Consumer Demand for Animal Welfare Products

Modern agricultural practices have increased the efficiency of food production with a decrease in their cost and prices for consumers. However, to some extent this has been detrimental to the ethical way in which livestock are treated, particularly in more intensive production systems. On the demand side, an increasing number of consumers are interested in the way that food is produced and the attributes behind it. Animal welfare is one of those ethical attributes that are particularly important for consumers, and at the retail level, it is reflected in a number of labels aiming at passing cues (due to its nature as a credence attribute) to consumers. For meat supply chains, these labels have the possibility to positively affect sales if consumers are willing to pay more for products with those attributes. Moreover, if increasing animal welfare implies higher costs of production, it is important for the supply chain to know whether these costs can be passed on to consumers. These issues have motivated a substantive literature on the measurement of consumers' interest in animal welfare and their willingness to pay for its attributes. The purpose of this chapter is to provide an overview of the economic theory behind the measurement of animal welfare and some empirical applications.