Psychological Returns on Stamp Collecting in China...or Not.

Sometime last month I saw the following study on an SSRN's (the Social Science Research Network - where academic working papers go to procreate) Cognitive Science Network newsletter: "Does Psychological Return Matter? Evidence from China Stamp Market"

ABSTRACT: Previous literature has challenged the traditional claim that collectibles have high returns and expensive collectibles tend to return more. However, only financial returns were examined previously while psychological returns was completely overlooked, which may result in underestimation of returns on collectibles. This paper examines the returns from investment in China stamp market and the existence of psychological returns. The empirical results suggest that stamp returns in China stamp market are very dispersive and expensive stamps tend to have a low return. Potential psychological returns generators have negative effects on financial return of stamps, which implies the existence of psychological return.

After fond flashbacks to trolling around moving sales in St. Louis through childhood (dusty stamp collection were a staple of the event), the first few questions in my mind were

1. Why stamp collecting? Don't behavioral economists at Peking University have something more...interesting to study? Like pornography or blood donations ?
2. What are those most expensive stamps in China these depressed collectors are staring at?

So towards an answer this article in City Weekend Beijing describes the Yuetan Stamp and Coin Market in Beijing. Pictures above are: the one and two cent Mauritius stamps that sold for $3.8 million each in 1992. The rarest stamp in the world - the Tre Skilling Banco Yellow, first stamp of Sweden and one of a kind and sold for $2.3 million in 1996. The most expensive stamp of China was a 19th Century Qing stamp - "One-Yuan Red Revenue Surcharged Small Issue" (Red, Top). A "1897 Three Cents Red Revenue stamp" going to auction later this month may be the next catch though.

PS. Most predictable/hilarious instantiation of the state in the aforementioned study: "special stamps” (including "less serious topics, such as folklores, flowers, birds, vegetation, architectures as well as paintings of famous artists") have a significantly higher psychological and monetary return than "memorial stamps" (which cover political themes such as "the 50th anniversary of the foundation of the People’s Liberation Army, the victory of the Resistance War against Japanese Invasion and the opening of the 17th National Congress of CPC.")