Saturday, August 15, 2015

Wine: It's More Like Art Than Real Estate

I just returned from Sonoma--so I'm an expert on all things wine for the next month or so.

One could really get used to a life out there: beautiful weather, wonderful entertainment and dining options, friendly and interesting people. What was it that Kurt Vonnegat didn't actually say? "Live in Northern California once, but leave before it makes you soft. Travel."

As we all know, not all wine is created equal and price is NOT the way to tell the difference.

I was enjoying our first tour and tasting at Far Niente when it fermented in my mind how people tend to not understand how to think about wine. The wines at Far Niente are superb . . . in my opinion. Fortunately, I don't find them so superb that it spoils less expensive wine for me. I can appreciate both the difference and that it is a difference rather than a superiority.

Many people don't understand this. They want to think about it linearly: good to bad = expensive to cheap. But wine is not something so simply categorized. The evaluation is multidimensional. Comparing wine is not as simple as comparing soft drinks. Soft drinks are much more a commodity (both in supply as well as demand). There are taste preferences, but the taste dimension has much tighter bounds in soft drinks than with wine.

Doesn't price correlate with quality, you ask. Yes, but quality is in the eye of the beholder. People want wine to be like real estate where quality tends to be relatively linear in definition. Larger dominates smaller. Most people tend to agree most of the time on location preferences. Elaborate dominates simplistic. And so on. There is of course a lot of room for personal taste differences in real estate. It is just that these are muted relative to the linear factors.

Instead of real estate consider wine to be like art. Here there are vast differences in personal taste and these tend to be overwhelming. It is a lucky man who can get as much joy out of his child's painting as he can a Picasso. I look at wine the same way. Our very sophisticated yet down-to-earth guide at Far Niente is perhaps cursed with a high appreciation for fine wine.

Adapting the analogy to hit closer to home, consider the differences in football appreciation. For some only the NFL will do. For others watching the same college team when good and even when not so good is the top preference. Still for others even any small college game gets the job done. Is devotedly liking OU or Texas or Alabama superior to having the same devotion to Kansas or Tulane or Indiana? Of course not. Sitting in premium seats to watch OU beat Texas is consuming an altogether different product as compared to casually watching from home or listening on the radio while you work on your car. It is essentially a coincidence that these three things involve the same sporting event facts and outcome. My meal at Bouchon and your meal at McDonald's share only the coincidence that both involved digestion.

There is one other aspect to consider when it comes to the price of wine: namely, budget constraints matter. One factor that determines consumer responsiveness to price changes (the technical term is elasticity) is how much of a consumer's wealth the price represents. Pencils are a classic example as they are usually so cheap that a large increase in price does not cause a large decrease in the amount purchased (price inelastic). Wine is not an inelastic good for me. So to ask if a bottle that is 10x the price of another is 10x as satisfying is relevant to me. But it is not relevant for a billionaire. So understand that the price dynamics in part of the wine (and art and sports attendance) market is simply not relevant to many of us.

PS. Here are some pictures from my trip. Random thought: How less popular would wine be if it were produced in less amazing places?




















































Highly Linkable

Never eat a bad meal again says Todd Kliman. And don't miss this link in the article.

Scott Sumner on NYC's regressive property taxes and the residential building worth as much as many cities' entire residential markets.

Perhaps they should try rent control? Oh yeah, that is acutely harmful for the poor as well as Megan McArdle points out. In other news local area hospitals are considering blood letting as a cure for cancer.

Of course, public schools play a big role in distorting property values. The performance at NYC's private charter school Success Academy may bring some changes to that.

Think you understand Richter? Think again.

Monday, July 20, 2015

The Tourist's Perspective

Travel is fatal to prejudice, bigotry, and narrow-mindedness, and many of our people need it sorely on these accounts. Broad, wholesome, charitable views of men and things cannot be acquired by vegetating in one little corner of the earth all one’s lifetime.
--Mark Twain
Something I've been thinking about is how regular, routine life is a constant business trip for most of us. Yet it doesn't have to be. When we are truly on a leisure vacation, we can let go and detach. At least that is what we should be able to do.

Some are better at it than others. Some travel with a sense of obligation to see the things they are supposed to see and an expectation that the world owes them something. Those with this attitude tend to be miserable whether on the holiday road or not. For them the answer to 'how much does it cost?' is always 'how much do you got?'

Others take a healthier perspective viewing travel as a quest for fun. To unwind, explore, and grow--spiritually, mentally, physically. There is no reason to limit this quest and this mindset to the 10 days a year you sleep away from home. Sure the world can be hot and dangerous, but it is also amazingly rewarding.

I think taking on what I call the tourist's perspective opens up the world and frees one's mind. In that way anywhere we are becomes Disneyland for us. Chicago, for example, is a staged adventure set up for us, provided we don't live in Chicago or have significant ties to there. What I am suggesting is that we take that ethos and apply it to our constant travels through all of life. Chicago should be stunning to everyone including the most serious Chicagoan.

A good tourist is an observer who assumes the world is working fine without him; perhaps he can contribute and improve, but he treads lightly. When he sees something he doesn't understand, he first assumes it is correct and he is confused. He is a enthusiastic student and a reluctant teacher. The model is more like Anthony Bourdain rather than Christopher Columbus. Read this and understand that it is not just advice for how to see Europe--it is advice on how to see life.

In the tourist's mindset we don't take anything too seriously, we're more willing to compromise and roll with the punches, and we aren't possessive; of course, this may mean we don't take full ownership of our actions. Like anything, it can be taken too far. We cannot live life constantly under the credo 'What Happens In Vegas Stays In Vegas . . . and everywhere is Vegas'. But you have to have a credo, and something closer to the tourist's mindset should guide us at home and abroad. I say, go for it!

Sunday, July 19, 2015

Highly Linkable

Been travelling, so been behind. Some links to begin the catch up:

A podcast about when a teenage founder of a fictional company gets bought out for real money by the adults he "fired" for being too adult.

Expensive wine is for SUCKERS!

A wonderful example of how exploitable scientific study can be especially in the realm of health--study shows eating chocolate helps weight loss!

Speaking of food, a conversation with food historian (and contrarian) Rachel Laudan. One slice,
It´s to restore some sense of the benefits of modern food so that we do not waste time and energy trying to turn back the clock but can continue to improve our food system and disseminate those improvements as widely as possible.
Russ Roberts on recently being on Paul Krugman's bad side--I'm fully with Russ, of course.

Small but important steps on the road to education freedom.

Funny thing happened while we were wringing our hands over colony collapse disorder--the market (already) adapted to it minimizing the problem. (HT: Arnold Kling)

John Cochrane addresses one of the most fundamentally important questions in U.S. political economy--how to attain sustainable 4% annual economic growth. I fully (wistfully) endorse his short list of policy solutions.