A New Financial Metric for the Art Market

31 Pages Posted: 16 Feb 2020

See all articles by Ventura Charlin

Ventura Charlin

V. C. Consultants; EVENTUS ANALYTICS

Arturo Cifuentes

CLAPES--UC

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 )

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EVENTUS ANALYTICS ( email )

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Arturo Cifuentes

CLAPES--UC ( email )

Av Libertador General Bernardo O'Higgins 340
Santiago, Región Metropolitana 8331150
Chile

HOME PAGE: http://https://arturocifuentes.com/

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