About 64.2 million American households keep pets, at a yearly cost of about $34.4 billion, according to the American Pet Products Manufacturers Association. That amounts to about $500 per family per year, and that figure is not counting pet-themed greeting cards and other ancillary pet-related products.
I suspect that the demand curve for pets is, per family, not smooth. That is, the last pet yielded immense consumer surplus, yet the family doesn’t want to buy another pet, or even rent a pet for a week each year.
The number of pets has been rising, so by how much are market prices underreflecting the implied corresponding rise in living standards?
If people are investing more and more in "identity goods," perhaps those goods don’t have smooth demand curves either. Endowment effects are becoming stronger, not weaker. The very poor, for instance, can’t afford such extreme attachments to assets they might need to sell, or in the case of pets, convert to food.
How strong must this effect — the rising relative importance of endowment effects — be to generate an extra 1% a year boost in living standards?
I very much enjoyed the new book Pets in America, by Katherine C. Grier.
“The very poor, for instance, can’t afford such extreme attachments to assets they might need to sell, or in the case of pets, convert to food.”
Come on, this is America, not North Korea.
“for whom an unexpected litter of hungry kittens is a financial crisis”
Formerly most people would dunk them in a pail of water without giving much thought to it. Is it illegal in America?
A Tykhyy, yes, drowning kittens is usually illegal in the US, and it is generally considered to be cruelty here. People with unwanted kitten litters frequently release them to live in the wild (which is also illegal), or dump them at shelters to be killed legally, or try to recruit other people to adopt them.
Since all of these options impose costs of society, there is charity and public funding available to spay/neuter your cat, but many people don’t take advantage of the free funding either out of ignorance, or to avoid having anyone official notice that they should also be paying for licensing and vaccinations.
Do this take into account that more people are adopting pets instead of having children, thus transfering the money they would have spent on kids to pets? I know in the DC area (especially in my locale) that may be the case . . .
While the numbers of pets are rising, is the reason for increased spending on pets mainly isolated with the latest celebrity trend of pets with plush accomodations and accessories acting as an inflationary factor. For instance the number of crazy cat ladies and aficionados of neighborhood roaming hound dogs could be increasing, and a few eccentrics spending $500,000+/yr on their pets could be over compensating. Living in a rural mountain setting has taught me that often the greater number of pets equates to a lesser standard of living. Thus it would make only sense that this more of an abiration than a trend. Lending itself to a suburban/urban phenomenon combined with the increase infatuation of young rich girls w/ handbag sized pooches.
I agree that the demand curve for pets, per family, is not likely smooth. For the average person the rate of diminishing marginal benefit is greater than other “goods” because of the amount of upkeep that is required. I would also argue that the endowment effect concerning pets is much stronger than that of almost any other “object”. Even though they might not purchase another pet at the lower price level, the emotional attachment causes the pet owner to value their pet at a much higher price than a similar animal.
“the latest celebrity trend of pets”
Chihuahuas: They’re not dogs, they’re fashion accessories!
I don’t think the spending is celebrity-driven. the chihuahua market is pretty small and not that economically relevant. As a dog owner, what I’ve seen drive spending is:
1. Higher vet bills and more expensive treatments; they now fix a lot of dog problems that would have once gotten the Ol’ Yeller solution.
2. Owner convenience — people spend much more on training, psychology, medication, and doggie daycare to prevent their pets from peeing on or chewing up the furniture. This is really spending money on your furniture, not on your pet.
3. Entertainment — buying new doggie toys is probably more fun for the owner than for the dog (who might prefer a muddy stick). It’s no different from buying any other toys for yourself, and yes, it rises with disposable income.
Excellent info, I liked it.
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