Economics has an important but largely unrealized contribution to make to animal welfare issues. This is not surprising, since prevailing economic theory has a history of avoiding difficult issues that may ruin elegant yet unrealistic theories. One mantra often heard among economists is that interpersonal comparisons cannot be made. An extra dollar spent on food is beneficial to a starving person and an extra dollar towards a 50-foot yacht is beneficial to a billionaire, but most economists claim it is impossible to reasonably determine who benefits more from that dollar. This perspective severely limits the applicability of economic theory to policy issues (Harrod 1938 and Bromley, 1990) . It is hardly surprising that economists unwilling to make welfare comparisons between two people do not consider the welfare of animals. Instead, animals are viewed as property and therefore receive no direct economic consideration.

It is clearly true that assessing the welfare gains and losses to animals is a challenging and inevitably controversial task. However, to take on this task even as a rough approximation is preferable to the economic default of in effect assigning zero value to the welfare of any sentient life with no spending power. There are tools that can be applied to assessing animal welfare. For example, the concept of discounted Quality Adjusted Life Years (QALY’s) as an aggregate measure to guide policy for humans suggested by Zeckhauser & Shepard (1976) can be applied to animals though Veatch (1980) criticizes such aggregated measures of welfare. Frey (1997) also suggests using some form of quality adjusted life calculation in determining what to use as subjects in animal research even if this means humans with low quality lives would sometimes be the preferred subjects. Dawkins (1990) suggests a viable economic approach by observing the elasticity of demand laboratory animals express their preferences. Another possible method of combining aggregate welfare measures with other qualitative considerations is to use a constrained maximization approach to animal welfare as suggested in Frank (2002).

Current estimates indicate that about 4 to 5 million companion animals are put to death in shelters every year (Animal People, 2001). One of the more promising techniques for addressing this problem, subsidized spay-neuter programs, has been the subject of controversy. Some researchers have argued that these financial incentives are not effective at controlling animal populations (Beck, 1983; Rowan & Williams, 1987; Schneider, 1975; MacKay 1993). Yet others see evidence that these programs are effective (Rush, 1985; Arkow, 1985; Hodge, 1976). This is an example of an economic debate carried out by non-economists, leading sometimes to oversimplification of key issues. For example, low response to spay/neuter programs has often been cited as evidence that they are ineffective, yet there is evidence that even a very small change in the spay/neuter rate can have a powerful impact on long-term population size (Frank, 2001 and Animal People, 1994).

A second economic debate that has taken place almost exclusively by non-economists is the effectiveness of taxes or regulations to incent companion animal purchasers to adopt rather than buy animals from breeders or pet stores (for example this is discussed in Rowan, 1992 and Strand 1993. One economic analysis of the impact of a tax is discussed in Frank, 2001).

Other economic issues include the important role of marketing in reducing the euthanasia of companion animals (as pointed out in Fennel, 1999). Fennel blames some of the problem on market imperfections that make shelter dogs weak substitutes for other sources in the minds of some consumers. The author suggests utilizing a marketing-based model to overcome these barriers. This marketing approach could be greatly assisted by the existing literature on why people choose to live with companion animals (for example in Belk, 1996; Stephens & Hill, 1996; Holbrook, 1996; Hirschman, 1994; and Endenburg et al, 1994).

Ignorance of animal suffering plays a particularly strong role in food consumption decisions. This brings to bear interesting economic questions such as how information that is true yet decreases welfare (i.e. knowledge of suffering) should be treated economically. This is more than an academic question. It seems quite plausible that a significant portion of the population would change their consumption behavior if they were fully aware of the process for creating animal products. Information economics is a growing sub-field of economics that is very applicable here as well as to other animal welfare issues.

Another important economic issue regarding farm animal welfare is the effects of international trade and trade-regulating bodies such as the World Trade Organization on retarding or enhancing the progress of more welfare-conscious agricultural markets. This issue has received some attention from economists including Mitchell (2000) and Blandford et al (2000).

The debate over the use of laboratory animals often involves strongly opposing views with public opinion probably lying somewhere in the middle. What has often been lost in the debate is an attempt to move beyond an all or nothing perspective and to actually take serious stock of the costs and benefits of a given project. The danger of an out-of-hand cost-benefit analysis lacking rigor can be clearly seen in Cohen & Regan (2001) where Cohen accuses others such as Singer of inadequate analysis while at the same time Regan suggests Cohen suffers the same deficiency.

An economic approach to the problem would dictate we consider the possibility of taxation to "internalize" the externality of animal suffering. This is an interesting possibility that has not received adequate attention. Currently, animal researchers have little incentive to consider alternative methods or other projects. In normal markets a tax provides such an incentive, and it may work in some cases here (for example with the pharmaceutical industry). Blackorby and Donaldson (1992) do present one theoretical model examining animal research from an economic perspective. According to their model, a tax cannot lead to the optimal solution although it can move society closer to the optimal solution.

There is a wealth of literature concerning wild animal populations in environmental and ecological economic journals. This literature is sometimes critical of traditional economic valuation methods, including its failure to account for ethical considerations (for example in Vatn, 2000 and O’Neill & Spash 2000). However, though some consideration is given to concepts such as "non-use value" and the "intrinsic value" of the environment, the majority of this literature still focuses on humans as the locus of welfare (including future generations) rather than other sentient life. Examples of literature addressing the value of wild species is Gowdy (1997) which examines the value of biodiversity and Tisdell (1986) which demonstrates that it is sometimes "preferable" in the purely anthropocentric economic sense to hunt a wild species to extinction.

A second theme is one of economic efficiency; how to efficiently use resources to reach an agreed upon goal (such as reducing companion animal euthanasia). And finally, animals being institutionally defined as property is also a recurring issue of vital importance in animal welfare topics.

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