Hostname: page-component-586b7cd67f-r5fsc Total loading time: 0 Render date: 2024-11-30T15:09:26.081Z Has data issue: false hasContentIssue false
  • English
  • Français

Expert Opinion and Bordeaux Wine Prices: An Attempt to Correct Biases in Subjective Judgments*

Published online by Cambridge University Press:  03 November 2014

Jean-Marie Cardebat ,
Jean-Marc Figuet  and
Emmanuel Paroissien
Jean-Marie Cardebat*
Affiliation:
Larefi and Bordeaux Wine Economics, Economics Department, Bordeaux University, Avenue Léon Duguit, 33608 PESSAC cedex, France
Jean-Marc Figuet
Affiliation:
Larefi and Bordeaux Wine Economics, Economics Department, Bordeaux University, Avenue Léon Duguit, 33608 PESSAC cedex, France; e-mail: [email protected].
Emmanuel Paroissien
Affiliation:
Larefi and Bordeaux Wine Economics, Economics Department, Bordeaux University, Avenue Léon Duguit, 33608 PESSAC cedex, France; e-mail: [email protected].
*
(corresponding author) e-mail: [email protected]
Get access Rights & Permissions [Opens in a new window]

Abstract

The purpose of this paper is to assess the role of expert opinion on the pricing of Bordeaux wines. To this end, we compile an original dataset including (1) retail prices, (2) scores attributed to wines from France, Spain, and the United States by nine experts from 2000 to 2010, and (3) the meteorological conditions under which the grapes were produced. With this dataset, we aim to determine the presence of bias rooted in the subjectivity of the experts. We assume that the expert wine scores have two main components: (1) an objective one that is driven by the fundamentals of wine production (the quality of soil, producers' skills, and climate conditions) and (2) a subjective one that is determined by the individual opinion of the experts. We use control function techniques to compare the respective impacts of these two factors and find that prices are influenced more deeply by the fundamental quality of the wine than they are by the judge's subjectivity. Furthermore, we notice the great impact of “highest ratings” on pricing, which we interpret as a “marketing effect”: the most favorable score is likely to be the most publicized, which influences the price of the respective wine. (JEL Classifications: C21, D89, L15)

Keywords

Bordeaux wineexpert opinionprice
Type
Articles
Information
Journal of Wine Economics , Volume 9 , Issue 3 , December 2014 , pp. 282 - 303
Copyright
Copyright © American Association of Wine Economists 2014 

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

Footnotes

*

We thank Victor Ginsburgh and Michael Visser for their comments on an earlier version of this paper. We are also indebted to an anonymous referee for many helpful suggestions.

References

Ackerberg, D. (2003). Advertising, learning, and consumer choice in experience good markets: A structural empirical examination. International Economic Review, 44, 1007–1040.Google Scholar
Akerlof, G. (1970). The market for “lemons”: Quality uncertainty and the market mechanism. Quarterly Journal of Economics, 84, 488–500.Google Scholar
Ali, H. H., and Nauges, C. (2007). The pricing of experience goods: The example of en primeur wine. American Journal of Agricultural Economics, 89 (1), 91–103.CrossRefGoogle Scholar
Ali, H. H., Lecocq, S., and Visser, M. (2008). The impact of gurus: Parker grades and en primeur wine prices. Economic Journal, 118, 158–173.Google Scholar
Arguea, N. and Hsiao, C. (1993). Econometric issues of estimating hedonic price functions: With an application to the U.S market for automobiles. Journal of Econometrics, 56(1–2), 243–267.Google Scholar
Ashenfelter, O. (1989). How auctions work for wine and art. Journal of Economic Perspectives, 3(3), 23–36.Google Scholar
Ashenfelter, O. (2008). Predicting the prices and quality of Bordeaux wines. Economic Journal, 118, 40–53.Google Scholar
Ashenfelter, O., and Jones, G. (2013). The demand for expert opinion: Bordeaux wine. Journal of Wine Economics, 8(3), 285–293.CrossRefGoogle Scholar
Ashton, R. H. (2011). Improving experts’ wine quality judgments: Two heads are better than one. Journal of Wine Economics, 6(2), 160–178.CrossRefGoogle Scholar
Ashton, R. H. (2013). Is there consensus among wine quality ratings of prominent critics? An empirical analysis of red Bordeaux, 2004–2010. Journal of Wine Economics, 8(2), 225–234.Google Scholar
Benfratello, L., Piacenza, M., and Sacchetto, S. (2009). Taste or reputation: What drives market prices in the wine industry? Estimation of a hedonic model for Italian premium wines. Applied Economics, 41, 2197–99.Google Scholar
Bois, B. (2007). Cartographie agroclimatique à méso-échelle: méthodologie et application à la variabilité spatiale du climat en Gironde. Ph.D. dissertation, University of Bordeaux 1 and INRA.Google Scholar
Bois, B., and Van Leeuwen, C. (2008). Variabilité climatique dans la zone de production des vins de Bordeaux. Terroirs viticoles, ENITA Bordeaux—December.Google Scholar
Cardebat, J.-M., and Figuet, J.-M. (2004). What explains Bordeaux wine prices? Applied Economic Letters, 11(5), 293–296.Google Scholar
Cardebat, J.-M., and Figuet, J.-M. (2009). Estimation of a hedonic price equation for Alsace, Beaujolais and Provence wines. Applied Economics Letters, 16(7–9), 921–927.Google Scholar
Carew, R. (2000). A hedonic analysis of apple prices and product quality characteristics in British Columbia. Canadian Journal of Agricultural Economics, 58(1), 93–108.Google Scholar
Chesher, A. (1991). The effect of measurement error. Biometrika, 78(3), 451–462.Google Scholar
Clemons, E. K., Gao, G. D., and Hitt, L. (2006). When online reviews meet hyperdifferentiation: A study of the craft beer industry. Journal of Management Information Systems, 23(2), 149–171.Google Scholar
Combris, P., Lecocq, S., and Visser, M. (1997). Estimation of a hedonic price equation for Bordeaux wine: Does quality matter? Economic Journal, 107, 390–402.Google Scholar
Costanigro, M., and McCluskey, J. J. (2011). Hedonic price analysis in food markets. In Lusk, J.L., Roosen, J., and Shogren, J.F. (Eds.), The Oxford Handbook of the Economics of Food Consumption and Policy. Oxford: Oxford University Press, 152–180.Google Scholar
Court, A.T. (1939). Hedonic price indexes with automotive examples. In The Dynamics of Automobile Demand. New York: General Motors Corporation, 99–117.Google Scholar
Di Vittorio, A., and Ginsburgh, V. (1994). Des enchères comme révélateurs du classement des vins. Journal de la Société Statistique de Paris, 137, 19–49.Google Scholar
Dubois, P., and Nauges, C. (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), 205–212.Google Scholar
Espinosa, J., and Goodwin, B. (1991). Hedonic prices evaluation for Kansas wheat characteristics. Western Journal of Agricultural Economics, 16, 72–85.Google Scholar
Frankel, J., and Rose, A. (2010). Determinants of agricultural and mineral commodity prices. Research Working Paper Series, 10-038, John F. Kennedy School of Government, Harvard University, Cambridge.Google Scholar
Freeman, A. (1993). The measurement of environment and resource values: Theory and methods. Washington, DC: Resources for the Future.Google Scholar
Friberg, R., and Grönqvist, E. (2012). Do experts reviews affect the demand for wine? American Economic Journal: Applied Economics, 4(1), 193–211.Google Scholar
Ginsburgh, V., Monzak, M., and Monzak, A. (1992). Red wines of Médoc: What is wine tasting worth? Paper presented at the 2nd International Conference of the Vineyard Data Quantification Society, Verona, February 1992.Google Scholar
Griliches, Z. (1961). Hedonic price indexes for automobiles: An econometric analysis of quality change. In Price Statistics Review Committee (Ed.), The prices statistics of the Federal Government: Review, Appraisal, and Recommendations New York: National Bureau of Economic Research, 173–196.Google Scholar
Haeger, J.W., and Storchmann, K. (2006). Prices of American Pinot Noir wines: Climate, craftsmanship, critics. Agricultural Economics, 35(1), 67–78.CrossRefGoogle Scholar
Hilger, J., Rafert, G., and Villas-Boas, S. (2011). Expert opinion and the demand for experience goods: An experimental approach in the retail wine market. Review of Economics and Statistics, 93(4), 1289–96.CrossRefGoogle Scholar
Hodgson, R. (2008). An examination of judge reliability at a major U.S. wine competition. Journal of Wine Economics, 3(2), 105–113.Google Scholar
Hodgson, R. (2009). An analysis of the concordance among 13 U.S. wine competitions. Journal of Wine Economics, 4(1), 1–9.Google Scholar
Jin, G., and Leslie, P. (2003). The effects of information on product quality: Evidence from restaurant hygiene cards. Quarterly Journal of Economics, 118, 409–451.Google Scholar
Jones, G., and Storchmann, K.-H. (2001). Wine market prices and investment under uncertainty: An econometric model for Bordeaux crus classés. Agricultural Economics, 26(2), 115–133.Google Scholar
Landon, S., and Smith, C. E. (1998). The use of quality and reputation indicators by consumers: The case of Bordeaux wine. Journal of Consumer Policy, 20, 289–323.Google Scholar
Lecocq, S., and Visser, M. (2006). Spatial variations in climate and Bordeaux wine prices. Journal of Wine Economics, 1(1), 42–56.Google Scholar
Martin-Consuegra, D., Molina, A., and Esteban, A. (2007). An integrated model of price, satisfaction and loyalty: An empirical analysis in the service sector. Journal of Product & Brand Management, 16(7), 459–468.Google Scholar
Montgomery, C., and Wernerfelt, B. (1992). Risk reduction and umbrella branding. Journal of Business, 65, 31–50.Google Scholar
Nelson, P. (1970). Information and consumer behavior. Journal of Political Economy, 78, 311–329.Google Scholar
Oczkowski, E. (1994). A hedonic price function for Australian premium table wine. Australian Journal of Agricultural Economics, 38(1), 93–110.Google Scholar
Oczkowoski, E. (2001). Hedonic wine price function and measurement error. Economic Record, 239, 374–382.Google Scholar
Reinstein, D., and Snyder, C. (2005). The influence of expert reviews on consumer demand for experience goods: A case study of movie critics. Journal of Industrial Economics, 53, 27–51.Google Scholar
Roma, P., Di Martino, G., and Perrone, G. (2013). What to show on the wine labels: A hedonic analysis of price drivers of Sicilian wines. Applied Economics, 45(19), 2765–2778.Google Scholar
Rosen, S.M. (1974). Hedonic prices and implicit markets: Product differentiation in pure competition. Journal of Political Economy, 82(1), 34–55.Google Scholar
Salop, S. (1976). Information and monopolistic competition. American Economic Review, Papers and Proceedings, 66(2), 240–245.Google Scholar
Sorensen, A., and Rasmussen, S. (2004). Is any publicity good publicity? A note on the impact of book reviews. NBER Working Paper, Stanford University.Google Scholar
Stanley, L., and Tschirhart, J. (1991). Hedonic prices for a non-durable goods: The case of breakfast cereals. Review of Economics and Statistics, 73(3), 537–541.Google Scholar
Storchmann, K., Mitterling, A., and Lee, A. (2012). The detrimental effect of expert opinion on price quality dispersion: Evidence from the wine market. American Association of Wine Economists, AAWE Working Paper No. 118.Google Scholar
Taylor, L. (2003). The hedonic model, in Champ, P., Boyle, K., and Brown, C. (Eds.), A Primer on Non-Market Evaluation. AA Dordrecht, The Netherlands: Kluwer Academic, 331–391.Google Scholar
Triplett, J. (1989). Price and technological change in a capital good: A survey of research on computers. In Jorgenson, D., and Landau, R. (Eds.), Technology and Capital Formation. Cambridge: MIT Press, 127–213.Google Scholar
Triplett, J. (2004). Handbook on Hedonic Indexes and Quality Adjustments in Price Indexes: Special Application to Information Technology Products. Paris: OECD.Google Scholar
Vaillant, N., Lesot, P., Bonnard, Q., and Harrant, V. (2010). The use of expert opinion, quality and reputation indicators by consumers: Evidence from the French vaulting stallion semen market. Applied Economics, 42, 739–745.Google Scholar