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Investment in the Visual Arts: Evidence from International Transactions
Topic(s): research on arts and cultural economics, arts philanthropy, social investment, creative industries and entrepreneurship
Keywords:  Visual art markets - sales - art exports and imports - analysis - consumption good - international trade

This paper uses international trade data to discern between competing theoretical setups for visual art markets. It begins by documenting several facts on the growth and international distribution of painting, print and sculpture sales over the past two decades: (i) US art exports and imports are concentrated in about 10 countries, (ii) the growth of art sales appears to be primarily demand-driven , and (iii) the elasticity of aggregate art purchases to national income is greater than one even when controlling for purchases of other consumption and investment goods. That art’s share increases with income is consistent with it being either a superior consumption good or an increasingly attractive investment. It uses a stylized prediction of the permanent income hypothesis to discern which narrative is more pervasive in the data, and concludes that art looks most like a superior consumption good.

Author / Published by: Benjamin Mandel, ACEI
Year of publication: 2010
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