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The wine delusion

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Economics and Philosophy<br />

PHIL S­161<br />

___________________________<br />

<strong>The</strong> <strong>wine</strong> <strong>delusion</strong><br />

Why prices and ratings don’t matter<br />

Praveen Vaidyanathan<br />

HARVARD UNIVERSITY<br />

Summer 2014<br />

Professor Frank Thompson<br />

HARVARD UNIVERSITY<br />

Department of Philosophy<br />

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Abstract<br />

People can never tell whether a <strong>wine</strong> is a lemon or not until they open the bottle.<br />

Even if they do, they certainly can't get their heads around it. For <strong>wine</strong> comes in just<br />

two colours, and yet, gives people over 15,000 options to pick from; more choice<br />

than any other product. Such is the complexity of <strong>wine</strong> that people lack the<br />

confidence to complain. So, how do people go about buying a bottle of <strong>wine</strong>? <strong>The</strong>ir<br />

best guess is to rely on two things: price and ratings. People assume that the more<br />

expensive <strong>wine</strong> will taste better than the cheaper <strong>wine</strong>. People assume that the <strong>wine</strong><br />

recommended by critics will taste better. It seems logical to assume that the more<br />

expensive the <strong>wine</strong> is, the better the critics will think of it. Reasonable as it may seem for<br />

other markets, for <strong>wine</strong>, it just doesn’t work. This paper uses behavioural economics and<br />

empirical evidence to prove that. It explores preferences, choices and risks in picking <strong>wine</strong>.<br />

Whilst suggesting refreshing ways for people to see <strong>wine</strong> like never before.<br />

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A bizarre market<br />

<strong>The</strong> <strong>wine</strong> market works in a peculiar way. Sellers know more about the product than<br />

buyers do, causing an imbalance in power (Reiss, 2013, p. 233). Economists call this<br />

principle, ‘information asymmetry’. Because people can’t access the quality before buying<br />

it, their decisions involve risk. Which would mean that low­quality products could dominate<br />

the market (Akerlof, 1970). This theory was predicted by the Nobel Prize­winning<br />

economist George Akerlof. Akerlof called it ‘lemons theory’, applying it to the used car<br />

market. <strong>The</strong> word lemon refers to defective cars sold on the used car market. <strong>The</strong> word<br />

cherry refers to good cars sold on the used car market. People can never really tell whether<br />

a car is a cherry or a lemon before buying it (Veseth, 2007). So their best guess is that it is<br />

of average quality. <strong>The</strong> price they pay reflects the average quality. Realising that they can<br />

never get a justified price, cherry owners refrain from selling. Which would leave the market<br />

with lemons (Akerlof, 1970). <strong>The</strong> <strong>wine</strong> market is quite like the used cars market, only more<br />

bizarre. People can never tell whether a <strong>wine</strong> is a lemon or not until they open the bottle.<br />

Even if they do, they certainly can't get their heads around it. Because <strong>wine</strong> is complex; so<br />

much so that people lack the confidence to complain (Sutherland, 2013). So, how do<br />

people go about buying a bottle of <strong>wine</strong>? <strong>The</strong>ir best guess is to rely on two things: price<br />

and expert opinion. People assume that the more expensive <strong>wine</strong> will taste better than the<br />

cheaper <strong>wine</strong>. People assume that the <strong>wine</strong> recommended by critics will taste better than<br />

the rest (Dubner, 2010). But according to the British psychologist Richard Wiseman (cited<br />

in Sample, 2011) who has been testing those assumptions over and over again, among<br />

experts and amateurs alike, the answer is clear: the chances of anyone identifying a <strong>wine</strong><br />

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as expensive or cheap based on taste alone is 50:50. <strong>The</strong> same odds as flipping a coin.<br />

So bizarre is the <strong>wine</strong> market that is refuses to accommodate even the most basic law of<br />

economics. Which is, people buy more when the prices are low and less when the prices<br />

are high. Economists call this principle, ‘law of demand’. Because <strong>wine</strong> is unlike a typical<br />

good, its audience, the ‘loyals’, the ‘snobs’ and the ‘conspicuous’, often violate the law of<br />

demand while making decisions. For instance, the loyals may not buy more or buy less with<br />

change in prices; the snobs may not buy more when prices fall; the conspicuous would buy<br />

more when prices rise (Thornton, 2009, pp. 219­21).<br />

<strong>The</strong> elixir of snobs<br />

<strong>The</strong>re are over 15,000 <strong>wine</strong> products to choose from. No other industry offers<br />

people so many choices (Thornton, 2013, p. 3). People believe these products have<br />

different characteristics. Such is its toll on the human capacity, leaving people confused.<br />

Perhaps its confusion is an intended illusion, a trick. For <strong>wine</strong> comes in just two colours:<br />

red and white. And yet, it seems so hard to pick one. So hard that the English poet<br />

Kingsley thought ‘Red or white?’ were the three most depressing words in the English<br />

language (Sutherland, 2014). So, why is <strong>wine</strong> still popular? Why are people taking so much<br />

trouble drinking a drink so confusing? One that people can never get their heads around,<br />

let alone have the confidence to complain. Perhaps the <strong>wine</strong> market thrives itself on<br />

confusion at the expense of clarity. A startup named Vinetrade set up a simple site for<br />

people to buy and sell <strong>wine</strong>s online. Vinetrade soon had to shut down because people<br />

resisted ordering <strong>wine</strong> online. Turns out, that the whole online thing killed the joy of being<br />

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part of an elite group that used fancy words like ‘tannin’ and ‘oak’ (Mayassi, 2013). So, why<br />

is confusion revered? What is the correlation between confusion and popularity? In popular<br />

culture for instance, there is a meme on the theme nerds are cool. It works because nerds<br />

seem to have a certain IQ, too hard for the average Joe to understand. So cool that<br />

Hollywood filmmakers have been ditching superheroes for nerds (Hu, 2013). Similarly, the<br />

British adman Rory Sutherland thinks that <strong>wine</strong>’s popularity may be Freudian, ‘not in the<br />

sexual sense, but in the sense of what the Austrian psychologist Sigmund Freud called der<br />

Narzißmus der kleinen Differenzen or ‘the narcissism of small differences’ (Sutherland,<br />

2013). As Sutherland (2013) puts, ‘<strong>The</strong> advertising business is often criticised for<br />

exploiting this bias: to provide customers with a superficial sense of uniqueness endless<br />

trivial product variations are created to provide “an ersatz sense of otherness which is only<br />

a mask for an underlying uniformity and sameness”.’ In other words, the absurd complexity<br />

of <strong>wine</strong> may be essential to its popularity. For its drinkers to show status and<br />

connoisseurship, it is necessary for the market to be absurdly confusing to navigate<br />

(Sutherland, 2013). Which creates a sense of snobbery among <strong>wine</strong> drinkers; the<br />

superficial culture that is, <strong>wine</strong>. This peculiar narcissistic urge opens up an opportunity for<br />

people to advertise their own discernment, of what good <strong>wine</strong> is.<br />

Is <strong>wine</strong> genuine?<br />

So, what really is good <strong>wine</strong>? How do people know what good <strong>wine</strong> is? What<br />

makes one <strong>wine</strong> better than another? <strong>The</strong> Château Lafite Rothschild Bordeaux is<br />

considered by many to be the world’s best <strong>wine</strong>. Thomas Jefferson was among its<br />

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admirers. Jefferson’s 100­year old Lafite was recently sold at an auction for $156,000, the<br />

most expensive sale ever (Mayassi, 2013). A recent bottle commands just over $400; older<br />

bottles cost three times as much or more. Wine experts talk of its taste as if it were an<br />

expensive piece of art (Mayassi, 2013). Because people assume a linear relationship<br />

between price and <strong>wine</strong>, they would believe a Lafite should taste different. But it’s unclear<br />

anyone can actually tell the difference between a $2000 Lafite and a $2 Two­Buck Chuck.<br />

Wisemen (cited in Sample, 2011) confirms that the probability of someone picking fine<br />

<strong>wine</strong> from cheap <strong>wine</strong> is at 47%. <strong>The</strong> same chances as flipping a coin. <strong>The</strong> American<br />

economist Robert Goldstein, along with his Swedish counterparts, Anna Dreber and Johan<br />

Almenberg, published a paper in the Journal of Wine economics that drew results from<br />

over 6000 blind tastings. Findings confirmed a few important observations: there is no<br />

correlation between price and the perceived quality of <strong>wine</strong>; there is no correlation between<br />

quality and enjoyment of <strong>wine</strong>; neither amateurs or experts can consistently differentiate<br />

between fine <strong>wine</strong>s and cheap <strong>wine</strong>s, nor identify the flavors within them (Goldstein et al.,<br />

2008). If a $10, $100, and $1,000 bottle all roughly taste the same, what explains the<br />

difference in their price tags? Maybe it’s a sign of wealth to impress others with expensive<br />

things. Maybe it’s an occasion for which something pricey feels special. But the underlying<br />

truth is that it is about expectations. It turns out that people who spend more on something<br />

expect to enjoy it more (Berdik, 2012, p. 78). Is this expectation rational or justified? In a<br />

cheeky study, the French economist Frederic Brochet tested a brand of table <strong>wine</strong> on <strong>wine</strong><br />

experts. Cheeky in that it reflected a model of behaviour in which reactions depend on the<br />

way things are presented. Behavioural economists call this principle, ‘framing’ (Bendle and<br />

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Chen, 2014). Brochet served the same <strong>wine</strong> disguised in two different bottles, one cheap<br />

and one pricey. Experts praised the <strong>wine</strong> served from the pricey bottle as ‘excellent’,<br />

‘flavoursome’ and ‘balanced,’ whilst rejecting the <strong>wine</strong> served from the cheaper bottle as<br />

‘weak’, ‘flat’ and ‘unbalanced’ (Brochet, 2001). Beneath the framing lies a reason,<br />

expectations. Expectations are built into our brain’s tasting gear. People have thousands of<br />

taste buds, which are but blunt instruments. <strong>The</strong>se can tell if something is sweet, sour,<br />

bitter, salty or savoury. <strong>The</strong>ir main purpose is to know what’s edible, not distinguish flavours<br />

(Berdik, 2012). Besides tasting things, people can smell. Smell is the result of our constant<br />

sniffing of thousands of chemical compounds. What people smell is both the anticipation<br />

and fulfillment of a <strong>wine</strong>’s promise. It is easier to fool the nose than the mouth. <strong>The</strong> smell<br />

that people know of is the combination of many, many chemicals. <strong>The</strong>re are 213 known<br />

odor compounds in cheddar cheese and 466 in grapes according to Maarse (cited in<br />

Berdik, 2012). People’s reaction to these depend on odor concentration and context. In<br />

one study that tested the same smell, cued with the words ‘cheddar cheese’ or ‘body odor’,<br />

the former was found to be more pleasant. Even in the absence of odor, when prompted<br />

with the same words, people found ‘cheddar cheese’ better (Araujo et al., 2005). <strong>The</strong> truth<br />

is, people don’t need to overthink about the attributes of a <strong>wine</strong> to enjoy its flavour or check<br />

if it’s worthy of the price. So, why not disregard flavour specifics and look at taste<br />

preferences?<br />

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For the sake of justification<br />

Do people like what they like, or do they like only what they expect to like? How<br />

much of our preference is already decided even before the first sip? <strong>The</strong> behavioural<br />

economist Dan Ariely asked the question, ‘Do we dislike what we expect to dislike?’ Dan<br />

Ariely’s team tested beer with a dash of vinegar on college students. When the students<br />

were told about the vinegar before they drank the beer, 70% didn’t like it. When the<br />

students were told about the vinegar after they drank the beer, more than 50% liked it. <strong>The</strong><br />

test tells us that expectations not only change what we think we should enjoy, but<br />

significantly changes our experiences itself (Ariely et al., 2006; Berdik, 2012). Marketers<br />

spend billions on advertising to craft emotional appeals towards brands. But prices are just<br />

numbers. People assume that expensive stuff is better. Behavioural economists call this<br />

principle, ‘price­quality heuristic’ (Berdik, 2012). Berdik (2012) feels that people use price<br />

as a guide. That is, if something is expensive, then it is likely to be of higher quality than<br />

something that is cheaper. Hence, people tend to justify a pricey product. Basically, they<br />

follow the crowd, and end up paying for the premium like everybody else does. Quality<br />

expectations may be fairly accurate on products with available objective measures of<br />

quality. For experiential goods such as <strong>wine</strong>, the price­quality rule is less accurate (Berdik,<br />

2012).<br />

<strong>The</strong> unnatural<br />

Unlike many of our basic consumer biases, the belief that price signals value isn’t<br />

evolutionarily natural. <strong>The</strong> American economist Laurie Santos has done years on research<br />

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on this area by teaching monkeys to use money. Santos’ (2006) ‘monkeynomics’ research<br />

found that monkeys share most human consumer quirks . Like humans, monkeys fear<br />

potential losses more than they value potential gains of the same size. Behavioural<br />

economists call this principle, ‘loss­aversion’ (Bendle & Chen, 2013, p. 18). Like humans,<br />

monkeys value something more once they own it than they would before owning it.<br />

Behavioural economists call this principle, ‘endowment effect’ (Bendle & Chen, 2013, p. 4).<br />

<strong>The</strong> only thing monkeys don’t seem to share with us is the price­quality heuristic. Monkeys<br />

seem to understand what price means, but are not affected by price in the same way<br />

humans are. <strong>The</strong>y know more quantity would cost more. <strong>The</strong>y know to buy their favourite<br />

treats on sale. But, they don’t think one treat is inherently better just because it costs more<br />

(Santos et al., 2006). Which suggests that our overestimation on price may not be as<br />

deeply ingrained as other consumer biases. Meaning, our expectations on price can be<br />

easier to overcome. Or as Santos (2006) puts, ‘if we just have the right experiences and<br />

pay attention to our real preferences.’<br />

<strong>The</strong> flight from expectations<br />

So, people like what they expect to like, and their preferences can be fundamentally<br />

influenced by price and labels (Thornton, 2013). But, what really are our preferences? Have<br />

our real preferences been swayed by critics, society and others? Are preferences shaped<br />

by our own expectations the only preferences we have? Turns out, dividing real from<br />

shaped preferences is hard (Berdik, 2012). Research from the economics faculty of<br />

Stanford and Caltech found that pleasure from expectations is real. Subjects were told to<br />

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taste five different <strong>wine</strong> bottles, priced at $5, $10, $35, $35, $45 and $90 respectively.<br />

<strong>The</strong>re were however only three bottles, with the $5 bottle labelled as $45 and $90 bottle<br />

labelled as $10. <strong>The</strong> results, as noted by Plassmann et al (cited in Berdik, 2012), showed<br />

that the more expensive the <strong>wine</strong>, the more they liked it. In other words, increasing the price<br />

of the same <strong>wine</strong> significantly increases the pleasure one gets from it. <strong>The</strong>se results mean<br />

that our brains connect sensory properties with expectations on how it should be. Knowing<br />

something beforehand about the quality of an experience gives us valuable additional<br />

information (Berdik, 2012). But our brains can’t evaluate this value in detail. Because it<br />

requires time, effort and thought. Our brains tend to default to mental shortcuts. Behavioural<br />

economists call this principle, ‘cognitive bias’ (Moesgaard­Kjeldsen, 2014). It sets up<br />

expectations based on the pre­experience. However, if our expectations were well beyond<br />

our actual experience, there would be a clash. Behavioural economists call this principle,<br />

‘contrast effect’ (Berdik, 2012). Which means, an average <strong>wine</strong> will taste even worse if<br />

people expected it to taste really well, or paid a lot for it. <strong>The</strong> contrast effect works exactly<br />

the same in opposite too. So, perhaps the only way to find our true preferences is to avoid<br />

expectations.<br />

<strong>The</strong> truths<br />

Blind tasting has been a saving ground, especially when it comes to dealing with<br />

problems of expectations on price versus quality. Goldstein (2008) published a manifesto<br />

in <strong>The</strong> Wine Trials with three useful arguments. First, expectations, especially those based<br />

on price, rule our evaluation of <strong>wine</strong>. Goldstein (2008) writes, ‘By questioning <strong>wine</strong> prices,<br />

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you will become less of a slave to expectations and more of a student of your own palate.’<br />

Goldstein’s (2008) study revealed that everyday <strong>wine</strong> drinkers actually enjoyed expensive<br />

<strong>wine</strong> less. That is, people who are unaware of price do not get more enjoyment from<br />

expensive <strong>wine</strong>s. Second, experts and critics who guide our <strong>wine</strong> preferences are<br />

notoriously inconsistent, unreliable and untrustworthy. This is an issue, especially because<br />

peoples’ <strong>wine</strong> preferences are largely swayed by critics’ preferences. Critics rate <strong>wine</strong>s<br />

with scores on gold­standard magazines like Wine Spectator and Wine Advocate, seen<br />

as bibles of the industry. <strong>The</strong> American <strong>wine</strong> critic Robert Parker is undisputedly the<br />

world’s most influential person in <strong>wine</strong>, and has been since the last three decades. Parker<br />

also happens to be the editor­in­chief of its leading magazine, Wine Advocate. <strong>The</strong> Parker<br />

100­point score is the standard rating system for the <strong>wine</strong> market. So powerful is Parker<br />

that he wasn't exaggerating when he once said, ‘I can make or break a <strong>wine</strong>.’ In 2008,<br />

Goldstein went on to undercut the authority of such experts with a stunt that garnered<br />

international press. He put in the $250 application to Wine Spectator for a badge called<br />

the ‘Award of Excellence’. It is awarded to restaurants that have the best <strong>wine</strong> lists. He set<br />

up a fake restaurant, a website, a phone number with a Milan address. Its fake menu<br />

featured a list of the worst­rated <strong>wine</strong>s in the last two decades, reviewed by the very own<br />

Wine Spectator. Despite the size and obviousness of the error, his fake restaurant<br />

received an ‘Award of Excellence’. <strong>The</strong> only voicemail on his fake restaurant's phone<br />

number was left by Wine Spectator’s advertising department, to announce the news and<br />

enquire if they wanted to place an ad in their magazine. Critics are not only inconsistent<br />

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and unreliable, they are also untrustworthy, says Goldstein (2008). To call them fake<br />

wouldn't be an understatement.<br />

Speaking of taste<br />

So, how sensitive are our palates to the taste expectations of <strong>wine</strong> descriptions?<br />

Consider this description by Robert Parker:<br />

…is a real treat as this cuvee flirts with perfection. Already revealing some pink and amber at the edge, the<br />

color is surprisingly evolved for a <strong>wine</strong> from this vintage. However, that’s deceptive as the aromatics offer<br />

incredible aromas of dried flowers, beef blood, spice, figs, sweet black currants and kirsch, smoked game,<br />

lavender, and sweaty but attractive saddle leather­like notes. Full­bodied and massively endowed, with<br />

abundant silky tannins, it possesses the balance to age for 30+ years.’ (McFadden, 2014)<br />

When an item promises multiple benefits, it is less convincing than items that<br />

appear to do only one thing. Behavioural economists call this principle, ‘goal dilution’<br />

(Sutherland, 2009). If only <strong>wine</strong> critics and writers knew about it. What could everyday<br />

drinkers make of such flowery descriptions? If anything, they do one thing well: confuse. So<br />

they’re actually doing a good job, if confusing people is the real intention. But if the real<br />

intention is to help people match words with <strong>wine</strong>s, they’re far from helpful. <strong>The</strong> American<br />

economist Roman Weil ran tests to see if people could match words with <strong>wine</strong>. Weil (cited<br />

in Berdik, 2012) gave subjects three glasses of <strong>wine</strong>, two of which were the same; along<br />

with two descriptions written by the same critic. Simple as it may seem, only half of them<br />

matched it right. <strong>The</strong>y would have done just as well flipping a coin. Unlike the blunt signal of<br />

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price, flavour expectations of such flowery descriptions is nothing but a joke to the human<br />

capacity. Besides, nothing expresses approval like a Parker score of 90­plus or a gold<br />

medal, both of which correlate to higher prices. In other words, it would mean logical for the<br />

best­tasting <strong>wine</strong>s to pick up 90­plus scores and medals. But to Goldstein, that’s far from<br />

the truth. Wine Spectator makes $1 million in application fees for its ‘Award of Excellence’<br />

every year. And Goldstein’s own stunt made it quite clear: money talks. To take it a step<br />

further, Goldstein (cited in Berdik, 2012), along with economists Craig Riddell and Orley<br />

Ashenfelter, compared Wine Spectator­style ratings to ‘Zagat’ ratings, which is done much<br />

the same way, except that it is awarded to restaurants for the best food menu. Results<br />

showed that for each point awarded, the price of a meal rose up to 48% (Berdik, 2012).<br />

Things take time<br />

Goldstein’s (2008) price­signal study, which placed results onto a 100­point ratings<br />

scale, found that pricier <strong>wine</strong>s averaged 7 points lower among everyday drinkers and 4<br />

points higher among experts. Which means, when people are freed of expectations, their<br />

preferences would differ from that of the experts. So it seems perfectly reasonable to<br />

assume that critics’ tastes may well have been corrupted. If people could pick <strong>wine</strong>s purely<br />

on blind tasting, would they still prefer expensive <strong>wine</strong>s? Goldstein has helped launch a<br />

<strong>wine</strong> research institute in California’s Napa Valley. Whose aim is to, by bringing together<br />

behavioural economists and <strong>wine</strong> enthusiasts, explore the gap between subjective quality<br />

and price in the <strong>wine</strong> industry. It seeks to compare the effects and relationship of a <strong>wine</strong>’s<br />

region, price, bottle type, sensory characteristics and preferences across people, experts<br />

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and <strong>wine</strong>makers. Peoples’ tendency to default to others opinion explains the popularity of<br />

critic ratings and reviews despite economics research (Thornton, 2013), which is working<br />

to undercut the value of expert authority by revealing its blatant inconsistencies (Goldstein,<br />

2008). Goldstein (cited in Berdik, 2012) believes that recommendations need to be<br />

‘starting points’ not ‘ending points’ put to further testing. Trying to figure out our real <strong>wine</strong><br />

preferences does take time. But that doesn’t mean people should fall prey to the<br />

pseudo­preferences of critics. Which Goldstein (cited in Berdik, 2012) sums up tastefully,<br />

‘<strong>The</strong>re’s a huge amount of bullshit in the <strong>wine</strong> world.’ Which takes us to the third argument<br />

in his manifesto, blind tasting is the only way to find out our true preference (Goldstein,<br />

2008). Just not the type blind tasting experts seem to follow.<br />

Intuition versus data<br />

A Paso Robles <strong>wine</strong>ry once sent the same <strong>wine</strong> to a <strong>wine</strong> competition under three<br />

different labels. One was rejected as ‘undrinkable’, the other won a double gold medal<br />

(Sutherland, 2013). <strong>The</strong> State Fair competition in California is the world's biggest in <strong>wine</strong><br />

judging. Its judges taste <strong>wine</strong> blindly, free from expectations, fortunately, staying true to<br />

Goldstein’s manifesto. But since 2003, they fatefully agreed to test their consistency, and<br />

report findings in the Journal of Wine Economics. Now, there is overwhelming evidence to<br />

show that their long­term judgements based on blind preferences were inconsistent<br />

(Berdik, 2012). <strong>The</strong>y have repeatedly tried to update, redefine or find new ways to find<br />

consistency in their results. <strong>The</strong>y have tried many times, some half­way through<br />

competitions, to find that elusive consistency. No matter how hard or how many times they<br />

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tried, their inconsistent results didn’t seem to budge. <strong>The</strong>y still voted to retain and eliminate<br />

the same <strong>wine</strong>s. Berdik (2012) confirms that even the small minority of consistent tasters<br />

were often wildly inconsistent the next. Without expectations that are based on price, expert<br />

palates seem lost. To a point where the State Fair organisers were compelled to post a<br />

video interview titled, ‘Are Wine Competitions a Hoax?’ featuring its chief judge, G.M.<br />

Pucilowski. It’s clear that the <strong>wine</strong> market conducts itself on methodologies that are neither<br />

rigorous nor accurate (Goldstein, 2008). Two decades ago, the American economist Orley<br />

Ashenfelter offered the <strong>wine</strong> market a compelling tool using the power of simple statistics<br />

to outdo the world’s most accurate critics (Kahneman, 2011, p. 223). Ashenfelter came up<br />

with a formula that could predict the future prices of <strong>wine</strong> based on data, not human<br />

intuition. His formula was simple:<br />

∆ price =<br />

­12.15 + (β1 * Winter rainfall) + (β2 * Average summer temperature)<br />

+ (β3 * Harvest rainfall) + (β4 * Age of Vintage)<br />

It created an uproar in the <strong>wine</strong> market, with Robert Parker calling the economist ‘an<br />

absolute total sham’ (New, 2013). Perhaps Parker and his fraternity were concerned with<br />

the plight of the fancy world of <strong>wine</strong> ratings and its pricing should an economist’s formula<br />

beat a critic’s intuition. Unfortunately for them, Ashenfelter’s formula turned out to be<br />

extremely accurate (Kahneman, 2011, p. 224). Kahneman (2011) confirmed that the<br />

correlation between its prediction and actual prices was above .90. Ashenfelter’s formula<br />

found praise from the Nobel­prize winning psychologist Daniel Kahneman (cited in New,<br />

2013) who feels, ‘Whenever we can replace human judgement by a formula, we should at<br />

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least consider it.’ Algorithms are beating intuition in chess, jeopardy and diagnosis these<br />

days (New, 2013). But the <strong>wine</strong> market continues to be sceptical toward such innovation,<br />

sticking to its flawed methodologies and conventional tasting techniques.<br />

Following the herd<br />

It is debatable whether <strong>wine</strong> critics or competitions are giving out scores and<br />

medals with the intention of helping people deal with uncertainty or of quality. <strong>The</strong> viticulture<br />

researcher Maynard Amerine spent decades understanding <strong>wine</strong> quality, growing<br />

conditions, <strong>wine</strong>making techniques, colouring, flavour, storage and so on. <strong>The</strong> State Fair<br />

rating system was designed on Amerine’s work (Berdik, 2012, p. 95). Amerine (cited in<br />

Berdik, 2012) believes that judges’ personal preferences do not come into play whilst<br />

judging, or are consciously ignored. He sees <strong>wine</strong> judging as a legitimate profession with<br />

fixed, common and consistent standards. Both Amerine and Pucilowski agree that experts<br />

and people don’t look for the same thing when they taste <strong>wine</strong>. But both have contradicting<br />

views on the real value they bring to people. Pucilowski feels that the reason why people<br />

might pay attention to <strong>wine</strong> critics or competitions is to see if they agree with the word of<br />

the expert. In other words, to check if preferences match. Amerine thinks otherwise. He<br />

feels that the reason why people might pay attention to <strong>wine</strong> critics or competitions is not to<br />

match preferences, but to pick quality (Berdik, 2012). But why should people expect their<br />

own preferences to match with the preferences of anyone else, or of experts? Especially<br />

when experts themselves, with all their fancy experience, can’t seem to evaluate <strong>wine</strong><br />

16


quality consistently. So, how can people actually figure out what they really like or dislike?<br />

What is the type of blind tasting that Goldstein hopes would actually make sense to people.<br />

Being humble<br />

Many sceptics believe that blind tasting is nothing without <strong>wine</strong>’s context. <strong>The</strong><br />

context includes everything from the <strong>wine</strong>, the food, the company, the occasion to the<br />

setting. <strong>The</strong>y agree that some <strong>wine</strong>s may be better than others, but the satisfaction people<br />

get from them depends on the context, which is discounted with conventional blind tasting<br />

sessions. Even Amerine believes that sensory evaluation is the true measure of <strong>wine</strong><br />

(Berdik, 2012). It is the quality of the <strong>wine</strong> in the glass in the context that matters. Which<br />

matches with the aim of Goldstein’s manifesto: personal preference. As it does with the<br />

democratic views of the New York Times <strong>wine</strong> writer Eric Asimov, who feels that opinions<br />

of critics and blind tastings should not be revered with authority they don’t possess. Asimov<br />

(cited in Berdik, 2012) hopes for a consensus, when he said, ‘let’s stay humble with <strong>wine</strong>.’<br />

He wants a culture of being comfortably ambivalent rather than being sure of others,<br />

anyone, or ourselves for that matter. Goldstein’s take on being humbled is for people to<br />

challenge themselves. He wants people to find the abilities and limitations of their palate.<br />

Goldstein believes that this knowledge is enough to sift through nonsense confidently,<br />

instead of trusting experts. Enough to make for great armour along with our real<br />

preferences, which we know evidently from Santos’ (2006) ‘monkeynomics’ and Caltech’s<br />

(2008) contrast effect research, are independent of expectations.<br />

17


Putting on the sceptical hat<br />

Blind tasting may not take people to their true preferences. But finding true<br />

preferences can be a work­in­progress even if it’s never found. If any, it opens up people to<br />

knowing how much they don’t know about what they really like (Berdik, 2012). Likes and<br />

dislikes are part of our own selves. Expectations may offer suggestions to our preferences;<br />

some useful, some not so much. Just as the Greek philosopher Heraclitus believed, ‘<strong>The</strong><br />

only thing that is constant is change,’ our preferences, too, are anything but consistent.<br />

<strong>The</strong>y are constantly being changed, evolved, influenced, and by nature, can certainly do<br />

with some questioning and discovery. At the heart of questioning and discovery is trial and<br />

error (Sutherland, 2014). In <strong>The</strong> Black Swan, the Lebanese­American mathematician<br />

Nassim Taleb explains the human tendency of trial and error in finding simplistic<br />

explanations retrospectively. <strong>The</strong> trial and error approach has defined human progress,<br />

from steam engine to aspirin. <strong>The</strong> human act of discovery through trial and error is what<br />

Taleb (cited in Sutherland, 2014) calls ‘stochastic tinkering’. <strong>The</strong> notion that people make<br />

progress on their own without really understanding how it works. In the notoriously complex<br />

<strong>wine</strong> market, where even expert preferences are about as consistent as flipping coins, trial<br />

and error seems like a reasonable way for people to find better and more genuine<br />

preferences (Sample, 2011; Sutherland, 2014; Berdik, 2012). How is Taleb’s use of the<br />

phrase ‘teaching birds to fly’ so different from unreliable experts telling people ‘how to<br />

drink’ or ‘how or enjoy’ a glass of <strong>wine</strong>? By using purchase data on more than 77 million<br />

shopping trips over 7 years, the Dutch economist Bart Bronnenberg matched shoppers’<br />

actual choices to their knowledge and found an interesting correlation: the more informed<br />

18


people are the more likely they are to pick store brands (Bronnenberg et al., 2014). If we<br />

flipped it around a bit, it makes sense the other way too. That is, if people simply<br />

recognised the <strong>wine</strong> market’s absurd complexity as an illusion to stay fancy, disregard<br />

advertising appeals and fluffy citics, the unfair bias against cheap <strong>wine</strong>s would become<br />

redundant. While this isn’t the case for many other experiential goods, it certainly holds true<br />

to <strong>wine</strong>. Whether people find their true preferences or learn anything about <strong>wine</strong> at all, they<br />

can at least be happy by merely knowing that a $10 <strong>wine</strong> can give them a $100<br />

experience. Or as Goldstein and Asimov believe, will motivate people to strip experts of<br />

their undue reverence, stay humble about not knowing <strong>wine</strong>, and be bold enough to wear a<br />

sceptical hat when it comes to picking <strong>wine</strong>.<br />

­­<br />

19


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