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Abstract

This paper will revisit the economic question “is buying art profitable?” facing any potential investor by focusing specifically on the market for prints. The answer will account for both pecuniary and aesthetic benefits. Previous inquiry into the returns of investments in art and their methodologies is first reviewed. Then a framework for measuring utility from prints from market-observed leasing prices is described. Various price indexes for returns to Picasso and Chagall prints are compiled for the years 1977 to 1997 using a market basket technique. The indexes are then combined with the utility framework. Real and nominal returns to prints, both with and without consumption, are compared to those in stocks and bonds. I find that although prints barely maintain real value in most periods, an investor with sufficient appreciation for art may reap significant annual and long-term returns by purchasing prints. For such individuals, participation in art markets is wholly rational, if not advantageous.

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