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Revisiting Baumol's `art as floating crap game'

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  • BUELENS, Nathalie
  • GINSBURGH, Victor

Abstract

We show that Baumol's conclusion that returns on bonds are higher than returns on paintings is too pessimistic. There are segments in the market for which returns are significantly higher than returns on bonds and stocks, during long periods of time (20 to 40 years); since tastes do change slowly (though not in a predictable way), this may imply that beating the market is not impossible. We also construct price indexes for paintings over the last 200 years.
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Suggested Citation

  • BUELENS, Nathalie & GINSBURGH, Victor, 1993. "Revisiting Baumol's `art as floating crap game'," LIDAM Reprints CORE 1063, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    • Handle: RePEc:cor:louvrp:1063
    DOI: 10.1016/0014-2921(93)90060-N
    Note: In : European Economic Review, 37, 1351-1371, 1993
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    as
    1. Baumol, William J, 1986. "Unnatural Value: Or Art Investment as Floating Crap Game," American Economic Review, American Economic Association, vol. 76(2), pages 10-14, May.
    2. Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
    3. Chanel, O. & Gerard-Varet, L.A. & Ginsburgh, V., 1990. "Is Art Such A Bad Investment?," G.R.E.Q.A.M. 90b03, Universite Aix-Marseille III.
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