Tuesday, June 9, 2009

Overestimating the Benefit of Animal Welfare

As societies seek to better understand how it should raise farm animals, economists often look to valuation studies to help make these decisions.  The idea behind valuation is simple.  If people are willing to pay $2 million dollars to make farm animals better off (perhaps through a regulation) and it only costs $1 million, then the regulation is "good."

One recent study measured the willingness of citizens within the EU to forego money to improve the lives of broilers (Moran and McVittie).  Broilers would be made better off by giving them more room, better health monitoring, and the like.  The results indicated that the benefits were two times greater than the costs.  It would seem a slam-dunk: provide chickens a better life.

Yet what the authors do not caution is that the benefits are measured based on what people "say" they would pay.  Every valuation study has some type of bias, and this study suffers from hypothetical bias, which is often very large.  In fact, valuation studies tend to overestimate peoples' true willingness-to-pay for things on average by a factor of three!  
(see List and Gallet)  

Thus, the benefits this study measures is likely to be three times higher than its true value, which would make the benefits of improved animal welfare less than the cost.  It is so very important that benefits of animal welfare, when they are measured, when it is possible, to measure them using actual payments--real money.


Moran, D and A McVittie.  2008.  “Estimation of the Value the Public Places on Regulations to Improve Broiler Welfare.”  Animal Welfare.  17:43-52.

List, J.A. and C.A. Gallet. 2001. “What Experimental Protocol Influence Disparities BetweenActual and Hypothetical Stated Values?”  Environmental and Resource Economics 20 (3):241-54.

Little, J.M. and R. Berrens. 2004. “Explaining Disparities between Actual and Hypothetical Stated Values: Further Investigation using Meta-Analysis.” Economics Bulletin 3 (6):1-12.