The Iconic Boom in Modern Russian Art

This paper investigates the prices and the returns in the market for modern Russian art, a prime example of an ‘emerging art market’, over the last four decades. After applying a hedonic regression model on an extensive dataset containing 52,154 sales by 410 Russian artists, we show that the reputation of the artist, the strength of the attribution, and the topic of the work play important roles in the price formation of Russian art, in addition to characteristics such as size, medium and the identity of the auction house. We find a geometric average return of 4.07%, in real USD terms, between 1967 and 2007. Since 1997, however, our Russian art index shows an annualized return of 12.40%, which is roughly double the average yearly appreciation of a global art market index over the same period. Especially nineteenth century Russian art has generated high returns. Based on correlations and Granger causality tests, we conclude that the prices for Russian art are impacted by both Russian and global stock market movements. Our results illustrate how the new wealth created in fast-developing economies has its impact on the market for art from these countries.