Reconsidering Psychic Return in Art Investments

12 Pages Posted: 26 Feb 2020

See all articles by Guido Candela

Guido Candela

University of Bologna - Department of Economics

Massimiliano Castellani

University of Bologna - Department of Economics

Pierpaolo Pattitoni

University of Bologna - Department of Statistical Sciences ; University of Bologna - Rimini Center for Economic Analysis (RCEA)

Date Written: August 9, 2012

Abstract

Measuring the psychic return of art investments is a debated issue in Cultural economics. Several works suggest Jensen’s alpha as a measure of the psychic return. Since the Jensen’s alpha is defined in the CAPM framework, its uncritical application as a measure of the psychic return may be problematic when the CAPM hypotheses do not hold. Applying an opportunity cost framework and the analytical tools of portfolio theory, we propose a new psychic return measure, which is not affected by the same issues as Jensen’s alpha. Psychic return estimates based on our measure are provided for several art market indexes as an empirical application.

Keywords: psychic return, art investment, portfolio theory

JEL Classification: G11, Z11

Suggested Citation

Candela, Guido and Castellani, Massimiliano and Pattitoni, Pierpaolo, Reconsidering Psychic Return in Art Investments (August 9, 2012). Economics Letters, Vol. 118, No. 2, 2013, Available at SSRN: https://ssrn.com/abstract=2127113 or http://dx.doi.org/10.2139/ssrn.2127113

Guido Candela

University of Bologna - Department of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy
+39 0541 434118-9 (Phone)
+39 0541 434120 (Fax)

Massimiliano Castellani (Contact Author)

University of Bologna - Department of Economics ( email )

Strada Maggiore 45
Bologna, 40125
Italy

Pierpaolo Pattitoni

University of Bologna - Department of Statistical Sciences ( email )

Via Belle Arti 41
Bologna, 40126
Italy

University of Bologna - Rimini Center for Economic Analysis (RCEA) ( email )

Via Patara, 3
Rimini (RN), RN 47900
Italy

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