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Quantifying the Value of Collecting: Implications for Financial Advisers

Author

Listed:
  • John E. Grable

    (University of Georgia)

  • Kimberly Watkins

    (University of Georgia)

Abstract

This paper documents the extent to which collectors—specifically, those owning collectible classic US postage stamps—experience an opportunity cost associated with expenditures on their collection. Results show, based on stamp price, S&P 500, bond, and T-bill rate data over the period 1969 through 2013, that collectible stamps tend to underperform stocks and bonds on a risk-adjusted basis. Using estimates based on the Modigliani measure (M2), it was determined that collectors incur an opportunity cost when selecting collectible stamps over more traditional investments. However, it is known that collecting as a hobby provides sociological and psychological benefits. This paper adds to the literature by illustrating how collecting also provides psychic return benefits that can be valued similarly to investment returns. In this study, the foregone return rate of stamp collecting for those who allocate a significant percent of available resources to their collection equates to between 3 and 13 % on an annual basis.

Suggested Citation

  • John E. Grable & Kimberly Watkins, 2016. "Quantifying the Value of Collecting: Implications for Financial Advisers," Journal of Family and Economic Issues, Springer, vol. 37(4), pages 639-648, December.
    • Handle: RePEc:kap:jfamec:v:37:y:2016:i:4:d:10.1007_s10834-015-9471-2
    DOI: 10.1007/s10834-015-9471-2
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    References listed on IDEAS

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    Cited by:

    1. Kyoung Tae Kim & Jae Min Lee, 2021. "A Review of a Decade of Financial Behavior Research in the Journal of Family and Economic Issues," Journal of Family and Economic Issues, Springer, vol. 42(1), pages 131-141, July.

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