Pour Better Decisions: How Wine Tasting and Investing Benefit from Behavioural Science

For over six years, I’ve had the pleasure of co-leading Pour Better Decisions with Master of Wine JOHN DOWNES . The event, which blends my academic discipline with the delightful medium of wine, has been delivered to audiences all over the world. As someone whose career has revolved around helping people to make better decisions, managing to secure Continuing Professional Development (CPD) accreditation for, erm ... drinking ... is a crowning life achievement.

At its core, Pour Better Decisions combines live psychology experiments and wine tasting to reveal the many ways in which we’re all hopelessly biased, even in the face of something as seemingly straightforward as choosing between a Sauvignon Blanc and a Chardonnay. The event’s purpose is to expose how easily our preferences are distorted by context, all while demonstrating tools—‘decision prosthetics’—to help people make more consistent, informed decisions in business and life.

Participants respond to simple questions about the wines they taste, submitting their answers through their phones. The results appear live on a big screen for all to see (anonymously, so no public humiliation here). The initial tasting of three white wines reveals just how unformed and inconsistent our preferences are—contextual trickery is everywhere! But don’t worry, we quickly provide the antidote: a structured framework for better decision-making. After equipping participants with this toolkit, we serve up three red wines and watch the magic of less biased thinking take hold.

Decision Prosthetics for Wine

To guide participants through the tasting process, John uses a wine-tasting framework that embodies what I refer to as Decision Prosthetics. This structured approach helps ensure that your taste buds, like your financial decisions, aren’t being led astray by rogue emotions or a flash label. Here’s the breakdown:

1.???? Appearance: The wine’s colour hints at grape variety and climate. Deeper colours can indicate warmer climates, while lighter shades may suggest cooler ones. Think of it as the first impression—like an investor scanning the market for early signals.

2.???? Nose: The aroma offers clues about the grape and climate. Fuller scents can signal warmer regions, while leaner aromas may point to cooler areas. It’s like digging into data after an initial scan—looking for deeper insights.

3.???? Alcohol: Using the "Cheek Test," high alcohol content pushes the inside of your cheeks outward, often indicating a warmer climate. This adds an objective layer to what could otherwise be subjective—similar to using metrics to guide investment decisions.

4.???? Acidity: The "Dribble Test" is always a hit. Take a sip, swallow, tip your head forward, and notice how much you dribble. High acidity leads to more saliva, which can signal a cooler climate. It’s the only time drooling feels like a strategic decision-making process.

5.???? Flavour: Fuller flavours can indicate warmer climates, while leaner ones can suggest cooler areas. At this stage, you're synthesising all the information, much like weighing different factors in an investment.

6.???? Tannin: For reds, tannins provide structure. The "Tannin Test" involves tasting and pushing your tongue along the roof of your mouth—higher tannins make your tongue ‘stick’—a physical sensation that helps you evaluate the wine objectively.

7.???? Assessing Quality: Finally, quality is assessed through:

• Intensity: Depth of aromas and flavours.
• Balance: Harmony between fruit, acid, tannins, and alcohol.
• Length of Finish: The "Counting Test" measures how long the flavour lasts. A short finish dies at 1 or 2, while top quality wines just keep going. The longer the finish, the better the quality.

This checklist brings everything together, just as investors pull together metrics to assess an opportunity’s real value.

Parallels to Investing

The structured, sequential approach to wine tasting—where each attribute is evaluated one by one—offers striking parallels to decision-making in the world of finance and investing. Just as John breaks down the elements of a wine, an investor must break down the components of a decision.

1. Decomposing Decisions: John’s wine tasting framework assesses appearance, nose, acidity, alcohol, flavour, and tannins in isolation. In investing, you do the same by evaluating risk, return, market trends, and other factors independently before making a final judgment.
2. Consistency of Application: The framework ensures that you use the same process for each wine, much like disciplined investors apply a consistent set of criteria when evaluating opportunities.
3. Objective Tests: The "Dribble Test" and "Cheek Test" bring objectivity to wine tasting, just as financial ratios and performance metrics provide objective anchors in investment decisions. These checks help cut through biases and gut instincts that can lead us astray.
4. Controlling the Context: In Pour Better Decisions, we blind-taste the wines to eliminate the bias of branding or price. In investing, it’s vital to control for external distractions like market noise or emotional reactions, focusing instead on fundamentals.
5. Use of a Checklist: A structured checklist in both wine and investing ensures that every important element is considered, reducing the risk of rash or incomplete decisions.
6. Background Knowledge and Expertise: Of course, frameworks are only as good as the knowledge underpinning them. In wine, understanding grape varieties, vineyard climates, microclimates, and production techniques enriches the tasting experience, allowing for more nuanced evaluations, just as financial expertise deepens investment analysis. As a Master of Wine John gets more information from dribbling than I do; and vice versa from a balance sheet.

Conclusion

Pour Better Decisions has now travelled the globe, commissioned by many of the world’s top financial services and wealth management companies, and the feedback remains unanimous: blending wine and behavioural science is not only enjoyable but genuinely eye-opening. And who knew there was so much overlap between the careful process of evaluating a glass of wine and managing financial investments? By breaking decisions into smaller parts, using objective tests, and staying consistent, we can make better, less biased choices.

Whether you’re choosing wine for dinner or navigating complex financial decisions, applying a well-structured process will help you make smarter, more consistent choices. After all, there’s nothing quite like improving your decision-making while enjoying a Merlot—a life goal worth raising a glass to!