Wine and Economics

Wine and Economics

Transacting the Elixir of Life

Denton Marks

What is distinctive about the economics of wine? Wine’s health benefits stir debate, but many appreciate life-enhancing qualities from its production and enjoyment. Few products enjoy such wide distribution, rich history, and interest. This book emphasizes microeconomic principles and related research – drawing upon various fields from international trade to public choice, relating economic reasoning to management. Topics range from economic fundamentals to the challenge of knowing what is in the bottle and the importance of wine as a cultural good.

Chapter 8: Wine as a cultural good

Denton Marks

Subjects: development studies, agricultural economics, economics and finance, agricultural economics, environmental economics, international economics, public choice theory, environment, agricultural economics, environmental economics, water

Extract

For many, wine is simply a commodity or an agricultural product whose market does not differ in any significant way from other beverages except for its legal treatment as alcohol. However, those who appreciate wine for something more know that the experiences of drinking it can be significantly different from other beverages. Moreover, the primary distinction is not the presence or absence of alcohol’s narcotic effect. Wine appreciation has many dimensions—from history, art, and culture to science and management. The market for wine can touch a number of other markets such as tourism and education. For example, Aylward (2008) has argued that wine is essentially a “cultural good” that embodies more than the sensory characteristics of other consumables. A recent development in economic thinking is the appreciation of “cultural goods” and the distinction between economic value and “cultural value”. Up to now in this book, our focus has been economic value that is a foundation of microeconomics—the market-determined value of something as reflected in someone’s willingness to pay (WTP) for it. In light of this familiar concept, what can we mean by a distinct cultural value? Why does the distinction matter, especially in our valuation of goods? Why does the standard economic model not allow for proper valuation of cultural goods? In this chapter, we examine the idea of cultural goods, the challenges they present for market transactions, and the application to wine.

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