‘Free-Riders’ And Animal Welfare Food Labels
Welfare labels on animal products aim to improve farmed animal welfare standards by allowing consumers to vote with their wallets. But do they work well? Comparing consumer decisions in a collective versus individual context, this study suggests that welfare labels are not successful.
To see the issue with welfare labels, it’s first necessary to understand a phenomenon known as the free-rider problem. Essentially, this occurs when an imbalance between a public good (e.g. farmed animal welfare) and private benefits leads consumers to underpay.
In the case of welfare labels, the free-rider problem looks roughly like this: Products with welfare labels are more expensive. If I buy these products, I effectively lose out by paying more. But someone must be buying these products and supporting farmed animal welfare: my choice doesn’t seem to make a difference. Comforted by this thought, I might opt for the cheaper, unlabeled product. Each individual consumer faces the same set of skewed incentives. As a result, overall farmed animal welfare suffers.
This study used a survey to examine how the free-rider problem impacts animal welfare. To narrow it down, the study looked specifically at the production of and demand for pig meat, the most consumed meat in Germany (where the study was conducted). After some opening questions about their meat consumption and purchases, the survey split respondents into two groups, presenting half with an individual situation and the other half with a collective situation. The individual situation involved purchasing labeled meat, while the collective situation involved a vote on farmed animal conditions.
Mapping demand based on this data revealed higher support for farmed animal welfare in the collective situation. Surprisingly, it seems that more people would vote for higher animal welfare even if it meant a 60% price increase, than would be willing to pay just 10% more on an individual basis. Clearly, the free-rider problem is a major stumbling block for the effectiveness of welfare labels.
The final section of the survey aimed to understand what motivated respondents’ purchasing habits. This section found, for example, that as much as forty percent of respondents think it’s ethically acceptable to eat conventionally produced meat. This suggests that many consumers have no compelling reason to pay extra for labeled meat.
So how can we use the information from this study moving forwards? One way to reduce the free-rider problem would be to increase private benefits, thus correcting the imbalance. In this case, private benefits of labeled products might relate to their quality: for instance, they are tastier and healthier than welfare-poor products. Rather than emphasizing the public good of animal welfare, the authors suggest that labels should highlight private benefits like meat quality.
In addition to shifting the focus towards private benefits, the study proposes swapping resource-based for outcomes-based welfare measurements to improve on current welfare labels. This means looking at the animal rather than their environment. Instead of asking how much space they have, for example, we should be asking how they behave and whether they are in good physical condition. Emphasizing outcomes will increase transparency and let consumers make more informed decisions about the welfare of the animals they eat.
Improving the labels in these two ways might help correct the free-rider problem and allow individual consumers to make choices that better reflect the value they place on welfare. But useful as this information is, perhaps the bigger takeaway from this study relates to the importance of collective decisions. Respondents strongly supported improving animal welfare across the board. Maybe instead of focusing on the ceiling, it’s time to raise the floor, by improving legislation rather than simply promoting welfare labels.