Wine as an Experience Good: Price Versus Enjoyment in Blind Tastings of Expensive and Inexpensive Wines

Abstract

AbstractEconomic theorists maintain that wine is an experience good, a product whose quality can be evaluated only after purchase and consumption. Theory holds that consumers often rely on the price of experience goods as one cue to judge their quality. In this paper, however, I provide evidence that an important segment of wine consumers do not consider price a useful cue to quality. Specifically, I test the robustness of Goldstein et al.,'s (2008) finding that, in blind tastings, average wine drinkers consider less expensive wines to taste better than more expensive wines. Four blind tastings of 2006 red Bordeaux and 2009 white Burgundy with a price range of $20–$119 were conducted, in which members of a wine club rated their extent of enjoyment of each wine. In three of the tastings, there was no relationship between price and enjoyment, while in the other the relationship was negative, lending additional credibility to the contention that an important segment of wine consumers do not find enjoyment to increase with price. (JEL Classification: C91)