Is Wine an Experience Good?

In economics, an experience good is a product that can only be evaluated after experiencing it.

The other two categories are a search good, where an item is fully evaluated prior to purchase (think clothing), and credence claims which are difficult to impossible to evaluate or measure accurately even after consumption or purchase (think legal advice and education).

Economic wonks would place wine in the experience good category, with the idea that only after consumption evaluation can occur. This ties into blind tasting and some pretty clear studies that show that more expensive wines don’t outperform less expensive wines for many consumers. In fact, some studies show a negative return on price, with the less expensive wines outperforming more expensive wines in double-blind trials.

There are two problems with this.

  1. We don’t purchase and drink wine blind. There is always a known cost involved and often a label, place, grape variety, or more information to set expectations for the consumer.
  2. A multiplier of satisfaction occurs with story, connection, knowledge, and background. If you’ve been to a winery, their wine will taste better. If you know more about the struggles of Miles Davis in the early part of his career, suddenly Kind of Blue sounds better. If you know your pork chop came from happy and well cared for pigs, it suddenly tastes better.

We don’t experience the world blindly. We don’t buy plain wrapped wine bottles and only later find out what they were and what they cost.

So in many ways I see why wine is considered an experience good, but I also see characteristics of it as a search good and a credence claim.

A wine from a proven winery and a proven vineyard on a great vintage (think Burgundy or Barolo) has been evaluted prior to purchase even if you have not experienced that vintage of that wine. The track record is clear. It’s therefore, at least a bit and in a way, a search good.

A wine from an unknown (to you) winery made in a style that you have never quite experienced (think natural wines or Pet Nat) is nearly impossible to evaluate even after purchase unless you have lots of experience with other wines of the same style. It’s therefor, at least a bit and in a way, a credence claim.

In other words, once again, wine is something special. It means different things to different people at all times, based on individual history, hopes, expectations, and narratives. It’s more like music than anything else.

More info: Wikipedia Classification of SEC Services

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