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Beyond financial wealth: The experienced utility of collectibles

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  • Kleine, Jens
  • Peschke, Thomas
  • Wagner, Niklas

Abstract

We argue that the utility of specific assets, in our case collectibles, is not only derived from the financial outcome, but also from the conditions that prevail until a financial outcome may be realized. Therefore, we derive a multi-attribute utility function that measures financial returns — using a mean-variance utility function — on the one hand, and non-financial returns — using an experienced utility function — on the other. We then reveal the trade-off between financial and non-financial utility by analyzing 363 owners of collectibles. We divide the owners into the group of collectors and the group of investors, based on their self-reported motivation. Our results suggest that collectors receive almost no utility from financial returns, but rather from experience. The opposite is the case for investors. Our findings help to explain the reported financial underperformance of collectibles and suggest to adjust existing models of utility.

Suggested Citation

  • Kleine, Jens & Peschke, Thomas & Wagner, Niklas, 2024. "Beyond financial wealth: The experienced utility of collectibles," The Quarterly Review of Economics and Finance, Elsevier, vol. 97(C).
    • Handle: RePEc:eee:quaeco:v:97:y:2024:i:c:s1062976924000711
    DOI: 10.1016/j.qref.2024.101865
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    More about this item

    Keywords

    Collectibles; Collecting; Decision utility; Event recall method; Experienced utility; Non-standard utility;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G40 - Financial Economics - - Behavioral Finance - - - General
    • G59 - Financial Economics - - Household Finance - - - Other

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