nep-cul New Economics Papers
on Cultural Economics
Issue of 2013‒12‒15
four papers chosen by
Roberto Zanola
University Amedeo Avogadro

  1. Does it Pay to Invest in Art? A Selection-corrected Returns Perspective By Roman Kraussl; Arthur Korteweg; Patrick Verwijmeren
  2. The Price of Wine By Dimson, Elroy; Rousseau, Peter L.; Spaenjers, Christophe
  3. Kollektive Identitäten in Industrial Cultural Districts: Theoretische und konzeptionelle Überlegungen am Beispiel des Schmuckindustrieclusters in Pforzheim By Kosche, Robert
  4. Who Owns the Media? By Simeon Djankov; Caralee McLiesh; Tatiana Nenova; Andrei Shleifer

  1. By: Roman Kraussl; Arthur Korteweg; Patrick Verwijmeren (LSF)
    Abstract: This paper shows the importance of correcting for sample selection when investing in illiquid assets with endogenous trading. Using a large sample of 20,538 paintings that were sold repeatedly at auction between 1972 and 2010, we find that paintings with higher price appreciation are more likely to trade. This strongly biases estimates of returns. The selection-corrected average annual index return is 7 percent, down from 11 percent for traditional uncorrected repeat-sales regressions, and Sharpe Ratios drop from 0.4 to 0.1. From a pure financial perspective, passive index investing in paintings is not a viable investment strategy, once selection bias is accounted for. Our results have important implications for other illiquid asset classes that trade endogenously.
    Keywords: "Art investing; Selection bias; Asset allocation"
    JEL: D44 G1 Z11
    Date: 2013
  2. By: Dimson, Elroy; Rousseau, Peter L.; Spaenjers, Christophe
    Abstract: We examine the impact of aging on wine prices and the performance of wine as a long-term investment, using a unique historical database for five long-established Bordeaux wines that we construct from auction and dealer prices. We estimate the life-cycle price patterns with a regression model that avoids multicollinearity between age, vintage year, and time by replacing the vintage effects with annual data on production yields and weather quality. In line with the predictions of an illustrative model, we observe the highest rates of appreciation for young high-quality wines that are still maturing. The findings suggest that the non-financial “psychic return” to holding wines that are substantially beyond maturity is at least 1%. Using an arithmetic repeat-sales regression, we estimate an annualized return to wine investments (net of insurance and storage costs) of 4.1%, in real GBP terms, between 1900 and 2012. Wine underperforms equities over this period, but outperforms government bonds, art, and stamps. Wine and equity returns are positively correlated.
    Keywords: alternative investments; luxury goods; price indexes; psychic return; consumption; storage
    JEL: C43 D44 G11 G12 Q11 Z11
    Date: 2013–12–10
  3. By: Kosche, Robert
    Abstract: Im Mittelpunkt des Beitrags steht die Rolle kollektiver Identitäten für die Entwicklung lokaler Designnetzwerke und der daraus resultierende Einfluss auf die Adaptionsfähigkeit von Industrial Cultural Districts, die auf ästhetisierte Produkte wie Möbel oder Schmuck spezialisiert sind. Diese häufig sehr traditionsreichen Typen industrieller Cluster bilden wichtige regionale Knotenpunkte in den weltweiten Netzwerken der Kreativindustrien, sind jedoch in den letzten Jahren von einem starken Wandel der wirtschaftlichen Rahmenbedingungen betroffen: Globale Konkurrenz und veränderte Konsumgewohnheiten verlangen von den lokalen Produzenten vermehrte Anstrengungen im Bereich der Produktdifferenzierung, u.a. durch eine stärkere Betonung ästhetischer Inhalte im Rahmen einer verstärkten Designorientierung. Da die Rolle von DesignerInnen in den traditionellen industriellen Clustern kleiner und mittlerer Unternehmen ein wenig erforschtes Feld ist, bleibt jedoch unklar, ob und wie DesignerInnen und Designprozesse stärker als bisher in die etablierten Wertschöpfungsketten von Unternehmen und unterstützenden Organisationen integriert werden können und welche Folgen dabei auftretende Probleme für die Entwicklungsfähigkeit der betroffenen Cluster letztendlich haben. ... -- The paper focuses on the effects of collective identities on local design networks and the resulting effects on the adaptability of industrial cultural districts, i.e. clusters that are specialized in aestheticized products, such as furniture or jewelry. These often very traditional, industrial clusters are important regional hubs in the global network of creative industries. However, in recent years they have been affected by strong changes in the economic environment: global competition and changing consumer habits require local producers to place increased efforts in the area of product differentiation, including a greater emphasis on aesthetic content in the context of an enhanced design orientation. Because the importance of designers in these traditional industrial clusters of small and medium businesses is a little explored field, it remains unclear whether and how designers and design-making can be integrated more closely into the established value chains of firms and supporting organizations. Furthermore, little is known about the consequences of lacking integration for cluster adaptability. ...
    Date: 2013
  4. By: Simeon Djankov; Caralee McLiesh; Tatiana Nenova; Andrei Shleifer
    Abstract: We examine the patterns of media ownership in 97 countries around the world. We find that almost universally the largest media firms are owned by the government or by private families. Government ownership is more pervasive in broadcasting than in the printed media. We then examine two theories of government ownership of the media: the public interest (Pigouvian) theory, according to which government ownership cures market failures, and the public choice theory, according to which government ownership undermines political and economic freedom. The data support the second theory.

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