Why Do People Have Pets

WHY DO PEOPLE HAVE PETS? A THEORETICAL NOTE

by

P. A. Black and D. Yu

1. Introduction

Pets play an important role in the daily lives of most people, and yet they are often taken for granted. Certainly very little research, at least in the economic sciences, has been done on the reasons why people acquire pets in the first instance, and why most pet owners treat their pets with love and kindness. The famous utilitarian, Jeremy Bentham, did at least ask whether the utilities of animals should be “on all fours with those of the human animal” (Bentham, 1961:10); and the prevalence of animal welfare organizations across the world would seem to lend support to Bentham’s intimation.

In this brief note we offer several tentative answers to these questions, and argue that pets fulfill several important functions that confer a net benefit on their owners: they can be a source of additional utility in much the same way as altruistic relations between human beings are; they may help to protect owners and their property against acts of crime; and they may allow their owners to join the labour force and earn additional income, instead of having to stay home and protect their properties. In what follows we use a simple microeconomic model explaining the choices made by pet owners under different assumptions, and also touch on the possible external values associated with pet ownership.

Although the term pet evidently includes a range of animals, including dogs, cats, birds, fish, monkeys, snakes and even pigs, our analysis mostly applies to the most common of these, i.e. dogs[1]. We also restrict ourselves to the (micro-) economics of the issue, thus ignoring contributions made in the other social and natural sciences. From a social psychology perspective, for example, it may well be argued that the presence of a pet impacts positively on inter-personal relations between and among family members, friends and associates of the owner; though it may also be true that it is precisely the ‘positive’ (interpersonal) attitude of a person that encourages him or her to acquire a pet in the first instance.

2. Private Value

The role played by pets can be viewed heuristically in terms of the standard tools of microeconomics. For example, let the utility of a pet owner, i, be

Ui = f ( Xi , Up ( Yp ) , C*i , ... ) [1]

with Ui ' (Xi) > 0 ; Ui ' (Up) > 0 ; Up ' (Yp) > 0 ; Ui ' (C*i ) < 0

where Xi is a composite good representing i’s level of (current) consumption, Up is the utility level of the pet, assumed to depend on the quantity of pet food consumed, Yp , and C*i is an exogenous variable indicating the extent to which individual i feels threatened by being a victim of crime. The consumer thus wants to maximise:

Ui = g ( Xi , Yp , C*i , ... ) [1a]

subject to the budget constraint, Bi = i + Px X i + Py Yp , or

Xi = ( Bi – i – Py Yp ) / Px[2]

where Px and Py are the prices of goods X and Y, and i represents individual i’s (fixed) expenses in respect of acquiring (and maintaining) a pet and / or crime prevention equipment.

We may explain the microeconomic role of pets in a step-wise fashion. To start with, assume that the consumer is not aware of the benefits associated with having a pet and finds herself initially at point C in Figure 1, where she spends all her money on good X and achieves a utility level equal (or similar) to Ui 1 ( C*i 2 ). She then realises that if she had a pet (for free) and divided her budget between Xi and Yp, she could achieve a higher utility level at point F. But pets do not normally come free, and if she had to pay for one it would imply an increase in i and an inward shift in the budget line to, say, AB – where she would still achieve a higher utility level, Ui 2 , at point E.

Now, if having a pet makes the consumer feel more secure, C* may fall to C*i 1 , thus raising her utility to Ui 3 whilst still operating at point E. Similarly, if ownership of a pet enables the consumer to join the labour force, and earn additional income (Bi), with the budget line shifting outwards to CD (or beyond), equilibrium would occur at point F (or point G), representing a further increase in utility to Ui4 (or Ui5).

X i

G

C Ui 5 ( C*i 1)

A F

E Ui 3 ( C *i 2) / Ui 4 ( C*i 1)

Ui 2 ( C *i 2 ) / Ui 3 ( C*i 1)

Ui 1 ( C*i 2 )

B D Y p

Figure 1

3. External Effects

Pets may confer external benefits on people visiting the owner, who may feel safer than otherwise, and may also derive (additional) enjoyment from spending time with the pet. At the same time, however, pets could also impose external costs on neigbours having to put up with a noise factor that would not otherwise be present. Pets may also pose a danger to individuals visiting premises in good faith rather than with criminal intent.

There is evidence showing that pet owners are healthier than non-owners and that they therefore spend, on average, less on health care. In Germany, for example, dog and cat owners make, on average, 16 per cent fewer visits to doctors and spend 21 per cent fewer days in hospital per year – a trend that is particularly prevalent among men over 65 years of age (Heady, 1998). Similar findings also apply to Australia, the UK and USA (Heady & Anderson, 2000). Thus, to the extent that having a pet does improve the health status of the owner – e.g. through greater physical exercise and a lower incidence of psychological / psychiatric ailments – health care costs will be lower, thus implying both a private benefit to the pet owner (as explained above) and external benefits to others. The latter benefits are relevant in countries where the state is the predominant provider of health services, as is indeed the case in Germany, Australia, the UK and many other countries. Lower health spending by pet owners may lead to lower tax payments by the broader community, and / or to a more efficient and acceptable allocation of (the given) state budgets.

Similarly, having a pet could confer positive externalities on other members of the pet owner’s neighbourhood – through a reduction in neighbourhood crime rates. Such externalities may ultimately be internalised through a reduction in protection and medical expenses and an increase in property values in the neighbourhood. More generally, the safety of a neighbourhood, and the average property value, will presumably depend on the number of pet owners resident in the neighbourhood: the optimal level of safety and the associated average property value may be achieved only if all residents have pets, or if some critical minimum number of them, spread evenly across the neigbourhood, have pets. Neighbourhood pets may thus be viewed as a local public good, calling for residents to negotiate with each other and requiring individuals who have a strong relative preference for pets to assist those with only a weak preference for acquiring pets.

Extending this argument to the broader community, a thriving pet industry may reduce the need for policing, thus reducing the size of the relevant state budget and benefiting tax payers. Similarly, the benefits in terms of value added and new job opportunities created by a growing pet industry may offset the possible contraction of private security and insurance companies. Why, insurance brokers merely need to become pet breeders or manufacturers of pet food!

4. Concluding Note

Apart from the private benefits associated with pet ownership – personal security, income-earning opportunities, better health – it is possible that pets may confer a net external benefit on the community, making the environment safer and communities healthier. The resultant under-supply of pets and pet food may thus call for a subsidy aimed at equating marginal social benefit and marginal social cost. Should the subsidy contribute to a thriving pet and pet food industry, the resultant induced increase in taxes may be sufficient to pay for the subsidy and also to assist in the attendant re-allocation of resources.

References

Bentham, J (1961). Principles of morals and legislation, London: Doomsday

Heady, B (1998). Annals of the Animals, Comminity Health and Public Polisy Symposium, University of Melbourne

Heady, B & Anderson, W (200). “Health cost savings: the impact of pets on Australian health budgets”, mimeo, Centre fro Public Policy, University of Melbourne

1

[1] It is estimated that 66 per cent of the total expenditure on pets in Australia is spent on dogs (and 25 per cent on cats) (Heady,1998)