Constructing an Index of Persian Rug Prices

Abstract

A number of researchers have studied the price appreciation over time of art objects. However, to our knowledge, no previous academic research has focused on Persian rugs. Using hedonic regression techniques in this paper we address this deficit and construct an index of Persian rug prices from data provided by Christie’s auction house. We find that the average, annual real price appreciation of this index between 1995 and 2015 is 4.10%, a higher real return than generated by many other art objects studied previously in the literature. We also found that the returns on this index had a low correlation with the returns generated by the UK stock and government bond markets. Given the estimated return and the low correlation with traditional asset classes, an investment in a diversified holding of Persian rugs might represent an attractive diversifying option, particularly for long-term institutional investors like university endowments, insurance companies, pension funds or family offices.

Keywords: persian rugs, hedonic regression, price index

JEL Classification: G00