Archive for the ‘Behavioral economics’ Category
Friday, August 27th, 2010
My talk at the International Food Blogger Conference in Seattle, “Recent Advances in Bullshit Reduction,” along with my panel session and discussion/debate with Robert Schroeder of the Federal Trade Commission and Foodista.com CEO Barnaby Dorfman about the new FTC guide to the disclosure of freebies and financial relationships in blog reviews, will be broadcast live on UStream at 3pm Pacific time. was scheduled for streaming video, but the video had technical problems and dropped out in the middle of my panel session, so for those who are interested, I’ve posted the PowerPoint presentation (with images downsampled) here. If you’re interested, you can also check out the original Osteria L’Intrepido post, my followup to Wine Spectator’s response, and a few other related entries on my blog.
Posted in Behavioral economics, Cognitive taste, Fearless Critic, Law, Regulation, Wine | No Comments »
Wednesday, July 7th, 2010
Britain’s Sun recently reported that supermarket giant Tesco sold two bottles of counterfeit Louis Jadot Pouilly-Fuissé, distributed by Hatch Mansfield, to a customer named Danny McGowan of Clacton, Essex, who described the fake bottle as having a label that “looked photocopied.” Apparently, the bottle was on sale for £5, down from a usual £14.49. (As of this writing, the Pouilly-Fuissé was on the price list at the Tesco website for £12.99.)
The Sun article, which was sent my way by the illustrious wine-counterfeiting scholar/economist Günter Schamel (whose work I’ve previously discussed here), has the amusing title “You Plonkers” and an equally amusing photo of a nonplussed McGowan.
The most unusual thing about this story is that while has been much discussion of counterfeit wine in the high-end rare and fine wine market—Jefferson bottles and first-growth Bordeaux and such—there hasn’t been nearly as much talk about counterfeiting in the low-to-midrange wine market.
In that market, the trick might be a lot easier to get away with, for at least three reasons: first of all, (more…)
Tags:counterfeit, fake wine, hatch mansfield, law and economics, libel, liebfraumilch, louis jadot, pouilly-fuisse, tesco, Wine, wine law
Posted in Behavioral economics, Cognitive taste, Fearless Critic, Law, Regulation, The Wine Trials, Wine | No Comments »
Friday, June 18th, 2010
As of this writing, of the 343 comments to have been approved by the moderators on FIFA.com’s “Have Your Say” discussion board about today’s controversial US-Slovenia 2-2 draw in World Cup competition, not one of them contains even a passing mention of the main topic of discussion of every article that has been written about the game: the fact that referee Koman Coulibaly disallowed the third US goal for reasons that weren’t (and still aren’t) clear to players, fans, or television announcers.
Other soccer discussion boards, like the Washington Post’s Soccer Insider, were flooded with debate and discussion about the questionable call, which began almost immediately after it happened at about 16:40 GMT (the time zone used by FIFA.com). So were Twitter feeds (although at some point Twitter crashed, as it frequently has during the World Cup). The discussion over the controversy really exploded around the internet after the game ended at 16:51, and before long, USA’s tie with Slovenia already had more Google News blog hits (850) than Serbia’s upset of Germany (701).
But on FIFA.com, the silence about USA-Slovenia has been deafening. The latest comment to appear on the discussion board has a timestamp of 20:04. In the 193-minute span between the game’s end and the latest comment’s time stamp, only 24 squeaky-clean comments have been approved. For instance: “great fightback by the USA”; “this is the right result on the balance of play”; “way to go USA”; “the match was really exciting!”; “slovenia is the best team”; “USA are becoming a real nice team!”; and “Slovenia had a great chance to qualify in the next round!! But in the second half we were too defensive.”
By comparison, in that same span of time—193 minutes—after the end of Germany-Serbia (which ended today at 14:20), there were already 175 comments posted. That’s more than seven times as many.
At one point, a user named Rossus, from South Africa, posted one comment that did, in the most polite possible way, at least hint at the idea that there might have been some controversy. Rather than suggesting any human fault, Rossus’s comment merely used the word “luck”: “I am not a USA supporter but the USA was very unlucky not to win.” But even that comment, after briefly appearing on the match overview page (which streams the latest comments), was later censored, and never made it to the discussion board page itself. The comment is no longer on the site, but I took a screen shot of it during the brief time that it appeared on the overview page, which appears here to the left.
Just to test my theory personally, I also tried posting the following comment: (more…)
Tags:censorship, fifa, fifa.com, goal nullified, koman coulibaly, online discussion, soccer, us vs slovenia, World Cup
Posted in Behavioral economics, Politics, Regulation, World Cup | 14 Comments »
Monday, April 12th, 2010
Here’s a sneak preview of The Beer Trials, which I co-authored with Seamus Campbell. The preview (in PDF format) includes a press release, the preface, our list of beer ratings, and a few reviews from the book.
The book, due out on April 15 from Fearless Critic Media (distributed by Workman Publishing), rates and reviews 250 of the world’s most prominent beers (craft brews, macro-lagers, and everything in between), based on blind tastings by a panel of brewers and experts in the beer mecca of Portland, Oregon—Seamus’ hometown. We also include a broad and (hopefully) accessible reference guide to the world’s major beer styles, flavors, and regions.
The collaboration was, I must admit, a bit lopsided: Seamus (who is a brewer and one of the world’s 96 Certified Cicerones) did the lion’s share of the work. I contributed the “Trials” concept (building on the ideas set forth in The Wine Trials) and co-wrote the first few chapters, which discuss the effects of behavioral marketing, perceptual bias, and the placebo effect on the beer industry.
In Portland, Seamus and I also conducted a beer experiment together in which we tested people’s ability (or, um, lack thereof) to discriminate (more…)
Tags:beer placebo effect, beer ratings, beer reviews, beer tasting, blind tasting, Fearless Critic, seamus campbell, The Beer Trials, workman
Posted in Beer, Behavioral economics, Cognitive taste, Fearless Critic, The Beer Trials, The Wine Trials | 1 Comment »
Saturday, February 13th, 2010
In wake of some of the latest chatter about The Wine Trials 2010 (this one from Joe Briand, wine buyer for New Orleans’ excellent Link Restaurant Group, e.g. Cochon, Herbsaint, with a response from Wine Spectator executive editor Thomas Matthews), I thought it was time for a quick clarification of first principles here.
People have sometimes (often, maybe) misinterpreted The Wine Trials (and The Wine Trials 2010) as making the claim that no expensive wines are worth the money, or that cheap wine is generally “better” than expensive wine. In fact, I make neither one of those claims in the book.
Rather, my basic points are these:
(1) Evidence has shown that most everyday wine drinkers (not wine professionals) don’t prefer more expensive wines to cheaper wines in blind tastings. This is separate from the question of whether the properties of expensive wines are aesthetically superior in the minds of experts.
(2) Many (but certainly not all) expensive wines, such as the luxury brands from LVMH—which are advertised much like the group’s TAG Heuer watches, De Beers diamonds, Guerlain perfume, or Louis Vuitton handbags—are overpriced because such a large portion of their cost base is spent on marketing. This doesn’t just go for superpremium wines like LVMH’s Château d’Yquem, Krug, and Dom Pérignon; it also goes for brands like Cloudy Bay, a straightforward New Zealand Sauvignon Blanc whose price—without any apparent change in the production method—rose from about $15 per bottle to about $30 per bottle after LVMH acquired the brand in 2003 and began marketing Cloudy Bay as a luxury product. To me, when the consumer dollar is going more toward advertising than toward materials or production, it’s a paradigm case of overpricing. It bothers me that the mainstream wine media doesn’t take brands to task for this. (more…)
Tags:burgundy, dom perignon, krug, LVMH, opus one, petrus, trockenbeerenauslese, wine pricing, wine spectator, Wine Trials
Posted in Behavioral economics, Cognitive taste, Fearless Critic, The Wine Trials, Wine, Wine Spectator exposé | 4 Comments »
Thursday, December 10th, 2009
The lead paper in the new issue of the Journal of Wine Economics is a study by Jonathan Reuter arguing that Wine Spectator wine ratings for advertisers were about one point higher than ratings for non-advertisers, when controlled against ratings from Wine Advocate. This is in spite of the magazine’s stated policy of tasting wines completely blind.
This from the abstract:
“In markets for experience goods, publications exist to help consumers decide which products to purchase. However, in most cases these publications accept advertising from the very firms whose products they review, raising the possibility that they bias product reviews to favor advertisers…Although the average Wine Spectator ratings earned by advertisers and non-advertisers are similar, I find that advertisers earn just less than one point higher Wine Spectator ratings than non-advertisers when I use Wine Advocate ratings to adjust for differences in quality.”
These are wine ratings, not the restaurant Awards of Excellence, which I’ve written about in the past (more…)
Tags:advertising, bias, corruption, jonathan reuter, journal of wine economics, wine ratings, wine spectator
Posted in Behavioral economics, Cognitive taste, Wine, Wine Spectator exposé | 11 Comments »
Friday, August 14th, 2009
Portland, Oregon, the current darling of America’s food and environmental writers, is arguably the county’s most bicycle-obsessed city. Bike use was up 28% in Portland between 2007 and 2008, and on the Hawthorne Bridge, a main thoroughfare, bikes now make up 20% of all vehicles. The New York Times estimated in 2007 that there were 125 bike-related businesses in Portland employing 600 to 800 people. There’s even a store in the city that sells only tricycles.
When I arrived in Portland last month, the first thing I wanted to do was buy a bike and get around the way the locals do. Since I wouldn’t be in town for too long, and it wasn’t clear that I’d be able to take the bike with me when I left, I wanted something extremely cheap.
There were bike shops on every other corner in Southeast Portland, the sort of Brooklyn-ish neighborhood where I was staying. I walked into what looked like the grungiest of them—a store that sold mostly used bikes. There was one employee, and he was heavily tattooed and seemed pretty cool. I completely leveled with him (more…)
Tags:arbitrage, bicycles, Burning Man, Costco, craigslist, inflation, portland
Posted in Behavioral economics, Cognitive taste, Travel | 16 Comments »
Thursday, July 2nd, 2009
We may disagree about our favorite artists and musicians, but it’s relatively easy to agree that a particular color is blue, or that a particular note is C-sharp. They’re described by wavelengths and frequencies along a clearly defined spectrum. That’s why the technologies of visual and auditory reproduction—photo, video, audio—work so well, relatively speaking.

Worth a thousand words?
With taste and smell—the so-called “chemical” senses, which are more complex (humans have about 400 different types of olfactory receptors) and less well understood than the others, we don’t have the luxury of those points of reference. That’s why we so often resort to loose analogies—“tastes like chicken”—and it’s also why reproducing tastes and smells is so difficult (grape soda doesn’t taste much like grapes, and nobody’s yet synthesized a bottle of 1945 Pétrus—an activity that would surely yield tremendous profit).
To challenge this barrier, we resort to analogy. Coffee tastes like nuts and chocolate; Sauvignon Blanc smells like grapefruit and cat pee. In a Sauternes, you might sense the brine of the first green olive you tasted in Italy; in a Pedro Ximénez sherry, the viscous maple syrup that your grandmother once drizzled on your pancakes.
But how carefully are we really choosing these adjectives and analogies? (more…)
Tags:adjectives, american association of wine economists, bullshit, carlos ramirez, coco krumme, Food, pedro ximenez, richard quandt, smell, taste, Wine
Posted in Behavioral economics, Cognitive taste, Fearless Critic, Food, The Wine Trials, Wine | 9 Comments »
Thursday, June 25th, 2009
One of the most thought-provoking papers at this year’s meeting of the American Association of Wine Economics was presented by Günter Schamel, a professor at the Free University of Bolzano.

Not empty for long?
Schamel’s study, which is still in progress, has thus far looked at a data set of 260 eBay auctions of empty wine bottles. In his model, the most powerful predictive variable—explaining both the incidence of sale and the final auction price of an empty bottle—is “the price a full and presumably authentic bottle could potentially fetch in the marketplace.”
Schamel argues that this is “powerful evidence that the empty bottles might go on to be refilled. Why otherwise would someone want to pay more than 100 euros for an empty bottle of 1982 Chateau Lafite-Rothschild rated with 100 Parker points? Presumably, because it is worth a lot more once it is filled up again.”
Certainly, notwithstanding a recent incident in which a customer at a London restaurant sent back a £18,000 magnum (more…)
Tags:counterfeit wine, ebay, gunter schamel
Posted in Behavioral economics, Cognitive taste, Fearless Critic, The Wine Trials, Wine | 8 Comments »
Wednesday, June 17th, 2009
Sweden has one of the world’s most controlled alcohol regimes, with steep taxation, a state-controlled retail monopoly, and a 20-year-old minimum age to buy alcohol at a store (and they really card, too). The only store at which a consumer can buy wine, beer, or liquor in Sweden is Systembolaget, the state-controlled retail monopoly.
Is this a good thing or a bad thing? My intuition (and that of the economists I’ve been speaking with here in Stockholm) is the latter—first and foremost, as in Quebec, it’s a major headache for wine producers, whose distribution chances hang on the (often arbitrary) whims of just one decisionmaker. Opening hours of stores are criminally short. Pricing is screwy, in part because per-unit (rather than per-krona) taxation results in cheap wine being overpriced and expensive wine underpriced. As ever, monopolies throw everybody’s incentives out of whack.



But here’s one definite consumer-oriented boon that results: in an of-the-people move, Systembolaget wine stores—that is, all wine stores in Sweden—are organized first by color, second by price. There’s the 69-kronor-(US$8.71)-and-under red wine section; there’s the 70-kronor-(US$8.84)-to-99-kronor (US$12.50) red wine section; and then there’s the 100-kronor (US$12.63)-and-up red wine section.
Although I’ve seen US wine stores with special $10-and-under sections and such, I’ve never seen an entire store organized this way. Intuitively, at least, it seems to be more aligned with consumers’ game plans as organization by region, grape, and so forth.
Why don’t non-monopoly stores organize this way?
My guess would be that profit-minded stores, for understandable reasons, don’t want to lose the chance to upsell—they want people to walk away with a wine more expensive than the one they came looking for.
Tags:monopoly, pricing, Sweden, Systembolaget, Wine
Posted in Behavioral economics, Cognitive taste, Fearless Critic, Regulation, Wine | 10 Comments »