Reconsidering psychic return in art investments

Guido Candela, Massimiliano Castellani and Pierpaolo Pattitoni

Economics Letters, 2013, vol. 118, issue 2, 351-354

Abstract: Measuring the psychic return of art investments is a debated issue in cultural economics. Several works suggest Jensen’s alpha as a measure of the psychic return. Since Jensen’s alpha is defined in the CAPM framework, its uncritical application as a measure of the psychic return may be problematic when the CAPM hypotheses do not hold. Applying an opportunity cost framework and the analytical tools of portfolio theory, we propose a new psychic return measure, which is not affected by the same issues as Jensen’s alpha. Psychic return estimates based on our measure are provided for several art market indexes as an empirical application.

Keywords: Psychic return; Art investment; Portfolio theory (search for similar items in EconPapers)
JEL-codes: G11 Z11 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecolet:v:118:y:2013:i:2:p:351-354

DOI: 10.1016/j.econlet.2012.11.010

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