The Economic Impact of Art Theft

Major art thefts attract massive amounts of media attention while the works that are taken are often worth vast sums of money. The media attention that follows is, in a way, free marketing for the artist and their works. Like in other commodity markets, when an organization makes major announcement, the market reacts. There is a supply and demand issue when artworks are stolen. Essentially theft reduces the supply of the artist's works. And so how do prices for other works by that artist react? Would they rise or fall? Is there a short or long term effect, supposing that there even is an effect? In addressing these questions, statistical analysis using SPSS was employed to compare the compound annual returns from repeat sales of artworks as well as auction sales prior to and following a theft. This was done over a short term period (six months and five years) and a long term period (ten years and all known repeat sales) in which thirteen artists from twelve thefts were subjected to analysis. The results showed evidence of a five year "theft effect" whereby compound annual returns and auction sales for the selected artist were higher than in the five years prior to the theft. This "theft effect" was contingent on the history of the work itself, the popularity of the artist, and if the artist had a high number of works previously stolen. However, it is possible for the "theft effect" to be overshadowed by the "death effect" of an artist and art market swings. The results from the analyses can have implications for art collectors, investors, auction houses, gallery directors, insurance companies and researchers.