Working Paper: NBER ID: w20440
Authors: William Goetzmann; Elena Mamonova; Christophe Spaenjers
Abstract: Aggregate art price patterns mask a lot of underlying variation--both in the time series and in the cross- section. We argue that, to increase our understanding of the market for aesthetics, it is helpful to take a micro perspective on the formation of art prices, and acknowledge that each artwork gives rise to a market for trading in its private-value benefits. We discuss relevant recent literature, and illustrate the potential of this approach through a historical study of art price records between 1701 and 2014. Our newly constructed series also points to the importance of developments in the industrial organization of the art market for long-term price trends.
Keywords: art prices; aesthetics; auction dynamics; private value; financial resale revenues
JEL Codes: D01; D44; G01; N00; Z1
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| expected non-financial private value benefits (J32) | valuation of an artwork (Z11) |
| expected financial resale revenues (G17) | valuation of an artwork (Z11) |
| enjoyment associated with art ownership (Z11) | bidders' willingness to pay during auctions (D44) |
| supply constraints (D10) | auction price records (D44) |
| social competition among wealthy bidders (D44) | auction price records (D44) |
| resolution of uncertainty regarding potential resale value (D80) | auction price records (D44) |