Publications
with Geraldine David, Kim Oosterlinck, and Luc Renneboog, Economic History Review, 2024, 77(4), 1362-1413.
We trace the long-term performance of the UK art market across a broad set of crises: world wars, economic recessions, financial crises, inflationary periods, and changes in monetary policy. By means of digitalized historical auction archives, we construct art price indices from the early twentieth century onwards and disclose that annual art auction value grew, in real terms, more than seven-fold over this period. The arithmetic annual real return and risk amount to 3.6 per cent and 20.1 per cent, respectively. Art returns plummeted at the onset of wars, but turned positive in the second half of wars when they outperformed stocks, suggesting that art was seen as a safe haven in times of political turmoil. During wars, smaller – and thus more transportable – paintings obtained higher returns. Art returns are sensitive to economic and financial crises, with the largest slumps occurring during the Great Depression, oil crisis, recessions of the early 1980s and early 1990s, and the Great Recession. We also document changes in art preferences for paintings’ sizes, schools, liquid art, and artists’ nationalities across crises. Art enters a broad optimal asset portfolio both in non-crisis periods and during war times.
with Marshall Ma and Luc Renneboog, Management Science, 2024, 70(1), 98-127.
While trust is the cornerstone of any market’s functioning, it is of particular importance in markets that are unregulated, illiquid, and opaque, such as the art market. This study examines the role of authenticity, as captured by provenance information in auction catalogs, on the probability of auctioned oil paintings, watercolors, and prints being sold, their price formation, and returns. Auction catalogs include four authenticity dimensions: pedigree (ownership “blockchain,” descendance information, type of past owners, such as renowned collectors, and past sales records); exhibition history (e.g., in famous museums or galleries); literature coverage (e.g. in catalogues raisonnés or authoritative press), and certification (e.g. artist’s physical testimonial, experts’ opinions). We find that trust, proxied by provenance information, increases the probability of a work being sold by up to 4%, leads to hammer price premiums up to 54%, and increases annualized returns by 5% to 16%. To address potential endogeneity problems between the provision of provenance, and past prices/price expectations, we perform quasi-natural experiments in difference-in-differences settings on auction houses’ provenance policy changes following authenticity litigation, and on a contamination effect of the discovery of fakes and forgeries on the oeuvre of forged artists. We also test transactions less affected by past prices, such as estate sales following the death of a collector. The findings on the relation between provenance and prices are robust to artist reputation, artistic style, auction house reputation, art market liquidity, and artist career timing.
Pricing Art and the Art of Pricing: On Returns and Risk in the Art Auction Markets
with Marshall Ma and Luc Renneboog, European Financial Management, 2022, 28(5), 1139-1198 (Lead Article).
We study price determinants and investment performance of art using a vast sample of transactions worldwide over the past 60 years. We focus on paintings and drawings which have appreciated at a real (nominal) annual return of 2.49% (6.24%). Higher art returns are reached for paintings at the high end of the price distribution, oil paintings, more recent art movements and transactions by reputable auction houses. The risk–return trade-off of paintings underperforms that of other passion investments. Paintings' Sharpe ratios are below those of stocks, bonds and gold but outperform those of commodities and real estate. Investments in paintings enter the optimal investment portfolio.