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The Economics Of Ridiculously Expensive Art

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What would possess someone to buy Leonardo da Vinci’s Salvator Mundifor US$450 million? You might think it’s an investment – after all it was previously sold for just US$10,000 in 2005.

From an economic point of view, art can be an investment. Although the research shows art investing has mixed results. Art also has what economists refer to as “psychic benefits”. It is something to be enjoyed, experienced or flaunted, and this may be the key to the high price paid for Salvator Mundi.

As an investment, art’s performance varies wildly, depending on a number of factors. For instance, artworks associated with movements that are currently fashionable will outperform other types of art. Contemporary art is currently outperforming impressionist art, for example. The strong demand for contemporary art coupled with limited supply has resulted in some previously overlooked artists, such as Keith Haring, being embraced by collectors…read more 

Image | Leonardo da Vinci’s Salvator Mundi

2018-10-29T09:52:08+00:00