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Explaining Wine Scores Through Stochastic Frontier Analysis

Author

Listed:
  • Ferro Gustavo
  • Gatti Nicolás

Abstract

Experts give scores to wines, which are quality proxies for marketers and buyers. The production of wine quality is explained by a set of observable objective attributes, plus another set of unobservable and subjective (sensory) features, and randomness. We use a Stochastic Frontier Approach (SFA) to understand whether objective and subjective (sensory) characteristics of wines explain the differences in wine scores. We estimate a wine quality stochastic frontier production function, using a database of 1800 top-scored wines, in an 18 years-window encompassing objective determinants (price, production, year, grape, country, etcetera), being sensory aspects related to wine grading unobservable. We find that the variables included explain half of the “efficiency” in attaining scores and our results suggest that sensory variables may have a role in explaining inefficiency.

Suggested Citation

  • Ferro Gustavo & Gatti Nicolás, 2022. "Explaining Wine Scores Through Stochastic Frontier Analysis," Asociación Argentina de Economía Política: Working Papers 4621, Asociación Argentina de Economía Política.
    • Handle: RePEc:aep:anales:4621
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • D61 - Microeconomics - - Welfare Economics - - - Allocative Efficiency; Cost-Benefit Analysis
    • L66 - Industrial Organization - - Industry Studies: Manufacturing - - - Food; Beverages; Cosmetics; Tobacco

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