Professor Karl Storchmann’s office, right off of NYC’s Washington Square, functions as a workspace, library of wine history and culture, and his own personal cellar. Decades of editions from his publication, the Journal of Wine Economics, are piled in neat stacks, alongside a few cases of his favorite wines. “It just all goes together,” he says.
Storchmann serves as a clinical professor of economics at New York University, but much of his current work is dedicated to statistical analysis of the wine industry. The title “wine economist” is a modern term coined in the last decade or so thanks to scholars like Storchmann, who realized the potential for the wine industry to be analyzed within this scope.
Storchmann began his studies focusing on the economics of transportation, fuel consumption, and climate change, publishing titles such as “How Fuel Price Increases Affect Public Transport” and “Automobile Externalities and Fare Free Transit — a Paradigm Shift?” His interest in wine began when he was teaching from 1993 to 1999 in Germany, where he owned a tiny, steep plot of land on the Mosel river that only produced 300 to 400 bottles each year — a side project that allowed Storchmann to meet wine professionals in the area, like winemaker Clemens Busch, and led him to begin thinking about wine from a statistical, empirical angle.
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Soon after, Storchmann came over to the United States and held postdoctoral positions at the economics departments at UCLA and Yale — later meeting Orley Ashenfelter, a preeminent labor economist in relation to viticulture. The two became part of a small group of 20 to 25 people who met once a year to exchange ideas about wine in the scope of economics. “There was definite potential to grow,” says Storchmann, “but there was just no journal.”
During his five years at Yale, it became clear to Storchmann that he wanted to stay in the U.S. and he accepted a position at Whitman College in Walla Walla, Wash., to be closer to the American wine industry and publish more in the field of wine economics, which at that time was not a distinct field. Ashenfelter and Storchmann, along with Kym Anderson of Adelaide, Robert Stavins of Harvard, and Victor Ginsburgh of Brussels, were eventually able to found the American Association of Wine Economists (AAWE) in 2006 and began publishing issues of the Journal of Wine Economics four times a year. The association also started a conference, where members and contributors to the journal can share their work, which is held in a different prominent winemaking region of the world each year. “We give academic talks, we have lunch, which includes wine, and go back to the talks,” says Storchmann. “We now have 1,000 members in our association— academics, wine industry members, policymakers, and wine writers.”
In 2011, the journal was picked up by Cambridge Press, a top academic publishing house that helped the journal become one of the top viticulture-focused publications in the world. “Through them, we are now in 8,800 schools worldwide,” Storchmann says.
VinePair chatted with Storchmann about his work as a wine economist, the trends wine lovers should be paying attention to, and more.
1. Why do you think that people tend to scoff at the term “wine economics?”
If you think back like 15 years ago, it was not a term and, and frankly, I don’t know if it is a term now. For us, it is a term and our meetings are global. I think it’s frowned upon because it’s a mixture of work and pleasure. But over time, looking at wine from a quantitative point of view has become respected and even somewhat “sexy.” Our annual conferences attract hundreds of participants from all over the world and include 150-200 presentations each year. But at this point, there are now people that do beer econ, there’s cannabis econ — I even just reviewed a book about the economics of chocolate. All these different fields are expanding and are assessing how we can use stats and numbers to quantitatively approach a field that in the past has been more subjective.
It was Orley Ashenfelter, the founding father of wine economics, who changed that, because he claimed that we don’t need scores like from Robert Parker, and that we can look at rainfall and temperature to explain the auction prices of top Bordeaux wines with an accuracy of about 90 percent. And of course, that threatens self-declared wine experts. Wine is one of these goods that are surrounded by many myths. This goes beyond wine’s usual association with the sun, romance, and candlelight. We publish the Journal of Wine Economics to shed some quantitative light on the wine industry and, as a result, remove some of the mystique.
2. What do you want people in the wine industry to take from this journal?
First of all, we want to convey that many wine-associated perceptions are just myths — based on little factual support. There is almost no question that cannot be tackled in a quantitative way. We want to insert some reason into the industry and its decision makers.
We also venture into adjacent fields such as viticulture, winemaking, history, psychology, and law. For instance, once one can explain wine yields or quality through weather data, the next step to wine and climate change is almost obvious. The link between climate change and plant growth is outside of economics; therefore, interdisciplinary collaboration may be very fruitful.
3. How do your students react when you say that your specialization is in wine economics?
In most cases, the first reaction is an amused smile. I think they all think it’s funny. I teach all kinds of classes: microeconomics, urban economics, industrial organization, and public finance. Although I do not teach an explicit wine economics class at NYU — I do in Bordeaux, though — I use numerous examples from the wine world in those more generalized classes.
4. What are some trends and problems in the industry that you think deserve more attention?
I think climate change is an important issue that is now getting its deserved attention. However, most studies draw on average temperatures and rainfall data, when the extreme may be more relevant. There is scope for more in-depth analyses.
In the U.S., alcoholic beverages are heavily regulated. I am astounded that there is almost no research on the U.S. three-tier system and its economic impact. Alcohol must go through three tiers: producer and importer, wholesaler and distributor, and retailer. Any shortcut is prohibited — in some states, even a felony. Likewise, the requirements for opening a wine store vary from state to state.
The role of wine experts and their assumed influence deserves more attention. After all, experts want to sell their information to consumers, and the consumers will pay for it. But expert opinion deserves some scrutiny. First, are experts really experts? Ten years ago, we published a groundbreaking paper, “An Examination of Judge Reliability at a Major U.S. Wine Competition” by Robert Hodgson. He analyzes how wine judges assess wine quality at a large wine fair in California. The fair lets judges taste large flights of 20-plus wines; unknowingly to the judges, each flight includes three identical wines poured from the same bottle. Did they get the same or even similar scores? No! Only 10 percent of judges rated all three wines within the same medal rank; 90 percent did not. The experiment was repeated over several years and each year it was 10 percent of judges that were deemed “good.” However, it was never the same people. The 10 percent of judges that were sufficiently good in 2005 did terribly in 2006 — suggesting there is a great deal of randomness to wine judging.
Next, how useful are wine descriptors? Roman Weil wrote “Debunking Critics’ Wine Words: Can Amateurs Distinguish the Smell of Asphalt from the Taste of Cherries?” The answer is no. When tasting blind, it seems impossible to match wine and words.
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