Transcript Slide 1

A better conversation with consumers
about farm animal welfare
Bailey Norwood
Associate Professor
A better conversation with consumers
about farm
animal
Jayson
Luskwelfare
Professor and Willard Sparks Endowed
Chair of Agribusiness
Department of Agricultural Economics
Oklahoma State University
1
A better conversation with consumers
about farm animal welfare
(A) The farm animal welfare issue
better
conversation
with consumers
(B)AA
Calibrated
Conjoint-Auction
Method
about farm animal welfare
(C) Interesting empirical results
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The Farm Animal Welfare Debate:
Where We Have Been
Section
A
3
Productivity Gains Mostly Benefit
Consumers
Historical Farm Prices for Live-Cattle, Live-Hogs, and Eggs in 2002 Prices
$250.00
500
450
$200.00
400
Live-Cattle
Prices
$150.00
300
250
$100.00
200
cents per dozen (eggs)
$ / cwt (cattle, hogs)
350
Hog Prices
(barrows, gilts,
and sows)
Egg Prices
150
$50.00
100
50
0
1920
1923
1926
1929
1932
1935
1938
1941
1944
1947
1950
1953
1956
1959
1962
1965
1968
1971
1974
1977
1980
1983
1986
1989
1992
1995
1998
2001
$-
Section
A
The data before 1929 are from Statistical Abstracts of the U.S. and the subsequent data are from NASS yearly
reports. The two data series do not refer to the exact same goods or use the same sampling methodology, but are
close enough for me.
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John Steinbeck in Travels With Charley
Even while I protest the
assembly-line production
of our food, our songs, our
language, and eventually
our souls, I know that it
was a rare home that
baked good bread in the
old days.
Section
A
Page 83.
1962
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But what about the animals?
Section
A
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The Farm Animal Welfare Debate:
Where We Are Going
Section
A
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The Farm Animal Welfare Debate: What
Makes Chickens Happy?
Determinants of Hen Welfare
(1) Space per hen
(2) Barn space per hen
(3) Beak trimming
(4) Room for scratching
(5) Nest availability
(6) Free-range access
(7) Group size
Section
A
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The Farm Animal Welfare Debate: An
Interesting Question
Is this worth $0.60 more per dozen?
Let us ask consumers.
Especially informed consumers.
Section
A
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Conventional Valuation: Overview
Estimate some regression: Bid = a0 + a1(X)
e.g. indicate your auction bid
Good A
67 square inches of space
Section
B
Good B
100 square inches of space
Dependent
Variable Y = bids
Explanatory
Variable X
Question 1, Good A
{$0.5 }
0
Question 1, Good B
{$1.5}
1
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We want to measure individual values
for 41 attribute levels.
Section
B
Attribute
Eggs
1. Price (dozen eggs)
2. Barn Space Per Hen (sq inches)
3. Barn Floor Space Per Hen (sq
inches)
4. Beak Trimming
Levels
# Levels
$0.50, $1.50, $2.50, $3.50, $4.50
48, 69, 100, 171, 252, ≥353
≤97, 111, 129, 155, ≥194
5
6
5
5. Room for scratching, foraging,
and dust bathing (sq feet per hen)
6. Nest Availability
0, 1, 2
3
no nests, group nests - no bedding, group nests - with bedding,
individual nests - no bedding, individual nests - with bedding
5
7. Free Range
no free range, free range without predator protection or shelter,
free range with predator protection, free range with shelter, free
range with predator protection and shelter
5
8. Group Size
> 3,000 hens, > 3,000 hens with perches, 2,000 hens, 2,000 hens
with perches, < 7 hens, < 7 hens with perches
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9. Type of Feed
non-organic, non-organic with flaxseed to add omega 3 fatty
acids, organic
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beaks are not trimmed, beaks are trimmed < 10 days old, beaks are 3
trimmed when older than 10 days
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We want to measure individual values
for 41 attribute levels.
But this is impossible to do using standard valuation
methods.
• Is each person going to submit 41 bids?
• We wish to avoid the use of random parameter
logit models.
Section
B
We need a system that helps respondents behave
rationally.
• Respondents cannot “keep their thoughts” straight
when perusing goods with 41 possible
attributes/attribute levels.
• Want to avoid preference reversals, excessive12
choice effects.
Choice Experiments Are No Better
Imagine Choosing Between Good A and Good B
More Than 100 Times
Attribute
Section
B
Good A
Good B
Space / Hen
67 sq. in. per hen
100 sq. in. per hen
Barn Space / Hen
< 97 sq. in
100 sq. in per hen
Beak Trimming
none
< 7 days old
Scratching Room
1 sq. ft. per hen
1.5 sq. ft. per hen
Nest Availability
Group nests / bedding
Individual nests / no
bedding
Free-Range
none
Free-range no
protection
Group Size
< 7 hens
> 3,000 hens
Type of Feed
regular
organic
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Solution: A Calibrated Auction-Conjoint
Method
Step 1
Rate the
desirability of
many attribute
levels
Step 4
Submit bids
Utility
Function
auction
bids
Step 2
Rate the relative
attributes
Section
B
Step 3
Calibrate utility
function to generate
desirable bids
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Step 1: Rate the Desirability of Each
Attribute Level
Section
B
(3-3)/(9-3) =
0.00
(4-3)/(9-3) =
0.17
(9-3)/(9-3) =
1.00
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Step 2: Indicate the Relative Importance
of Each Attribute
Section
B
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Describe Five Egg Production Systems
Attribute
Cage
Barn
Aviary
Aviary with
Free Range
Organic
2. Barn Space Per Hen
(sq inches)
69
155
186
186
186
3. Barn Floor Space Per Hen (sq
inches)
69
155
97
97
97
trimmed <10
days
trimmed <10
days
trimmed <10
days
trimmed <10
days
trimmed <10
days
0
1.35
1.35
1.35
1.35
no nests
individual nests
with bedding
individual nests
with bedding
individual nests
with bedding
individual nests
with bedding
7. Free Range
no free range
no free range
no free range
free range with
shelter and
predator
protection
free range with
shelter and
predator
protection
8. Group Size
<7
> 3,000
> 3,000 with
perches
> 3,000 with
perches
> 3,000 with
perches
non-organic
non-organic
non-organic
non-organic
organic
Eggs
4. Beak Trimming
5. Room for scratching, foraging,
and dust bathing
(sq feet per hen)
6. Nest Availability
Section
B
Production System
9. Type of Feed
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Four Egg Production Systems
Section
B
Cage System
Barn System
Aviary System
Aviary w/ Free-Range System
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Step 3: Calibrate Utility Function
Step 4: Submit Bids
Section
B
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We ask subjects to construct their own
utility function, and verify it with a
real auction
Utility (ignoring price) = (Points to Attribute)(Rating of Attribute Level)
Utility of Cage Eggs = (Points to Space)(Rating of 48 sq in)
+ (Points to Free-Range)(Rating of no access)
= (25)(0) + (10)(0.25) = 2.5
Utility of Cage-Free Eggs = (Points to Space)(Rating of 150 sq in)
+ (Points to Free-Range)(Rating of access/protection)
(25)(1) + (10)(1) = 35
Auction Bid for Cage Eggs = $1
Bid Premium for Cage-Free Eggs is then (utility difference) / (Points to Price)
= (35 – 2.5) / 65 = 0.5
Section
B
Bid Cage Eggs = $1
Bid Cage-Free Eggs = $1.5
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Advantages of Calibrated Conjoint Auction
Method
(1) Low computational burden (when using
computers)
(2) Induces rationality (preference reversals
impossible)
(3) Can compute bids for any combination of
attribute values, not just those in the auction
(4) Can analyze large numbers of attributes and
attribute levels
(5) Observe individual-level behavior directly
(6) Did you notice there is no error term?
Section
B
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Application
Locations: Dallas, Chicago, and Wilmington, NC
Subjects: 300 total, in 25 person sessions
Good: 150 in eggs, 150 in hog
Information: objective description of farm
production practices and animal welfare factors
Auction: 5 egg or pork products, real BDM auction
Section
C
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Application
Is this worth $0.60 more per dozen?
Let us ask consumers.
Especially informed consumers.
Section
C
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Thank You!
Questions?
Comments?
Insults?
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A Final Thought. This IS a Big Issue.
From Racism to Specism
Specism- the
act of
placing a
higher moral
or ethical
value on one
species over
others.
Peter Singer
Utilitarianism
Animal rights
view
Species-integrity
view
Agent-centered
view
Hybrid view
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A Final Thought. This IS a Big Issue.
Don’t underestimate society’s ability to
change
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