Consumer Impact of Animal Welfare Regulation in the California Poultry Industry

Abstract

This study examines the consumer welfare impact of animal welfare legislation mandating cage-free egg production in California. We estimate California egg consumers’ willingness to pay (WTP) for cage-free eggs using household-level purchase data and compare the implied premium to higher production costs when calculating the potential change in consumer surplus. Our findings suggest that larger households and/or households with limited means are most likely to be affected. Furthermore, the implied welfare loss for consumers is approximately $106 million. Although consumers value cage-free eggs, higher production costs result in a net welfare loss to consumers. One implication of this finding is that a clear labeling practice may be a more efficient way to motivate animal welfare and non-cage systems.