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Handbook of the Economics of Art and Culture by David Throsby, Victor A. Ginsburgh

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Chapter 10

Investment in Visual Art: Evidence from International Transactions

Benjamin R. Mandel,    Federal Reserve Bank of New York, USA

Abstract

This study uses international trade data to discern whether fine art is, on average, more an investment or a consumption good. Using a battery of novel measures, the chapter demonstrates that the flows of services embodied by visual artworks most closely resemble consumption services. A stylized prediction of the permanent income hypothesis is that consumption demand increases with rises in permanent income and the demand for investment increases with rises in temporary income. We find that international shipments of art are strongly correlated with trade in consumer goods, with the income of destination ...

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