Farm animal welfare: do free markets fail to provide it?

Abstract

Abstract Animal welfare is often claimed to be a 'public good', i.e. requiring government intervention and legislation to ensure that animal welfare is respected. In other words, markets, on their own, cannot be relied on to deliver socially acceptable animal welfare. In fact, the issues surrounding animal welfare are more complex and subtle than this. This chapter first explains the general features of public goods, as defined and recognized in economics (Section 2). It then turns to the specific case of animal welfare (Section 3) and explains that outlawing cruelty to animals is clearly a genuine public good, but improving animal welfare can only be achieved by reflecting consumers' willingness to pay for better animal welfare production. However, there is a clear disconnect between citizens' apparent concerns about animal welfare and their exhibited willingness to pay for better animal welfare. Does this imply a clear market failure? This apparent failure is examined with the aid of a thought experiment, and identifies the nature of the problem - a combination of information and communication deficiencies with peoples' limited availability of time, resources and motivation to attend to all social issues with each and every purchase decision. The underlying problem is one of consumption externality - other peoples' consumption decisions affect my/your assessment of our own welfare - since farmed animal welfare depends on peoples' consumption decisions.