For centuries, wealthy individuals and institutions have collected and consumed art for aesthetic pleasure. While anecdotal evidence suggests that some artworks have appreciated in value over time, few studies have documented investment returns in art systematically. In this article, we demonstrate that art could be an important asset class in many respects, worthy of addition to the long-term investment portfolios of individuals and institutions. Because individual works of art are not securitized, studying the value of works of art from financial sources is not possible. Gallery or direct-from-artists prices tend not to be reliable or easily obtainable. Auction prices, however, are reliable and publicly available. As a result, auction prices can be used as the basis for a database for determining the change in value of art objects over various holding periods.
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