The Iconic Boom in Modern Russian Art

Abstract

Motivated by the fast growth of personal wealth in emerging economies like Russia, we investigate the investment performance of modern Russian art. A hedonic analysis of more than 50,000 art transactions results in a geometric average return of 3.97%, in real USD terms, between 1967 and 2007. Our Russian art index shows an impressive annualized return of 12.37% since 1997. This is roughly double the average yearly appreciation of a global art market index over the same period. Especially art from the nineteenth century has performed well. The returns on Russian art correlate positively with the returns on global equities, gold, and (especially) London real estate. Also, they seem to be affected more by trends in oil prices than are global art prices. Our results illustrate how the new wealth created in fast-developing economies has its impact on the demand for art from these countries, which reflects a home bias in taste.

Keywords: Art, Emerging markets, Hedonic regressions, Wealth

JEL Classification: F0, G1, Z11