WHY IS EXPERT OPINION ON WINE VALUELESS?

This paper presents an improved hedonic price estimate for wine sold in the Australian retail market. In the model developed, concepts from viticulture and wine tasting theory have been drawn upon to ensure both estimation technique, and variable selection, are theoretically sound. Approaching the estimation question in this manner has provided important new insights into domestic wine pricing. The empirical results presented suggest: (i) objective characteristics and long-term quality ratings explain price; (ii) annual wine quality ratings do not influence price; and (iii) OLS, not 2SLS, is the most appropriate estimation technique. * I am greatley indebted to my supervisor, Professor Kenneth Clements, for the support, supervision, and constructive comments he has provided during the writing of this paper. 1