Podcast: Play in new window | Download
Who and what affects the price of wine? (Photo by Jeff Pachoud/AFP/Getty Images)
This week on Freakonomics Radio’s Marketplace segment, we ask a simple question about a simple product: wine. It’s the quintessential holiday party gift, but which one should you buy?
One would assume that wine, like most other products, follows basic price theory: you get what you pay for. But according to a growing body of wine economists, this is rarely true. Instead, wine prices are based on the expert opinions of a selected few. Host Stephen Dubner investigates whether the experts really know their wine, and to what degree their opinions affect your wallet and palate.
Marketplace Segment
In Vino Veritas, Sort Of
And what kind of wine will Kai Ryssdal buy for the Marketplace holiday party that he’s hosting this year? Will he listen to a wine expert like Robert Parker, or stoop to following the advice of an economist like Steve Levitt?
and 
. You can also watch it on 
For almost a decade goodcheapwine.info has been trying to bring you the exact truth discovered here. Congratulations and Happy Solstice.
I got a sense from the tone of the podcast that you were almost being wilfully provocative but nevertheless I do feel I need to put you straight. Throughout the podcast you keep repeating the same mistake of assuming there is just one scale for judging wine. On one hand you judged a wine on whether people liked it and then compared it the cost and made a conclusion as if they were relative – these are two completely different scales! This was one of the first things I was taught when I did a very basic “introduction to wine tasting” course and it is disappointing that the wine experts involved your research didn’t explain this to you.
In fact there are three scales for judging wine:-
1. Like versus dislike – in other words a subjective measure based on personal taste.
2. Good versus bad – an objective measure based on a technical knowledge of wine.
3. Cheap versus expensive – a market driven measure based on fashion and scarcity.
It is probably easier to think of these as the three axis on a three dimensional graph if that helps.
If you think this sounds complicated or far fetched they are exactly the same sort of measures people use all the time when judging music. I like classical music but I don’t like Mozart. I can, however, still appreciate that Mozart was a master of his craft. He just doesn’t appeal to my personal taste. Similarly I like the Rolling Stones and spend a lot of money getting hold of rare original recordings even though there are now much cheaper and better recorded digitally re-mastered versions available. The same behaviours also apply to appreciating wine.
The other point I didn’t like about the podcast was that you seemed to be advocating wilful ignorance. That a acquiring a knowledge of wines was a waste of time because (according to your logic) the most expensive wines do not taste the best – whereas the reality is that the reason the majority of people develop an appreciation of wine IS SO YOU DON’T HAVE TO DRINK EXPENSIVE WINES! In other words by developing a good understanding of what sorts of wine you like and a good knowledge of where good wines can be found you can then avoid buying over priced or over rated alternatives. For example (and here is a tip for you) if you like really robust, full bodied red wines you will be tempted by Australian Shiraz or French Cabernet Suavignon. Don’t. True, both can be very good but both are also fashionable choices and therefore overpriced. Instead try an Argentinian Malbec. Some Argentinians vineyards produce very good quality wine and the malbec grape makes for a fully bodied red. Both country and grape are, however, unfashionable so a bottle can be purchased very cheaply. It is this knowledge that makes studying wine but worthwhile and economic sense.