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Identifying the Effects of Objective and Subjective Quality on Wine Prices*

  • Edward Oczkowski (a1)
Abstract
Abstract

This study examines a framework developed by Cardebat, Figuet, and Paroissien in a 2014 Journal of Wine Economics article for identifying the impacts of both objective and subjective quality on wine prices. We recognize how various specifications are observationally equivalent and that the interpretation of model estimates depends crucially on the posited assumption for the relation between price and objective and subjective quality. The proposed framework is applied to Australian premium wines. Results indicate that the price impact of expert personal opinions is similar to the impact of objective quality as estimated via weather, vintage, and producer fixed effects. The relative importance of objective quality compared with subjective quality depends crucially on the ability of expert scores to accurately reflect objective quality. (JEL Classifications: C21, Q11, Q54)

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Comments from an anonymous referee and communications with Jean-Marie Cardebat and Emmanuel Paroissien clarifying aspects of their article are gratefully acknowledged.

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This list contains references from the content that can be linked to their source. For a full set of references and notes please see the PDF or HTML where available.

O. Ashenfelter (2008). Predicting the quality and prices of Bordeaux wine. Economic Journal, 118(529), F174F184.

R.H. Ashton (2012). Reliability and consensus of experienced wine judges: Expertise within and between? Journal of Wine Economics, 7(1), 7087.

J.-M. Cardebat , J.-M. Figuet , and E. Paroissien (2014). Expert opinion and Bordeaux wine prices: An attempt to correct biases in subjective judgments. Journal of Wine Economics, 9(3), 282303.

J.-M. Cardebat , and E. Paroissien (2015). Standardizing expert wine scores: An application for Bordeaux en primeur . Journal of Wine Economics, 10(3), 329348.

P. Dubois , and C. Nauges (2010). Identifying the effect of unobserved quality and expert reviews in the pricing of experience goods: Empirical application on Bordeaux wine. International Journal of Industrial Organization, 28(3), 205212.

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J.P. Nelson , and P.E. Kennedy (2009). The use (and abuse) of meta-analysis in environmental and natural resource economics: An assessment. Environmental and Resource Economics, 42(3), 345377.

E. Oczkowski (2001). Hedonic wine price functions and measurement error. Economic Record, 77(239), 374382.

E. Oczkowski , and H. Doucouliagos (2015). Wine prices and quality ratings: A meta-regression analysis. American Journal of Agricultural Economics, 97(1), 103121.

A.G. Reynolds , ed. (2010a). Managing Wine Quality. Vol. 1, Viticulture and Wine Quality. Oxford: Woodhead.

A.G. Reynolds , ed. (2010b). Managing Wine Quality. Vol. 2, Oenology and Wine Quality. Oxford: Woodhead.

G. Schamel , and K. Anderson (2003). Wine quality and varietal, regional and winery reputations: Hedonic prices for Australia and New Zealand. Economic Record, 79(246), 357369.

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Journal of Wine Economics
  • ISSN: 1931-4361
  • EISSN: 1931-437X
  • URL: /core/journals/journal-of-wine-economics
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