Towards a Monotonicity-Compliant Price Index for the Art Market

15 Pages Posted: 5 Jan 2020

See all articles by Ventura Charlin

Ventura Charlin

V.C. Consultants; EVENTUS ANALYTICS; V.C. Consultants

Arturo Cifuentes

CLAPES--UC

Date Written: March 18, 2014

Abstract

Notwithstanding almost forty years of efforts, the market for paintings still lacks a widely accepted price index. In this paper, we introduce a simple and intuitive metric to construct such index. Our metric is based on the price of a painting divided by its area. This formulation rests on a solid mathematical foundation as it corresponds to a particular type of hedonic model. However, unlike indexes based on the time-dummy coefficients of conventional hedonic models, this index satisfies the monotonicity condition. We demonstrate with a simple example the advantages of our metric. We also show the dangers of relying on the time-dummy coefficients of conventional hedonic models to estimate returns and generate price indexes.

Keywords: Art Markets, Hedonic Pricing Models, Pricing Indexes

JEL Classification: C20, D44, C43, Z10

Suggested Citation

Charlin, Ventura and Cifuentes, Arturo, Towards a Monotonicity-Compliant Price Index for the Art Market (March 18, 2014). Available at SSRN: https://ssrn.com/abstract=2411101 or http://dx.doi.org/10.2139/ssrn.2411101

Ventura Charlin (Contact Author)

V.C. Consultants ( email )

230 East 73rd Street
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New York, NY 10021
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9147070723 (Phone)

HOME PAGE: http://vc-consult.com

EVENTUS ANALYTICS ( email )

230 E 73rd Street
New York, NY New York 10021
United States

V.C. Consultants ( email )

United States

Arturo Cifuentes

CLAPES--UC ( email )

Av Libertador General Bernardo O'Higgins 340
Santiago, RegiĆ³n Metropolitana 8331150
Chile

HOME PAGE: http://https://arturocifuentes.com/

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