A New Financial Metric for the Art Market

31 Pages Posted: 11 Jul 2013 Last revised: 20 Apr 2014

See all articles by Ventura Charlin

Ventura Charlin

V. C. Consultants; EVENTUS ANALYTICS

Arturo Cifuentes

Finance & Economics Division, Columbia University

Date Written: April 19, 2014

Abstract

This paper introduces a new financial metric for the art market. The metric, which we call Artistic Power Value (APV), is based on the price per unit of area (dollars per square centimeter) and is applicable to two-dimensional art objects such as paintings. In addition to its intuitive appeal and ease of computation, this metric has several advantages from the investor’s viewpoint. It makes it easy to: (i) estimate price ranges for different artists; (ii) perform comparisons among them; (iii) follow the evolution of the artists’ creativity cycle overtime; and (iiii) compare, for a single artist, paintings with different subjects or different geometric properties. Additionally, the APV facilitates the process of estimating total returns. Finally, due to its transparency, the APV can be used to design derivatives-like instruments that can appeal to both, investors and speculators. Several examples validate this metric and demonstrate its usefulness.

Keywords: Art markets, Hedonic pricing models, Paintings, Auction prices

JEL Classification: C18, D44, G11, G12, Z10

Suggested Citation

Charlin, Ventura and Cifuentes, Arturo, A New Financial Metric for the Art Market (April 19, 2014). Available at SSRN: https://ssrn.com/abstract=2291569 or http://dx.doi.org/10.2139/ssrn.2291569

Ventura Charlin (Contact Author)

V. C. Consultants ( email )

Avda. Los Leones 1300
Suite 1202
Santiago, RM 7510477
Chile
227897447 (Phone)

EVENTUS ANALYTICS ( email )

230 E 73rd Street
New York, NY New York 10021
United States

Arturo Cifuentes

Finance & Economics Division, Columbia University ( email )

Columbia University, Finance & Economics
URIS HALL
NEW YORK, NY
United States

HOME PAGE: http://www8.gsb.columbia.edu/cbs-directory/detail/ac4170

Register to save articles to
your library

Register

Paper statistics

Downloads
342
Abstract Views
1,758
rank
88,611
PlumX Metrics