657895.001.0001

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Early and Contemporary American Art as Investment Vehicles

Early and Contemporary American Art as Investment Vehicles

(p.139) Chapter 5 Early and Contemporary American Art as Investment Vehicles
The Economics of American Art

Robert B. Ekelund

John D. Jackson

Robert D. Tollison

Oxford University Press

American art, both pre-1950 art and contemporary works, are examined as investment vehicles in this chapter. This study, unlike others, factors in both buyer’s and seller’s premiums charged by the auction house. These transaction costs must be considered when calculating actual returns from utilizing art at auction as an investment. We find that, under various assumptions of these transaction expenses, early American art (pre-1950) provides a modest return of between a negative 3-plus and a positive 2 percent. Contemporary American art, for our sample, yields a far higher return in the range of 18 percent and above. However, contemporary art carries a higher risk than holding a market portfolio, although quite naturally the return must include psychic income. This chapter, moreover, provides clear evidence that early and contemporary American art are two distinct markets.

Keywords:   art investment, early American art, contemporary American art, investment, psychic income, transactions cost

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