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Abstract
Although there has been an increasing interest in the links between aesthetics and the market economy, researchers have largely ignored the aesthetics related to one class of economic behavior, i.e., individuals’ investments. The purpose of this article is to explicate what roles aesthetics may play in people’s evaluations of companies’ stocks as investment objects. First, the author explains that investment decisions are partly based on aesthetic intuition, which emerges as a counterpart to the logical‐epistemic analysis of company stocks. Second, it is explained that investment decisions are affected by the apprehended beauty of stocks in the sense of subjectively grasped “unity in variety” or “familiarity in the unfamiliar” which one may encounter when assessing a company and its earnings figures. Third, the author explains how an individual may actually have investment motives that go beyond the extrinsic/instrumental objective of maximizing expected financial returns. Such extra motives will be expressions of one’s ego or self and reflect the intrinsic appreciation of things represented by a company.
Acknowledgements
The author is grateful to Jenny and Antti Wihuri Foundation and Marcus Wallenberg Foundation for receiving research grants for studying stock markets. The author also wishes to express his great gratitude to Head of Research Ossi Naukkarinen (University of Art and Design Helsinki) for his valuable views and comments on the article.
Notes
1. For instance, in the US, Canada, the UK and Australia, stock market participation has risen rapidly, in the 1980s and 1990s, from about 10 or 20 percent to even half of the population. In the US, the share of families owning stock directly or indirectly (through, e.g., mutual funds or various retirement vehicles) went up from 19 percent in 1983 to 49 percent in 1998 (Aizcorbe, Kennickell, and Moore Citation2003; Investment Company Institute [ICI] and Securities Industry Association [SCA] Citation2002), in Canada from 13 percent in 1983 to 49 percent in 1998 (Toronto Stock Exchange Citation2004), and in the UK from 9 percent in 1978 to 34 percent in 2000 (Muñoz Citation2006). In Australia, the share of individuals with direct shareholdings increased from 10 percent (direct and indirect: 15 percent) in 1991 to 44 percent (direct and indirect: 55 percent) in 2004 (Reserve Bank of Australia Citation1997; Australian Stock Exchange Citation2005).
2. On the impacts of online trading, see also, e.g., Barber and Odean (Citation2001); Looney and others (Citation2006); Lurie and Mason (Citation2007); Sabherwal, Sarkar, and Zhang (Citation2008); and Uchida (Citation2006).
3. A recently emerged additional explanation, from behavioral finance, is that the investor will select one of the stocks that is the most “attention grabbing,” due to, e.g., strong news coverage, high trading volume or extreme one‐day returns (Barber and Odean Citation2008). While not questioning this explanation, our first aesthetic perspective goes beyond it, essentially attempting to answer which stock is chosen of those that have already grabbed one’s attention and ended up in one’s consideration set.
4. The beauty of getting a grasp on such unity‐in‐complexity relates also closely to what Welsch (Citation1991) discusses as an important aspect of aesthetic perception in general: becoming aware of and gaining insight into the “true” state and meaning of (complex) affairs.
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28. Note that this intrinsic motivation is clearly and essentially distinct from two other motivations that, while usually operating entirely on their own, may sometimes co‐occur with our intrinsic aesthetic motivation. The two other, distinct motivations are (1) one’s motivation to invest in companies with which one is subjectively familiar, for the sake of familiarity per se or due to the alleviating effect of subjective information on perceived investment risk (Coval and Moskowitz Citation1999; Frieder and Subrahmanyam Citation2005; Huberman Citation2001; Merton Citation1987); and (2) one’s motivation to invest in companies that represent products that one likes, due to the naïve (optimistic) inference that if “I like them, others like them, too, and the company’s stock will succeed financially through increased sales and/or investor attraction” (Aspara and Tikkanen Citation2008). It is out of the scope of this article to examine which of these alternative motivations explains most of a given investor’s investments in a particular stock or stocks in general. An educated, as well as conservative, guess of the author is that the intrinsic, aesthetic motivation will generally and in most cases explain less of individuals’ investments than the familiarity and more than the naive inferences.
29. In some cases, the significance of one individual’s support is also objectively significant from the firm’s perspective – when, e.g., a wealthy individual makes a seed investment in a start‐up company. Also, the “small supports” by single individuals may add up to a significant aggregate effect.
30. The increasingly popular “socially responsible investing” (SRI) (e.g., Beal, Goyen, and Phillips Citation2005; Cullis, Lewis, and Winnett Citation1992; Hudson Citation2005; Lewis and Mackenzie Citation2000; Rosen, Sandler, and Shani Citation1991; Schueth Citation2003; Sparkes Citation2001; Winnett and Lewis Citation2000) might indeed be explained through one’s finding the idea(l) of “social responsibility” as personally relevant and pleasant and, hence, one’s consequent aesthetic appreciation of companies that support or represent that idea as investments targets. However, such investment can also be confused with “ethical investment” (rather than aesthetic investment) if social responsibility is considered to be an ethical dimension. In any case, the relationship between SRI and the ethics of investing are out of the scope of this paper.
31. Excluded is also Berkshire Hathaway since rather than a traditional company, Berkshire Hathaway can be considered an institutional investor, even a fund. Individuals’ indirect stock investments through institutions and funds are, in turn, out of the scope of this article.
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