The hedonic technique is applied to wines. In the price equation we include objective characteristics
appearing on the label, as well as sensory characteristics and a grade assigned by expert tasters.
We have three almost identically structured data sets (two on Bordeaux wines, and one on Burgundy
wines). The results are used to make comparisons between two of the most important wine
regions in France, and comparisons over time (the two Bordeaux data sets are sampled at different
points in time). (JEL Classification: D49.)
Another puzzle is the lack of correlation between price and pleasure. Perhaps it is not so surprising
that a first-rate example of a little known wine can seem much more memorable than something
more famous selling at ten times the price; part of the thrill is the excitement of discovery and
the feeling of having beaten the system. What is more extraordinary is the wild price variation at
the very top end. Demand bubbles up mysteriously, apparently fuelled by fashion and rumour as
much as by intrinsic quality.—Jancis Robinson, Confessions of a Wine Lover, Penguin Books,
1997.
I. Introduction
There