Discussion: The Economics of Animal Welfare

By Hudson, Darren | Journal of Agricultural and Applied Economics, August 2010 | Go to article overview

Discussion: The Economics of Animal Welfare


Hudson, Darren, Journal of Agricultural and Applied Economics


This discussion highlights some of the strengths and weaknesses of the literature on animal welfare. Most pointedly, the literature on the economics of animal welfare is quite scant. As exemplified by these papers, however, there is a growing body of literature, especially those related to added costs of production and consumer demand for animal welfare attributes.

Key Words: animal welfare, cost estimates, willingness to pay, consumer research

JEL Classifications: Q13, Q16, Q18

The issue of animal welfare has become an increasingly visible matter of public debate and, to some extent, marketing strategy. The issues surrounding animal welfare are complex and contain a considerable amount of subjectivity, which leaves the issue prone to emotional and psychological interpretations that may or may not have a basis in science. The credence nature of "welfare" leads to perceptions, and, in some sense, perception is the same as reality within a market. As a result, much attention and resources are devoted to shaping public perception about this issue from provocative advertisements by the People for the Ethical Treatment of Animals (PETA) as well as counter campaigns launched by farm groups. Public initiatives to define and/or regulate the treatment of animals have become more commonplace, and food marketing firms have attempted to capitalize on perceived marketing opportunities in their production of goods. However, in many ways, firms are also seeking to shape public opinion so as to more sharply differentiate products (increase differentials in own-price elasticity of demand) and maximize profits. It is in this environment that researchers are attempting to come to grips with potential values, policies, and market outcomes for animal welfare.

The articles in this session by Olynk, Tonsor, and Wolf (2010), Sumner et al. (2010), and Tonsor and Wolf (2010) all address different facets of the struggle to understand this complex issue. Rather than talk about each article in turn, I will address some crosscutting issues that are covered either directly or indirectly in each article. I will not attempt here to address the definition of animal welfare. Rather, my purpose is to raise some issues related to the operational understanding of the economics of animal welfare, whatever the technical definition that is used. I must freely admit that I come at this having done no serious research in the area. Rather, I bring a fresh set of eyes to the problem and hopefully can interject some different perspective.

First, how do we conceptually address the costs associated with animal welfare? Are these added costs on the system arising from a new set of demands about production practices? Alternatively, are these simply costs that must be internalized because lack of attention to animal welfare was a negative externality to society? Added costs are added costs to be sure. However, how we conceptualize the source of those costs makes a big difference in how we are to address these politically and/or supply chain management-wise. Of course, the former suggests a "carrot" approach of subsidies and/ or other positive incentives to induce adoption of "animal-friendly" production practices, whereas the latter suggests a "stick" approach of taxes or regulatory pressure. However, in either case, effective understanding of these issues must include an understanding of how policy actions are likely to impact the competitiveness of the affected industries.

The article by Sumner et al. does make this connection. Their analysis suggests that California egg producers will pay the price for cage-size regulations passed in California. Other egg producers, however, will benefit. The shift in production to more competitive states (it is useful to think of the U.S. as one big free trade zone here) reduces employment and income in California and raises the price of eggs to the state. Whether or not this tradeoff is welfare-enhancing or reducing to residents is not addressed, but the discussion of the tradeoffs is at least helpful to the debate. …

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