Discussion paper

DP16575 Art in Times of Crisis

Is art a safe haven in times of political or financial crisis? We trace the long-term performance of the UK art market during world wars, economic recessions, financial crises, inflationary periods, and changes in monetary policy. We digitalized historical auction archives to construct art price indices from the early 20th century onwards. Annual art auction value grew, in real terms, more than seven-fold over the past century. The arithmetic annual real return amounts to 3.6% and risk to 20.1%.
Art returns plummeted at the onset of wars, but in the later years of war periods, returns turned positive and outperformed equities, which suggests that art could serve as a hedge against political uncertainty. During wars, smaller and thus transportable paintings obtained higher returns.
Art is sensitive to economic and financial crises, with the largest slumps occurring in the Post-WWI recession, the Great Depression, the oil crisis, the recessions of the early 1980s and early 1990s, and the Great Recession. By far the largest declines in art returns occurred in 1931 (-63%), and for the post-WWII period in 1991 (-37%) when the largest art market bubble in art history burst. We highlight changes in art preferences for specific paintings by size, art school, art objects’ liquidity, and artists’ nationalities during different crises. We report that art enters a broad optimal asset portfolio both in non-crisis periods and during war times.


David, G, Y Li, K Oosterlinck and L Renneboog (2022), ‘DP16575 Art in Times of Crisis‘, CEPR Discussion Paper No. 16575. CEPR Press, Paris & London. https://cepr.org/publications/dp16575