Trends in Animal Welfare Concerns and Meat Demand

I'm preparing a talk at next week's annual meeting of the Agricultural and Applied Economics Association (AAEA) on trends in consumer concerns about animal welfare, and I thought while I'm at it I'd share a few of the results here.  All the results below come from the Food Demand Survey (FooDS), a monthly survey of over 1,000 consumers that has been ongoing for over four years (each of the graphs below contains information obtained from more than 48,000 survey responses).

One of the first things we ask in the FooDS relates to "food values".  A list of 12 items is presented to respondents and they are asked which are most/least important when buying food.  Respondents have to click and drag four of the items into a "most important" box and also put four in a "least important" box, leaving four in neither box.  The nice thing about this questioning approach is that it requires a tradeoff - respondents can't say all issues are important and they have to indicate some as least important.  To create a scale of importance, I simply calculate the percent of times an issue is placed in the most important box and subtract it from the percent of times it is in the least important box, creating a measure that ranges from 100% to -100%.  

So, where does animal welfare fall in importance?  As the graph shows, it is 7th in the middle of the pack (this graph combines all the data from the last four years).  Animal welfare is much less important than taste, safety, nutrition and price but more important than origin, fairness, or novelty.  About 18% of consumers place animal welfare in the most important box and 31% place it in the least important box, creating a score of 18%-31%=-14%

The importance of animal welfare has increased a bit over time.  Here are the month-by-month averages going back more than four years.  Animal welfare importance has remained fairly stable for the past year, hovering around -10%, but this is higher than in 2013, when it was as low as -20%.

One question that might arise is "so what"?  Do these statements of importance on animal welfare and other food values have any relation to meat demand?  The answer is "yes" - there are some strong correlations.  In FooDS, we also ask people to make nine choices between different cuts of meat (and two non-meat items) at different prices.  A crude index of demand can be calculated as the number of times (out of nine) a meat product, say beef steak, is selected minus the number of times (out of nine) a non-meat item is selected (this produces a measure that ranges from -9 to +9).  Here are estimated relationships between food values and demand for steak and ground beef (controlling for demographics and other factors). 

Relationship between food values and steak demand

Relationship between food values and ground beef

The above graphs show that people who have higher concern for animal welfare have lower demand for steak and ground beef (recall the vertical axis is a demand index that ranges from -9 to +9; for reference the mean demand index for steak is 0.9 and the mean for ground beef is 1.32).

Results indicate that if an individual who indicated animal welfare as the most important food value (a score of +1) instead indicated animal welfare as a least important food value (a score of -1), steak would be chosen -0.42 fewer times on average. Similarly for nutrition, results indicate that if an individual who indicated nutrition as the most important food value (a score of +1) instead indicated nutrition as a least important food value (a score of -1), steak would be chosen -0.33 fewer times on average.  Conversely, people who think taste and appearance are relatively important food values have higher demand for steak and ground beef.  Not surprisingly, importance on price is a positive contributor for ground beef demand but a negative contributor for steak demand.   If an individual with the four most favorable food values for steak demand were replaced with an individual with the four least favorable food values, then steak demand would increase by 2.49 (given that the mean is 0.9, this is a very large change). The take-home: to the extent animal welfare increases in importance over time, these results suggest demand for beef will fall (I find similar results for pork and chicken products too).  

By, the way, I can place these food values in the context of other correlates with demand.  Here is a comparison of different determinants of steak demand (the upper left-hand image is the food values graph that was already shown but rescaled so comparisons are made to the lowest impact).  Next to food values, household income, political ideology, and gender have the biggest impacts on steak demand.  Steak demand is higher for higher income and more conservative individuals and for males.  

Correlates with Steak Demand

In FooDS, we also ask, for more than 16 different issues,  “Overall, how much have you heard or read about each of the following topics in the past two weeks” and we classify responses as 1=nothing; 2=a little; 3=a moderate amount; 4=quite a bit; 5=a great deal.  Below are the results pertaining to animal welfare related issues.

Awareness of issues in the news over time

Result seem to suggest an up-tick in awareness of animal-welfare related issues during 2016, which subsequently declined.  However, this increase in awareness also occurred for ALL the issues we track (the solid black line), many of which (like E. Coli, pink slime, etc) have nothing to do with animal welfare.  

A similar pattern emerges in relation to "concern" for the same set of 16 or so issues over time.  We ask, “How concerned are you that the following pose a health hazard in the food that you eat in the next two weeks”, where 1=very unconcerned; 2= somewhat unconcerned; 3=neither concerned nor unconcerned; 4=somewhat concerned; 5=very concerned.  (Yes, I realize, asking whether animal welfare is a "health hazard" is strange, but that's what data I have).  The graph below slows a slight uptick in concern for animal welfare related issues, but this is also true for ALL the issues we track (the solid black line).  In other words, people don't seem to be discriminating much between animal welfare and other food issues.  

Concern for various issues over time

Finally, one of the questions we ask every month is whether respondents are vegetarian or vegan.  There has been an increase in this self-reported measure over time (see here or here for my previous discussions of these data).  In early 2014, the figure was between 3% and 4% of respondents.  This has roughly doubled and we now routinely see values between 7% and 8% of respondents self-identifying as vegetarian or vegan.  

Are you a vegetarian of vegan?  (% saying "yes")

Subsidizing Backyard Chickens?

There are a lot of really bad food policy proposals.  But, this one take the cake.  Apparently the city of Austin, TX is subsidizing backyard chicken coops.  

“The city announced Thursday that as a part of Austin Resource Recovery’s Home Composting Rebate Program, Austinites can attend one of five “chicken keeping classes,” buy a chicken coop, submit a rebate application online and receive a $75 check from the city.

Austin Resource Recovery is promoting the program as a way for Austinites to help reach the city’s Zero Waste goal by keeping food waste out of the landfill.”

A few questions come to mind.  What happens to the waste that comes out of the chickens?  Does this waste (and the smell and the sound) impose externalities on neighbors?  What happens to the hens who have reached the end of their egg-laying life?  What happens to the hens who, whoops, turn out to be roosters.  Bird flu?  Will the chickens be protected from preditors and extreme weather conditions?  How much does it cost to maintain the chickens and how expensive is supplemental feed and veterinary care?

I'm not necessarily trying to discourage backyard chickens.  I just want to know why taxpayer A should be required to pay for person B's chickens?  If the problem is food waste, and supposing it causes some unmentioned externalities, why not just increase the price of garbage pick-up?  Then households can respond in whatever ways they find most effective and convenient.  I doubt, for most, that chickens are the optimal solution.      

Food Demand Survey (FooDS) - April 2017

The April 2017 edition of the Food Demand Survey (FooDS) is now out. 

A few comments on the regular tracking portion of the survey:

• Willingness-to-pay for all meat products (except deli ham) fell from March to April.
• WTP for pork chops reached the lowest point in the almost four-year history of food.  
• Comparing April 2017 to April 2016, only WTP for hamburger is higher than was the case a year ago.
• Awareness of bird flu in the news fell this month and concern for bird flu as a food safety issue experienced the smallest increase of any of the issues studied.  Awareness and concern for animal welfare issues rose this month.

We added several new ad-hoc questions to the survey this month.  

There has been a lot of discussion in the news about whether hydroponics should be able to be labeled organic.  We put the question to our participants.  They  were asked: “Do you think hydroponic vegetables should be allowed, under certain conditions, to be labeled organic? (note: hydroponic vegetables are grown without soil - their roots grow in water with added nutrients and minerals)” 

About 46% of participants stated “yes”, hydroponic vegetables should be labeled organic, 24% said “no”, and the remaining 29% said “I don’t know”.   It should be noted that due to a glitch in survey administration, only 250 people answered this particular question and as such, the sampling error is higher than usual (it is +/-6% rather than the usual +/- 3%).

A couple weeks ago, I discussed some research we'd conducted studying when consumers don't want to know about certain agricultural production practices.  We followed up on this research in this month's edition of FooDs.  We were interested in whether people actively sought to avoid information they may find undesirable.  

We split people into two equal sized groups.  Those in the first group were asked: “On the next page you have two choices of what to see.  You can either see a picture of how pregnant hogs are housed on a typical farm or a picture of a blank screen.  Which do you prefer?”

To check whether people simply preferred to see a blank screen in general, respondents randomly allocated to the second group were asked a similar question but instead of the option to see a picture of “how pregnant hogs are housed on a typical farm”,  they could choose between “a picture of a nature scene or a picture of a blank page.”

Fifty four percent said they wanted to see the picture of how pregnant hogs are housed.  By contrast, 46% preferred instead to see a blank page.  Thus, slightly less than half the sample actively chose to ignore free information about hog housing.  Those who preferred to see the blank screen were less concerned about farm animal welfare as a food safety risk (mean of 3.2 vs. 3.6 on the 5-point scale of concern) and placed less relative importance on animal welfare as a food value (mean of -0.116 vs. -0.097). 

Ninety one percent of respondents choose to see the nature scene.  Overall, the results suggest just about half the respondents preferred not to know how pregnant hogs are housed. 

Finally, we added some questions about food insecurity.  I'll discuss these in a separate post.   

When Consumers Don't Want to Know

Since I first started working on the topic of animal welfare, I've had the sense that some (perhaps many?) consumers don't want to know how farm animals are raised.  While that observation probably rings intuitively true for many readers, for an economist it sounds strange.  Whether we're talking about GMO labeling, nutritional labels, country of origin labels on meat, or labels on cage free eggs, economists typically assume more information can't make a person worse off.  Either the consumer uses the information to make a better choice or they ignore it all together.    

There is a stream of literature in economics and psychology that is beginning challenge the idea that "more information is better."  One simple explanation for the phenomenon could be that consumers, if they know for sure they will continue to consume the same amount of a good, could be better off ignoring information because the information could only lower their satisfaction (perhaps because they'll feel guilty) for doing something they've already committed to doing.  In this paper by Linda Thunstrom and co-authors, 58% of consumers making a meal choice chose to ignore free information on caloric content, a finding that Thunstrom calls "strategic self ignorance" arising from guilt avoidance. 

Another possible explanation that I've previously published on is that, when people have limited attention, more information on topic A might distract people from a topic B, even though topic B ultimately has a larger impact on the consumers well-being.  

It may also be the case that people want to believe certain things.  They derive satisfaction from holding onto certain beliefs and will avoid information that challenges them.  These ideas and more are discussed by Russell Golman, David Hagmann and George Loewenstein in a nice review paper on what they call "information avoidance" for the Journal of Economic Literature.

A graduate student in our department, Eryn Bell, has been working with Bailey Norwood to apply some of these concepts to the topic of animal welfare.  They conducted a survey of 1,000 Oklahomans and asked them one of the two simple questions shown below.  Depending on how the question was asked, from 24% to 44% of respondents self declared that they would rather NOT know how hogs are raised.  The primary reasons given for this response were that farmers were trusted (a belief consumers may prefer to hold), that there are more important issues to worry about (limited attention), and guilt aversion. 

In the same survey, Bell and Norwood also included a set of questions based on some ideas I suggested.  The question gave respondents the option to see a picture of how sows are raised or to simply see a blank screen for a certain period of time.  People were divided into three groups that varied how long they had to see the blank screen.  The idea was that we could use the waiting time as a "cost", which would allow us to ask: how long are people willing to wait to NOT receive free information?  As it turns out, people weren't very sensitive to the waiting time.  Nonetheless, regardless of the waiting time, about a third of respondents preferred to see an uninformative blank screen as opposed to a more informative screenshot of sow housing.  These findings suggest at least some people, at least some of the time, would prefer not to know.  

How Animal Welfare Laws Affect Egg Prices and Production

Like  California,  at least five  other  states (Massachusetts, Michigan, Ohio, Oregon, and Washington) have passed laws that will eventually limit the use of so-called battery cages in egg production, and retailers like Walmart and McDonald's have made pledges to do the same.  Because this move started earlier in California, and due to the size of that state and the volume of egg production there, California represent a good case to analyze the effects of these laws.  

While I've written on this topic a number of times here on the blog (e.g., here), Conner Mullally and I have finally pulled together a revision of our earlier work that is much more comprehensive and hopefully informative.

One question that I haven't seen much addressed is: what happened to egg production in California as result of their animal welfare laws (these laws include passage of Proposition 2 by voters in 2008 which banned the production of eggs from battery cages and the subsequent passage of state law AB 1437 which banned the sale of eggs from battery cages - both were  ultimately enforced on January 1, 2015 via California Department of Food and Agriculture (CDFA) rules)?   

Before all of this went down, Dan Sumner and other researchers at UC Davis warned that passage of Prop 2 could lead to an exodus of California egg producers and lead California retailers to increase imports of eggs from other states (that's one reason state law AB 1437 came into being - to try to prevent this outcome).  The chart below shows our analysis of the number of egg laying hens in California, which generally confirms the UC Davis researcher's conjecture made back in 2008.  

We estimate that:

“by July 2016 both egg production and the number of egg-laying hens were about 35% lower than they would have been as a result of the new regulations. Out-of-state eggs were able to compensate for falling California production until around the time of implementation of the new rules, at which point imports of eggs into California fell. ”

Here is a graph of egg imports into the state, which Conner obtained via a FOIA request from CDFA, along with egg production in the state.

In addition to these production impacts, we were also interested in the impacts on prices paid by food consumers.  To address this issue, we obtained retail scanner data from Nielsen.  

“We find that the average price paid per dozen eggs was about 22% higher from December 2014 through September 2016 than it would have been in the absence of the hen housing restrictions. The price impact fell over time, from an initial impact of about 33% per dozen to about 9% over the last six months of the observed time horizon. These price increases correspond to welfare losses of at least $117 million for the three California markets [in LA, San Diego, and San Francisco from December 2014 to September 2016]. Our results suggest annual average welfare losses of at least $2 per California household in future years.”

Here is a graph of the actual (or observed) price of eggs in California compared to our prediction of what egg prices would have been had the new animal welfare laws not gone into place.