Two Animal Ethics; Many More Economic Lessons

  • Li Way LeeEmail author
Part of the Palgrave Advances in Behavioral Economics book series (PABE)


Cruelty to animals is a case of the tragedy of the commons. Economics has been tackling this type of problems for a long time. The experience is mixed: some successful and some disastrous. The successes and the failures hold lessons for animal advocacy. To make the case, I consider the two major animal ethics—“animal rights” and “animal welfare.” And I argue that animals need them both.


Animal rights Animal welfare Animal advocacy 

1 Introduction

Cruelty to animals is a case of the tragedy of the commons (Hardin 1968; Cowan 2006). Most of us recoil at the thought of it. But when lunch time comes, we eat ham sandwiches without much of a second thought. Then we complain about cruelty again. We do know one thing: To fix the problem, we need to take actions collectively. We must have policies that make each of us pay the cost of cruelty to animals.

Economics has been tackling tragedies of the commons for a long time. The record is mixed. The successes and the failures hold lessons for animal advocacy. To see what the lessons are, I consider the two major animal ethics—“animal rights” and “animal welfare.” Both are active in animal markets. And I argue that animals need them both.

2 Animal Rights as a Demand-Side Ethic

Animal-rights ethic says that all sentient beings have the right not to suffer. Animal-rights advocates oppose all forms of demand for animals, including medical experimentation and entertainment. Gary Francione (2014) explains: “The abolitionist approach sees the problem of animal exploitation primarily as one of demand and not supply. That is, the problem is not that there are institutional exploiters who will provide animal products to the public; the primary problem is that the public demands those products.”1

From that vantage point, animal-rights advocacy is similar to public policies toward alcohol, tobacco, gambling, and firearms. All these policies are aimed directly at reducing demand, not supply. Behavioral economists have learned, for example, that consumers who are being pressed to change their choices are prone to employ evasion tactics. We can see these tactics in the ways by which consumers react to the push for humane diets. Vegetarianism has splintered into lacto-ovo vegetarianism, lacto vegetarianism, ovo vegetarianism, etc. (Wikipedia, “Vegetarianism”). Even “semi-vegetarianism” has several branches, including flexitarianism, pescetarianism, and pollotarianism (ibid.). Another evasive tactic is substitution. Consumers who are forced to go through meatless Mondays may gorge on meat on Sundays and Tuesdays.

Behavioral economists also have learned that consumers do not always respond to more and better information about a product. Consumers respond more predictably to “textured information.” Richard Thaler and others have shown how to make people save more (Sunstein and Thaler 2003; Thaler and Benartzi 2004). They designed “saving nudges,” which are default mechanisms. A company may automatically withhold 5% of an employee’s paycheck and deposit it in a retirement account—unless the employee expressly chooses to opt out. (This is different from the prevailing system, where deduction is made for retirement only if an employee expressly chooses to opt in.) When it comes to reducing the demand for meat, a nudge would be a cafeteria plan that offers vegan spaghetti sauce as the default, so that if you want to have spaghetti sauce with meat, you must ask for it. Most people probably won’t bother to ask.

3 Animal Welfare as a Supply-Side Ethic

Animal-welfare advocates want to minimize suffering in the aggregate. When they initiate ballot initiatives against veal crates and gestation stalls, they intend to prohibit certain methods of raising animals. When they expose workers abusing animals in factory farms and slaughterhouses, they intend to galvanize actions to pressure producers into abolishing cruel practices. They strive to change “the animal production function,” which is on the supply side of the market. Animal-welfare ethic is a supply-side ethic. It sees suffering in how an animal is raised and how many are raised.2

Economics suggests two supply-side strategies: (1) raise cost and (2) monitor compliance.

3.1 Raise Cost

Factory farms do not pay the full social cost of the cruelty in their methods, just as power plants do not pay the full social cost of burning fossil fuels. The analogy to pollution suggests ways of reducing cruelty. One way is what may be called “cap-and-trade cruelty permits.” The idea here is that, if a farm does not meet a certain standard of humaneness, the farmer must pay for it by purchasing permits on the open market. This market works much like the market for “pollution permits,” where polluters buy and sell permits. Advances in animal science have made it possible to calibrate the extent of suffering on each animal, so a producer will know how many permits to buy or sell.3 The producer who treats animals well can sell the permits that he does not need; the producer who mistreats animals must buy the permits that he is required to have but does not have.

Another cost issue is the subsidization of corn and soybean. Because they are subsidized, the price of animal feed that contains them is lower than it would be otherwise. Low feed price leads to more animals being raised. Without the subsidies, the cost of animal products will be higher, and so the supply will be lower. The same reasoning applies to local tax breaks for factory farms.

I see another way to reduce cruelty on the supply side that does not involve taxes or permits: Enhance producers’ market power. Exempt animal producers from all antitrust policies. Encourage them to merge for monopolization. Higher prices will serve animals well.

3.2 Monitor Compliance

The supply side of a market is harder to control than the demand side. This is a lesson learned from attempts to control the production and distribution of alcohol in the 1930s and cocaine in the 1980s. Most economists would say that those attempts failed miserably. Cruelty is more difficult to detect than alcohol or cocaine, and that is an additional hindrance to the enforcement of policies against cruelty.

Last but not least, we must plug the loophole by the name of free trade. When we examine free-trade meat, we cannot easily tell the degree of cruelty in the methods of foreign factory farms. What is more, prevailing trade agreements are rife with exemptions, with the result that foreign producers have no incentive to recognize the moral cost of cruelty (Matheny and Leahy 2007).4

4 Do We Need Both Ethics?

The answer is yes, and the reason has to do with another economic lesson: A change in demand can cause a change in supply, and vice versa. This is most easily explained by an example.

Suppose that a group of consumers become vegan, in support of animal rights. Immediately, the demand for eggs goes down, and fewer eggs will be produced. That is good from the point of view of animal rights, since fewer laying hens will need to be raised to suffer. Still, some hens will continue to be raised to meet the demand of other consumers, and the question arises as to how these hens will fare. Will they live in larger or smaller cages than before? Will they be “free-range”? If so, will they be protected from eagles and foxes? Our intuitive understanding of “mass production” seems to make us think that fewer hens would go hand in hand with more humane production methods. But we cannot depend entirely on our intuition here: there is high stake in the specifics of demand and supply. When demand drops, individual owners of factory farms have to lower price to sell the same number of eggs and they make less profit. They may cut back on the production of eggs by raising fewer hens. This does not mean that the hens, now fewer, would have more room to spread wings in those same old cages. The producers may use even smaller cages to cut cost. In that case, the vegan movement reduces the number of hens but raises the degree of cruelty. Figure 1 illustrates this tradeoff. As the market moves from A to B, fewer hens suffer but the hens that continue to be raised will suffer more than before.
Fig. 1

Fewer hens in smaller cages

As Fig. 1 may be surprising, I have made up a story about it.

A Story about Fig. 1

There are two consumers in the market for chicken (meat). Each is willing to pay $5 for a chicken raised in a battery cage and $10 for one raised on pasture. Also, each consumer eats one chicken a week regardless of price.

The two chickens are raised by a single producer. To use the battery-cage method, there is the cost of a cage at $2, and the cost of feed at $2 per chicken. To use the pasture method, the cost of the pasture is $6 and the cost of feed is $4 per chicken. Both the cage and the pasture are big enough for two chickens.

Now, if we do a little bit of math, we can figure out what it will cost to raise two chickens: $6 when using a battery cage and $14 when using pasture. So the profit, which is the difference between what the two chickens can sell for and the cost of raising them, is $4 (= $5 × 2 − $6) from using the battery-cage method and $6 (= $10 × 2 − $14) from the pasture method. Clearly, it is more profitable to use the pasture system for two chickens. So the market with two chickens is pretty humane.

Suppose that, newly convinced of animal rights, one of the two consumers stops eating meat. Then only one chicken is demanded in the economy. Now, which method is the more profitable to use to raise one chicken? A little bit of math shows that the profit from using the battery-cage method is $1 (= $5 − $4), while that from using the pasture method is zero (= $10 − $10). So, for an economy with one chicken, it is more profitable to use the battery-cage method. That is a relatively inhumane way of raising a chicken. And that is a step backward ethically compared with the method earlier when more consumers ate more chickens.


This story is about an anomaly when only one of the two ethics is active. The moral of the story, therefore, is that the anomaly is less likely when both ethics are active. Assume that, at the same time when animal-rights groups promote veganism, animal-welfare groups pressure chicken factory farmers to use larger cages. Then animal rights and animal welfare would reinforce each other, instead of working at cross purposes. Figure 2 depicts the market moving from A to B: fewer hens and less cruelty. Incidentally, the producer would break even.
Fig. 2

Fewer hens in larger cages

Yes, we need both ethics. The animal-rights ethic reduces the demand for animals, while the animal-welfare ethic directs factory farms toward more humane methods.

5 A Concluding Remark

At the end of this visit with animals, I have mixed feelings. I see our relationship with them as incredibly extensive and deep; I see our relationship with them as incredibly unjust; I see a ray of hope in the incredibly selfless advocacies for animals, whether for animals’ rights or for animals’ welfare.


  1. 1.

    The primary animal-rights group in the US today is Mercy for Animals.

  2. 2.

    The primary animal-welfare group in the US today is The Humane Society of the United States.

  3. 3.

    A real-world example of a calibration system for cruelty is that administered by Global Animal Partnership. The system has five “steps,” where a higher number means a less cruel method: Step 1: no crates, no cages, no crowding; Step 2: enhanced indoor environment; Step 3: outdoor access; Step 4: pasture centered; Step 5: animal centered; no physical alternations; Step 5+: entire life on same farm with on-site or local slaughter.

  4. 4.

    Free trade includes commerce within a country. California has effectively blocked free trade by requiring that eggs sold in that state must come from hens that are raised in larger cages than those in most other states.


  1. Cowen, Tyler. “Market Failure for the Treatment of Animals.” Society, 43 (2), 2006, pp. 39–44.Google Scholar
  2. Francione, Gary. “Abolitionist Animal Rights/Abolitionist Veganism: In a Nutshell.” 2014. Accessed at
  3. Hardin, Garrett. “The Tragedy of the Commons.” Science, 162, 1968, pp. 1243–1248.Google Scholar
  4. Matheny, Gaverick, and Cheryl Leahy. “Farm-Animal Welfare, Legislation, and Trade.” Law and Contemporary Problems, 70, 2007, pp. 325–358.Google Scholar
  5. Sunstein, Cass, and Richard Thaler. “Libertarian Paternalism.” American Economic Review, 93, 2003, pp. 175–179.Google Scholar
  6. Thaler, Richard, and Shlomo Benartzi. “Save More TomorrowTM: Using Behavioral Economics to Increase Employee Saving.” Journal of Political Economy, 112 (S1), 2004, pp. 164–187.Google Scholar

Copyright information

© The Author(s) 2018

Authors and Affiliations

  1. 1.Wayne State UniversityDetroitUSA

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