Can regression analysis predict the quality of a vintage?
Predicting the future value of wine is notoriously difficult due to the years required for maturation. This video explores how Princeton economist Orley Ashenfelter applied economic principles and regression analysis to forecast wine quality and identify undervalued bottles.
Orley Ashenfelter's research, detailed in his paper 'Predicting the Quality and Prices of Bordeaux Wines', demonstrates how quantitative methods can be applied to a traditionally subjective market. By using regression analysis, Ashenfelter sought to determine which wines would eventually achieve greatness, a process that is complicated by the long aging periods necessary for many varieties.
This approach does more than just forecast taste; it provides a framework for finding great deals by predicting price fluctuations. Ashenfelter's work has been foundational, helping to establish the entire field of wine economics.
Source: The Economics of Wine (Orley Ashenfelter, Princeton)
