Is Art Really a Safe Haven? Evidence from the French Art Market During WWI

During crisis art is often considered as a safe haven both by the scientific literature and the financial advisors. For example, during WWII art markets encountered a massive boom in occupied countries This paper questions this vision of art as a safe investment providing evidence that art has not always supplied a safe investing way during crisis. To do so it constructs, on basis of an original database of 22,000 entries, an art price index for the French art market during WWI and the postwar period in France (1911-1925). The results show that the WWII boom mostly reflected the specificities of the occupation economy imposed by the Nazis. Indeed during WWI artworks underperformed gold, real-estate, bonds and stocks in terms of risk-return performances. This underperformance can be explained by several peculiarities of the market. Investors tended to prefer cheap artworks and old masters during WWI as these were less volatile at the time.