Luther Tweeten is one of the greatest agricultural economists alive or dead, and has recently written on the farm animal welfare issue coming to Ohio.
His section Animal Welfare makes it seem as if the scientific community has no idea whether cage-free egg production is better for the birds than cage production. Yet, while the science in this area will never be without some dubious proposition, I disagree on the degree of uncertainty regarding which production practices are better for birds.
The two scientific publications ranking egg production systems in terms of animal welfare puts cage-free production ahead of cage production, and these are two good articles.
References
De Mol, R.M., W.G.P. Schouten, E. Evers, H. Drost, H.W.J. Houwers and A.C. Smits. 2006. “A Computer Model for Welfare Assessment of Poultry Production Systems for Laying Hens.” Netherlands Journal of Agricultural Science. 54:157-168.
LayWel. 2004. “Welfare Implications of Changes In Production Systems for Laying Hens.” Specific Targeted Research Project (STReP). SSPE-CT-2004-502315.