The Economics of Pets

A few months ago, I posted a blog post about the carbon footprint of pets.    I see that my post must have started a new literature.  Here is a new paper   titled “Pet Overpopulation:  An Economic Analysis”.  Perhaps blogging and academic writing are like peanut butter and jelly? 

Now, I have wondered about how close substitutes are pets and children but I haven’t been smart enough to figure out a way to measure this.   We would need to observe whether people substitute from having kids to owning pets as the full Becker price of kids goes up.  (I’m half kidding).

Pet Overpopulation: An Economic Analysis

Stephen Coate, Cornell University
Brian Knight, Brown University

A BEJEAP Advances1 article.


The market for pets in the U.S. is important economically and socially. Pets differ from standard economic goods in significant ways, and the market displays a number of interesting problems, most notably pet overpopulation. Despite this, the market has been ignored by economists. This paper develops a dynamic model of the market for pets and uses it to study the problem of pet overpopulation. The positive predictions of the model square well with key features of the markets for dogs and cats in the U.S. The model is used to understand, from a welfare economic perspective, the sense in which there is overpopulation of pets and the underlying causes of the problem. The paper also employs the model to consider what policies might be implemented to deal with the problem. A calibrated example is developed to illustrate these corrective policies and quantify the potential welfare gains.

Submitted: March 19, 2010 · Accepted: December 3, 2010 · Published: December 9, 2010

Recommended Citation

Coate, Stephen and Knight, Brian (2010) “Pet Overpopulation: An Economic Analysis,” The B.E. Journal of Economic Analysis & Policy: Vol. 10 : Iss. 1 (Advances), Article 106.

Author: Matthew E. Kahn

Professor of Economics at UCLA.

9 thoughts on “The Economics of Pets”

  1. Don't know about pets, but today's total biomass of humans and draft animals in the US is about the same as it was in 1925.

  2. Maybe I'm just grumpy, and if so I'm sorry, but this kind of post sends me up the wall. Your statement about carbon footprints, and that others had gotten interested in the issue, set me off. If every pet were euthanized tomorrow the problem of carbon over production would be trivially addressed. To focus on pets in my opinion is to muddy all understanding of the carbon issue. The problem of CO2 over production and task of minimizing carbon footprints rests overwhelmingly with energy corporations and guys like the Kochs' domination of media and government on these issues so that no intelligent action on carbon footprints is possible.

    Here is one clear approach that would do more than all the worrying about whether somebody else has too many pets:

    A tax on gasoline that pegs its price so it never falls below a certain level, with the tax increasing or decreasing as the 'market' price fluctuates. Every year this price would increase in a predictable way.

    The money raised would go to offset employers' payments for Social Security, thereby making labor cheaper without hurting wages. That would make it revenue neutral, shutting up a standard 'conservative' complaint, while penalizing what we want people to avoid and lessening costs on behavior we want to encourage. Perhaps some could go to fund mass transit in areas where poor people have to drive long distances to work, like parts of New York where I used to teach. That would necessitate dealing with conservative complaints of a tax increase, but they will likely find a reason to complain no matter what.

    A stable and predictably rising price means people can safely invest in alternative technologies because the long term prices for the petroleum alternative are foreseeable.

    A stable and predictably rising price means consumers will know gas will get progressively more expensive, so they can take that into consideration when buying cars and houses.

    Because all market signals are through prices, and not regulations or subsidies to politically connected industries, no one is trying to bet tax money of the best alternative technology, or unintentionally stifle discovery of methods not known or appreciated by policy makers.

    Seems to me a better and more rational use of research time than exploring the economics of pets.

  3. Pets (as well as working animals) survived (and often thrived) perfectly well up until 1980 on a diet of human food scraps. Later canned and other processed pet foods were introduced (just as with human foods), but these were still cost-effective from an ecological viewpoint as they were still made from discarded human foodstock and generally were processed locally and transported only short distances. It is only since 1980 that pet foods (along with lawn and garden chemicals) have become objects of obsession in the Atlantic nations with large quantities of exotic, high-ecological-cost ingredients being processed and transported at high cost. This is a particular sickness of the Western world, not a necessity for owning, caring for, and enjoying pets.


    And I am a person who dislikes just about every form of pet, myself.

  4. Trying to measure the environmental consequences of pets in carbon alone is real reductionism. There are pets and pets, and different ways of maintaining them: the songbird price of outdoor cats (and the bite/fear price of ill-managed dogs) are considerable and should be considered.

  5. I think it's quite likely that pets substitute for children or children's siblings. I think the pet as substitute has a significantly smaller life-cycle cost because the pet is less likely to reproduce and even if it does reproduce, is less likely to change the overall pet population whose demand will be satisfied by strays/puppy mills etc. And the responsible pet owner can neuter their pets while the same practice is discouraged for children.

  6. Pet overpopulation is not the problem. Human overpopulation is. My partner and I have chosen to have two (small) dogs instead of children in significant part because of the issue of "carbon footprints" and overpopulation.

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