Art Investment Returns

  • Reiner Eichenberger


“What are the returns on investments in art objects?” This question has attracted the attention of the public and of economists for a considerable number of years. One of the reasons for this interest certainly stems from lay people’s belief that the art market yields huge profits in comparison to ordinary financial markets — at least when the investors are well-informed. This belief has been nourished by the media, which were all too ready to predict that the rapid increase in the general price level of auctioned art objects in the 80s, and in particular the ever higher record prices paid for paintings by van Gogh, Picasso and Renoir, would persist forever. Van Gogh’s Sunflowers sold at an auction for $39.9 million in March 1987. This was very soon topped by the sale in November of the same year of his Irises for $53.9 million. In May 1989, Io Picasso sold for $47.8 million. In May 1990, van Gogh’s Portrait of Dr.Gacher fetched $82.5 million and Renoir’s At the Moulin de la Galette sold for $78.1 million. The simple expectation of ever exploding arts prices proved to be drastically false, considering the marked downfall of such prices after 1989. Thus, for example, as late as in May 1996, Picasso’s La Lecture failed to sell (i.e. was“bought in”) at $4.8 million after having sold for $6.3 million in May 1989. But the media, nevertheless, renew the story of the extraordinary financial returns in art markets whenever prices show any indication of rising again.


Government Bond Alternative Investment Auction House Sunk Cost Effect Public Museum 
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© Springer-Verlag Berlin Heidelberg 2000

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  • Reiner Eichenberger

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