The Yayflies Conclusion

In the novel Venomous Lumpsucker, adult “yayflies” feel only euphoria in their several hours of existence. Does creating tremendous numbers of these genetically engineered gnats create tremendous welfare gains? If you're a utilitarian – and you probably are – the answer is yes!

Yayflies are a silly example to introduce a serious paper in the growing field of animal welfare economics. “The Animal-Welfare Levy” by Romain Espinosa and Nicolas Treich considers the following market failure. Farmed animals like chickens, cows, and pigs exist because of agricultural markets. People get utility from consuming animals, but the price we pay for their meat does not include the utility those animals experienced during their lives.

This is an externality just like congestion or knowledge. Drivers entering central Manhattan pay $9 because their additional vehicle makes driving slower for others. Governments subsidize research because knowledge is a public good. If the prices of driving and research don’t include these congestion and knowledge externalities, then central Manhattan will have too many vehicles on the road and the world won’t have enough research.

The paper’s title uses “Levy” instead of “Tax” because it’s an empirical question whether including farmed animal welfare should raise or lower meat prices. If an animal’s life is not worth living – its total utility over the course of its life is negative – then meat should be taxed. In this case, eating meat brings into existence animals who experience more misery than pleasure. Just like paying a carbon tax to reflect the negative externality of greenhouse gas emissions, the price of meat should be increased by an amount exactly equal to this net misery: a Pigouvian tax.

If farmed animals’ lives are worth living, then in this first-best world meat consumption should be subsidized. The intuition is the same as in the tax scenario: farmed animals exist and get utility because of agricultural markets. If that utility is positive and we are maximizing social welfare, which includes that of farmed animals, then the market won’t create enough farmed animals without a subsidy. The optimal subsidy equals this animal-welfare externality.

Measuring the extent to which the lives of chickens, cows, and pigs are better than non-existence is the key for calibrating the optimal levy. The authors start by calculating welfare scores using the Five Freedoms framework: to what extent is an animal (1) free from hunger, malnutrition or thirst, (2) free from fear and distress, (3) free from heat stress and physical discomfort, (4) free from pain, injury and disease, and (5) free to express normal behaviors? At each stage of an animal’s life—on the farm, in transport, at slaughter—they score how well those needs are met. For example, a chicken or pig in cramped housing scores poorly because of the severe discomfort and pain from mutilations they commonly experience, whereas a cow raised for beef with more space and fewer procedures scores higher well-being.

The authors conducted a survey of people in the UK to choose the threshold at which life isn’t worth living. For each animal, life stage, and farming method, the authors compute the difference between well-being and this threshold. Summing these differences over days gives the utility of an animal’s life under a particular farming method. Then, they convert utility into dollars by multiplying by the value of a human Quality Adjusted Life Year. To compare utilities across different animals and with humans, they multiply this dollar value by a proxy for each species’ cognitive capacity. For example, chickens have 0.35% of the cognitive capacity of humans according to this proxy, so the value of one additional day of life for a chicken experiencing maximum utility is about 1 Euro, compared to 402 Euros for a human.

The worked calculation for “standard” chickens in Section 4.2 clearly illustrates their approach. Because intensive chicken farming creates suffering at every life stage—debeaking, skin inflammation, extreme crowding, broken bones, and more—lifetime utility is negative. The externality per chicken is between 34 and 73 Euros. Paying a tax equal to that misery would raise the current 3-Euro price per chicken by 1,000 to 2,000%!

While standard chickens represent 66% of production in France, the remainder are raised under better conditions. However, even the best method (“organic”) produces negative utility. Interestingly, because this negative utility accumulates over longer lifespans than standard chickens experience, the negative externalities from eating non-standard and standard chickens are similar in magnitude.

French pigs have similarly miserable lives as chickens, but the result is surprising for cows raised for beef. Because they’re generally raised on pasture and mutilated less, these animals’ lives are worth living. Even when pollution externalities like greenhouse gas emissions are considered, the authors calculate that beef could merit a subsidy—its larger climate impact compared to chicken and pork is more than offset by the cows’ positive welfare.

These calculations use “total utilitarian” welfare functions: monetized utility levels summed over individuals. Total utilitarianism implies the Repugnant Conclusion: that we prefer World A, where everyone is almost miserable, with lives just barely worth living, to World B, where everyone’s well-being is high. This conclusion is possible if the number of individuals in World A is sufficiently high, because summing a small number (lifetime utility just above 0) over a large enough number of individuals can exceed the sum of a larger number (higher individual-level well-being in World B) over a smaller number of individuals.

The authors consider other social welfare functions that contradict our moral intuitions less. “Critical-level utilitarianism” avoids the Repugnant Conclusion by summing utilities that exceed some positive threshold, while “average utilitarianism” does so by replacing the sum over individuals with an average over individual-level utility. Importantly, the authors show that if we prefer one of these alternative social welfare functions to total utilitarianism, then the optimal levy should be at least as large as what they calculate under total utilitarianism.

Neither total, nor critical-level, nor average utilitarianism avoid the ‘yayflies conclusion’ though (creating billions of yayflies substantially increases societal welfare). This fictional example illustrates the difficulty of choosing a universally satisfying social welfare function, which is most evident and troubling when the authors discuss wild animals. For example, average utilitarianism “implies the counterintuitive conclusion that biodiversity is intrinsically undesirable, as it would prioritize eliminating species with lower well-being capacities to increase the overall average utility” (p. 12).

Under any of these three utilitarianisms, the extinction of predators could be desirable because they may lower the utilities of prey species. Or if farmed animals have higher utilities than wild animals, the replacement of wildlife habitat with farms could raise societal welfare too. “Number-dampening utilitarianism”, where each additional individual has diminishing marginal value for societal welfare, might avoid these conclusions. But I remain upset by the notion of measuring wild animal utility and adding that to a social welfare function alongside human and farmed animal utility. Species interactions among wild animals are much more complex than any of the social welfare functions economists are prepared to use.

Adding farmed animals to social welfare functions that have heretofore included only human utility does make sense because farmed animals are under the direct control of humans and so can be subject to the same policy instruments. But the ideal of wildlife conservation is to get out of the way, to lessen negative human impacts so that wildlife are free to perform normal behaviors in as undisturbed ecosystems as possible. Loss of wildlife habitat from animal agriculture should be included as another externality in calculating the optimal farmed meat tax. But attempting to measure wild animal utility and compare it to human and farm animal utility would be unsound.

This paper’s simple and clear framework yields consequential implications: farmed animal welfare externalities are large, demanding powerful policy instruments to address them. Berk will have a follow-up post with further thoughts on this paper, as well as some other recent related papers in the budding field of animal welfare economics.