Watching a grown adult pay $2,000 for a tiny plastic figure the size of a thumb seems a little strange. On the secondary LEGO market, though, that’s exactly what’s happening. It’s been going on for so long that economists are now writing papers about it.
From 1987 to 2015, a study from Russia’s Higher School of Economics looked at 2,322 LEGO sets. Researchers found something that most people wouldn’t have expected: investments in LEGO returned an average of 10 to 11 percent per year during that time, which was higher than investments in stocks, bonds, gold, and traditional collectibles like stamps and old wine. Dependent on the set, the returns ranged from -50 percent to over 600 percent per year, which was hard to believe.
That spread is important. In other words, it’s not just a case of “buy LEGO, get rich.” Know-how is rewarded in the LEGO resale market. People who know which sets will really be worth something in the long run and which ones will just sit there and collect dust usually get the best deals. One of the study’s authors, Victoria Dobrynskaya, said that real LEGO fans can read the market in a way that casual observers just can’t.
Some sets are very valuable because of a very simple process: when a set is retired and no longer made, the number of sets that are available decreases. Sets that used to be all over store shelves are slowly being taken off the market as boxes are opened and pieces are lost. People who have kept sealed, full sets for a long time now find themselves with something very rare. There is one thing that economists know about how prices change when something is rare.
As an example, the LEGO figure Mr. Gold is helpful. It came out in 2013 and cost $2.99 at stores, but now you can find it on second-hand markets for around $2,000. That’s not prices going up. That’s the combination of limited editions and collectors’ obsession, which LEGO is very good at achieving, sometimes on purpose through promotional exclusives and limited editions, and sometimes just by letting time do its thing.
It’s also important to understand the role that size plays. Collectors who are trying to finish themed collections are the ones who buy small sets because they often have figures or parts that can’t be found anywhere else. On the other hand, very large sets are made in smaller quantities and are usually bought by adults who have the space and money for serious display pieces. This is not a birthday present for a child: the Millennium Falcon, the Taj Mahal, or the Imperial Star Destroyer. The things they are made of are plastic and are meant to inspire.
It’s hard not to see the bigger picture here. Rich investors have long used real things like jewelry, fine art, and old cars as a way to diversify their holdings beyond just financial instruments. LEGO seems to offer a cheaper way to get to the same general idea. You don’t have to spend six figures at first, but some collectors do in the end. And since there are thousands of adult LEGO fans around the world, the demand side of the equation doesn’t seem to be going away.
But there are real costs to think about. Storage and shipping costs cut into profits. Long-term gains are the only way to get meaningful returns. The researchers recommend at least three years, but in reality, it will take much longer for the biggest gains. And the market’s wild swings of -50 to +600% are a reminder that not every set that is taken off the market becomes a treasure.
The research’s main point is not a way to get rich, but rather a reason to seriously consider unconventional assets. Around the corner, in a sealed box on a collector’s shelf, a set of plastic bricks is happy. It’s still not clear if the investment world as a whole will ever fully accept that. The data, on the other hand, seems to already know what to do.
