The Price of Wine

Elroy Dimson

London Business School; University of Cambridge - Judge Business School

Peter L. Rousseau

Vanderbilt University - Department of Economics

Christophe Spaenjers

HEC Paris - Finance Department

December 11, 2014

Journal of Financial Economics (JFE), Forthcoming

Using historical price records for Bordeaux Premiers Crus, we examine the impact of aging on wine prices and the long-term investment performance of fine wine. In line with the predictions of an illustrative model, young maturing wines from high-quality vintages provide the highest financial returns. Past maturity, famous châteaus deliver growing non-pecuniary benefits to their owners. Using an arithmetic repeat-sales regression over 1900-2012, we estimate a real financial return to wine investment (net of storage costs) of 4.1%, which exceeds bonds, art, and stamps. Returns to wine and equities are positively correlated. Finally, we find evidence of in-sample return predictability.

Number of Pages in PDF File: 50

Keywords: wine prices; alternative investments; price indexes; psychic return; bubbles

JEL Classification: C43, D44, G11, G12, Q11, Z11

Accepted Paper Series

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Date posted: September 7, 2013 ; Last revised: December 12, 2014

Suggested Citation

Dimson, Elroy and Rousseau, Peter L. and Spaenjers, Christophe, The Price of Wine (December 11, 2014). Journal of Financial Economics (JFE), Forthcoming. Available at SSRN: http://ssrn.com/abstract=2321573 or http://dx.doi.org/10.2139/ssrn.2321573

Contact Information

Elroy Dimson
London Business School ( email )
Sussex Place
Regent's Park
London, NW1 4SA
United Kingdom
44 20 7000 7000 (Phone)
44 700 607 7390 (Fax)
HOME PAGE: http://www.london.edu/faculty/edimson
University of Cambridge - Judge Business School
Trumpington Street
Cambridge, CB2 1AG
United Kingdom
Peter L. Rousseau
Vanderbilt University - Department of Economics ( email )
Box 1819 Station B
Nashville, TN 37235
United States
615-343-2466 (Phone)
615-343-8495 (Fax)
HOME PAGE: http://www.vanderbilt.edu/econ/faculty/rousseau.html
Christophe Spaenjers (Contact Author)
HEC Paris (Groupe HEC) - Finance Department ( email )
1 rue de la Liberation
Jouy-en-Josas Cedex, 78351

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