Consumer Impact of Animal Welfare Regulation in the California Poultry Industry
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This study examines the consumer welfare impact of animal welfare legislation mandating
cage-free egg production in California. We estimate California egg consumers’ willingness
to pay (WTP) for cage-free eggs using household-level purchase data and compare
the implied premium to higher production costs when calculating the potential change in
consumer surplus. Our findings suggest that larger households and/or households with
limited means are most likely to be affected. Furthermore, the implied welfare loss for
consumers is approximately $106 million. Although consumers value cage-free eggs,
higher production costs result in a net welfare loss to consumers. One implication of this
finding is that a clear labeling practice may be a more efficient way to motivate animal
welfare and non-cage systems.