'Art and Money'

May 23 2012

A reader has alerted me to a learned paper published by Tilburg University in Holland in 2010 entitled 'Art and Money'. The abstract says:

This paper investigates the impact of equity markets and top incomes on art prices. Using a newly constructed art market index, we demonstrate that equity market returns have had a significant impact on the price level in the art market over the last two centuries. We also find empirical evidence that an increase in income inequality may lead to higher prices for  art, in line with the results of a numerical simulation analysis. Finally, the results of Johansen cointegration tests strongly suggest the existence of a long-run relation between top incomes and art prices.

The paper itself runs to 40 pages, and includes complex graphs and statistics. But forgive me for asking, isn't the argument that more money leads to higher prices, in all things, simply a statement of the bleedin' obvious?

That said, it's interesting to note that here at Philip Mould & Co. we increasingly see people looking upon art, even in our Old Master end of the market, as an asset class. At the beginning of the crash, people in my business forecast excitedly that people might start investing in art as a safe place to store cash. At the time I took such predictions with a pinch of salt - but it does seem to be happening. 

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