Some economists decided to measures the returns on art and compare them to other investments. One way they did that was to take the collection of John Maynard Keynes that he bequeathed to a college and follow it over the years. The results of the study aren’t favorable for those who view art as a good investment.
Keynes’s “portfolio,” or art collection, was amassed for less than £13,000. By 2013, it was valued at over £70 million, for an annualized real rate of return of 4.2% over the past half-century—virtually matching the performance of the total return on equities over the same period. So what does their analysis tell us about the art market?
By analyzing the performance of Keynes’s collection, and comparing it with the simulated performance of thousands of hypothetical art portfolios, they found that the art market was structured much like a lottery, with relatively few winners (artists and their collectors) reaping enormous gains, and the bulk of artists marginal to the overall value of the market. This will be entirely unsurprising to anyone who has stood on an Christie’s or Sotheby’s saleroom floor or perused the aisles of major art fairs like Art Basel or Frieze.