I have a feeling that this holiday season there will be even more drinking than usual, as people self-medicate with booze. Worried about your 401(k)? Have some egg nog. The good news is that there’s a new studyshowing, once again, that expensive wine doesn’t necessarily taste better, at least for people who aren’t wine experts.
Individuals who are unaware of the price do not derive more enjoyment from more expensive wine. In a sample of more than 6,000 blind tastings, we find that the correlation between price and overall rating is small and negative, suggesting that individuals on average enjoy more expensive wines slightly less. For individuals with wine training, however, we find indications of a positive relationship between price and enjoyment. Our results are robust to the inclusion of individual fixed effects, and are not driven by outliers: when omitting the top and bottom deciles of the price distribution, our qualitative results are strengthened, and the statistical significance is improved further. Our results indicate that both the prices of wines and wine recommendations by experts may be poor guides for non-expert wine consumers.
Researchers at Cal-Tech and Stanford recently lifted the veil on this strange process. Their experiment was organized like a wine tasting. Twenty people sampled five Cabernet Sauvignons that were distinguished solely by their retail price, with bottles ranging from $5 to $90. Although the people were told that all five wines were different, the scientists weren’t telling the truth: there were only three different wines. This meant that the same wines would often reappear, but with different price labels. For example, the first wine offered during the tasting – it was a cheap bottle of Californian Cabernet – was labeled both as a $5 wine (it’s actual retail price) and as a $45 dollar wine, a 900 percent markup. All of the red wines were sipped inside an fMRI machine.
Not surprisingly, the subjects consistently reported that the more expensive wines tasted better. They preferred the $90 bottle to the $10 bottle, and thought the $45 Cabernet was far superior to the $5 plonk. By conducting the wine tasting inside an fMRI machine – the drinks were sipped via a network of plastic tubes – the scientists could see how the brains of the subjects responded to the different wines. While a variety of brain regions were activated during the experiment, only one brain region seemed to respond to the price of the wine, rather than the wine itself: the orbitofrontal cortex. In general, more expensive wines made this part of the prefrontal cortex more excited. The scientists argue that the activity of this brain region shifted the preferences of the wine tasters, so that the $90 Cabernet seemed to taste better than the $35 Cabernet, even though they were actually the same wine.
Of course, the wine preferences of the subjects were clearly nonsensical. Instead of acting like rational agents – getting the most utility for the lowest possible price – they were choosing to spend more money for an identical product. When the scientists repeated the experiment with members of the Stanford University wine club, they got the same results. In a blind tasting, these “semi-experts” were also misled by the made-up price tage. “We don’t realize how powerful our expectations are,” says Antonio Rangel, a neuroeconomist at Cal-Tech who led the study. “They can really modulate every aspect of our experience. And if our expectations are based on false assumptions” – like the assumption that more expensive wine always taste better – “they can be very misleading.”
After Rangel and his colleagues finished their brain imaging experiment, they asked the subjects to taste the five different wines again, only this time the scientists didn’t provide any price information. Although the subjects had just listed the $90 wine as the most pleasant, they now completely reversed their preferences. When the tasting was truly blind, when the subjects were no longer biased by their prefrontal cortex, the cheapest wine got the highest ratings. It wasn’t fancy, but it tasted the best.