Meet the Economists Trying to Put a Price on Animal Suffering

Animal Welfare Economics

Bailey Norwood pauses, choosing his words carefully. “All researchers are humans,” he says. “And humans? We tend to be a bit tribal.”

A gentle speaker with a courteous South Carolina twang, the professor of agricultural economics is a natural diplomat. It might have something to do with his unique professional niche. Norwood’s chair at Oklahoma State University is funded by the owner of a John Deere dealership. He raises chickens in his backyard and kills them himself for dinner. And yet he is a forefather of a new field whose conclusions challenge a pillar of modern-day animal agriculture.

That field doesn’t yet have a catchy name. It might be called “animal-inclusive welfare economics.” Its main premise is deceptively simple:  the welfare of farmed animals ought to factor into economic tallies of societal costs and benefits. 

While this idea aligns with most people’s intuitions, it is somewhat far-fetched in conventional economics. After all, farmed animals aren’t your typical market participants. They don’t bring home paychecks. They don’t buy or sell goods. And unlike humans, they could be said to contribute most to the economy with their death. But a growing contingent of researchers believes that, just as the field of economics can too often overlook environmental harms, ignoring animal welfare fails to capture important costs of industrial farming.

Over the past few years, this research has inched into the mainstream. In July 2022, Stanford University hosted one of the first-ever major conferences on the economics of animal welfare. The American Economic Association also acknowledged the growing field by adding a new categorization for published papers: “Q18 / Animal Welfare Policy.” 

While most researchers in the field are animal welfare advocates, its roots lie in conventional agricultural economics. Norwood’s interest in the topic began in the mid-2000s, when the rise of farm animal documentaries gave new life to the animal welfare movement. He was frustrated by certain activists’ complaints, such as the allegation that hormones in meat and dairy pose health risks. But he was equally troubled by the farming industry’s outright denial of legitimate criticisms, and by economists’ “knee-jerk” defense of the industry.

“I think if people  are being honest and reasonable, they will say that if you keep a sow in a gestation crate for two-thirds of their life, that’s pretty close to torture,” he says. “To not want animals to be in that really tight confined cage, for their whole life, that’s a very fair complaint. But we [economists] would not acknowledge that.”

Norwood saw the need for credible research that people on all sides of the debate could trust. And so, in 2011, he partnered with fellow agricultural economist Jayson Lusk to publish “Compassion, by the Pound“: a 400-plus-page work that analyzes animal welfare from farm to fork. Complete with a fill-in-the-blank worksheet where readers can calculate the costs of their decisions based on their own beliefs, the book has since become the de facto textbook of the animal welfare movement. Norwood likens the work to Peter Singer’s recently-updated book, “Animal Liberation,“ a cornerstone in the ethics of animal welfare.

Norwood was inspired by Singer’s philosophical, even-handed style of writing. “He is reasoning through things,” Norwood says. Likewise, “I wanted to help people reason through the controversy.”

His approach centers around the concept of consumer preferences. In theory, consumers tend to make  purchasing decisions that maximize their own happiness, and businesses adapt to provide popular goods. It follows, then, that if consumers feel more satisfied buying high-welfare animal products, they will pay a little extra for it. (In theory; the reality of consumer behavior might be different.)

A convenient result of this framework is that it allows economists to assign dollar values to intangible goods. The value of “goods” as wide-ranging as animal suffering, the existence of a public park or even a human life can be calculated based on consumers’ purchasing decisions. This is known as the “willingness to pay” approach: it values a good based on how much consumers are willing to pay for it.

It’s here that the moral underpinnings of the animal welfare movement chafe against conventional economics. Most animal welfare advocates believe that the mistreatment of farm animals is wrong in itself, even if it is the natural result of the free market. Should animal welfare only count insofar as it matters to humans?

“It still seems to me that the vast majority of people really don’t care about farm animals that much,” Norwood says. For that reason, “I would never come out and say that the free market has addressed the animal welfare issue well, but I would also never say that it has done it poorly.”

That’s an unsatisfying conclusion to some economists, including Jim Leitzel, a professor at the University of Chicago. Leitzel became a vegetarian around the same time that Norwood and Lusk published “Compassion, by the Pound”, and went vegan soon after that. Asked why he began thinking seriously about animal welfare, he tugs down his dress shirt to reveal a flashy neon tee emblazoned with the face of his dog, Rocky.

After adopting Rocky, “I began to think about the horrors of the current situation, and its scale,” Leitzel says. “I realized that this really, really important question is essentially never asked…You’ll see lots of mentions of non-human animals in economics textbooks, but their welfare is never mentioned.”

He thought back to the legal case Pierson v. Post, commonly used to teach law students the basics of property law. The case litigates at what point a fox becomes the property of a hunter. 

“It’s [thought of as] a famous American property law case. But of course, it’s a murder case, once you start seeing it from the animal’s point of view,” he says. 

 Leitzel argues that current methods of valuation, including “willingness to pay,” fail to properly price animal welfare. In 2021, Leitzel co-authored a paper on the topic with fellow University of Chicago economist Sabina Shaikh. The paper explored models that would give animals “partial standing” or “full standing” in cost-benefit analyses. These approaches would assign value to animal welfare in its own right — not just through human preferences. He argues that they align with the common moral belief that animal suffering matters, even if to many it matters less than human suffering. 

“I’m not trying to tell people that this system violates my standards. I’m trying to remind them that it violates their standards,” he says. 

In their paper, Leitzel and Shaikh discuss these models theoretically, rather than actually creating and running them quantitatively. They speculate that because of the sheer number of farm animals in the equation — at least eight billion in the U.S. annually — it seems likely that current welfare conditions would not pass a classic cost-benefit analysis. Yet even without quantitative models, Leitzel believes the exercise is worthwhile.

“For us, asking was more important than answering,” Leitzel says.

Kevin Kuruc, a researcher at the University of Texas-Austin, is attempting to provide a tentative answer. Kuruc began studying animal welfare by way of the Effective Altruism movement, the quantification-obsessed community that believes people ought to do the most good in the world, in the most efficient way possible.

That’s how Kuruc ended up trying to craft the mother of all welfare functions: an equation that calculates the “true cost” of a typical American diet. Such an equation would have to include not only the billions of animals in factory farms, but the millions of humans who eat them. In a co-authored paper published last year, he did just that.

The most striking aspect of the paper is the tortured philosophical thinking needed to start doing calculations. Each component requires Kuruc and his co-author, Jonathan McFadden, to jump through philosophical hoops. One example is the “moral weight” scalar, which determines how much animal suffering is worth relative to humans. The authors set this value equal to one, implicitly arguing that “equivalent subjective experiences” between a human and an animal are worth the same amount — a controversial assumption.

Even more abstract is the authors’ assumption that a factory-farmed animal’s life is not worth living. They reason that a “net neutral” life is worth the international poverty line of $1.90 per day; and that a “net negative” animal life must be worth less than that. He lands on $1 per day.

Forty-seven pages of philosophical model-crunching spits out a number: $100,000. According to the authors, that is the true cost of the food the average American consumes in a year. They find that about 97 percent of that cost is due to animal suffering, and the remaining three percent is due to climate and environmental costs.

When Kuruc presented his work to an audience of welfare economists, the reception was polarizing.

“Some people thought it was totally weird and perhaps useless,” he says. “But a couple of audience participants thought it was really valuable.”

Kuruc knows how zany his calculations are. That’s part of the point. He compares himself to the Nobel Prize-winning economist William Nordhaus, renowned for his work quantifying the costs of carbon emissions. Nordhaus’ initial calculations are now long outdated, but the metric he created is now integral to crafting climate policy.

“In a strict sense, I don’t [literally] believe the numbers that pop out of the exercise I did,” Kuruc says. “The hope of writing a paper like that is to put a wrong answer into the academic ecosystem and hope people swarm like piranhas, and tell me what’s wrong with it…Because that’s how we make progress on these things.”

The history of the still-nascent field seems to confirm Kuruc’s theory. Norwood, the Oklahoma State economist, is heartened by the growth in attention the subject has received since Compassion, by the Pound. Reclining behind his desk, he muses that much of the increased energy on the topic is led by the younger generation.

“Young people today are so empathetic towards everything. People make fun of them for it. ‘Can’t make a joke around the Millennials!’” he says with a chuckle. “Will y’all stay that way? If that’s the case, I would certainly think animal welfare would improve.”

If there’s a single concept that encapsulates Norwood’s career, it might be that of “information failure.” Information failure happens when a participant in an economic exchange doesn’t have perfect knowledge about the transaction they’re participating in. A classic example is a bluffing car salesman, who lies about the quality of a vehicle and sells it for more than its actual value.

The concept of information failure teaches us that the market doesn’t just fail if there are costly side effects. It also fails if people aren’t aware that their own choices have hidden costs that go contrary to their preferences – if, for example, they eat a morning omelet unaware of the painful plight of egg-laying hens, or if their purchasing decisions are guided by the mistaken belief that animals cannot feel pain.

In this sense, Norwood and the animal welfare economists who have followed in his footsteps aren’t just identifying a problem. By illuminating the true costs of industrial farming, they might be pushing the market towards a more humane form of efficiency.

This piece has been corrected: an earlier version mistakenly named the economist William Nordhaus as Richard Nordhaus.