Butchershop Economics

What you pay for is what you kill.

A spineless vegetarian

Imagine you’re an aspiring vegetarian. You want to save animals, but not in a pious way. You have a sheepish taste for meat. Today you wake up with a nasty craving for chicken. What should you order?

Here’s the menu at Peter’s Poultry Products™¹ where yours truly orders, butchers, and cooks chicken:

A1. Whole roast chicken

A2. Pan fried chicken breast

A3. Four fried chicken legs

A4. Six chicken paws

A5. Gravy made from one chicken liver

Take a moment to consider how many chickens would die if you ordered each product. Think about this in expectation (that is, on average, with no additional information).

Now, entertain me.² These seem true to me:

• Ordering A1 kills 1 chicken

• Ordering A2 kills some fraction of a chicken, like about a third

• Ordering A3 kills about the same as A2, despite obviously requiring more than one chicken

• Ordering A4 kills some small fraction of a chicken like 10%, less than A2 or A3

• Ordering A5 is probably far better than A2 or A3

If these aren’t intuitive to you, play around with the numbers a little until you feel satisfied.

Let’s dispel with a naive theory: the literal number of animals consumed is not always equal to the expected deaths. Consuming twenty wings or knuckles (from 10 chickens) does not mean you’ve killed 10 chickens.³ Otherwise, twenty wings (10 chickens) and twenty knuckles (10 chickens) would require us to kill (10+10=)20 chickens. Not a farmer, but I think I could do better. You might feel this even stronger with weird cuts like paw and liver; they’re more gross and less grim. There’s something about products from the same animal that makes them different.

And that’s the mystery. It arises several times a day for altruistic consumers. It implicates billions of dollars and animal lives. Our puzzle today: if you consume a given basket⁴ of animal products, how many animals have you killed?

Pounds and dollars

The standard way we measure animal products is by weight. Academic vegetarians use the weight of boneless generic meat or back out that weight from subproducts.⁵ They then all use a “pounds to lives” multiplier based on how many pounds of products can be harvested from an animal. And so the traditional model of animal lives lost is:

\(\frac{\text{weight of animal product consumed}}{\text{weight of products from one animal}} = \text{animals killed}\)

These multipliers are approximately correct in aggregate. If a country ships 5 million pounds of poultry a year and a chicken weighs 5 pounds, then about a million chickens have died in the process. Weight is a convenient metric for macroeconomic analysis because the statistics are readily available (from shipping, inventory, etc.).

But weight isn’t very satisfying at a granular level, for you and me. Is a pound of chicken liver the same as a pound of chicken breast? What about a pound of chicken bones? Or chicken feathers? We’re probably not ready to equate a pound of chicken drumsticks with a pound of chicken shit.

Really, the weight model is just convenient. There’s no theoretical reason why pounds are the right unit of analysis. Certainly, Peter’s Poultry Products doesn’t think in pounds. I buy whole chickens and break them up into breasts, legs, and wings. Then I sell the parts and price them based on demand. I can operate a perfectly profitable business without knowing any weights.⁶ No one in the poultry industry makes decisions to produce based on weight.

In a market economy, decisions are made based on money.

Here’s a simplified but mostly true model of the livestock industry. Whole livestock is raised and sold by farmers to butchers. Butchers divide the animal into component products and sell those piecemeal to wholesalers. Eventually, those products make their way to consumers like you and me. The crucial decision is made by butchers: butchers evaluate the demand for each of the products and make a decision about how much livestock to purchase.

Meat supply chain. Borrowed from a completely unrelated article about Cameroon. The important part: look! meat goes through the butchers before reaching the consumers.

The butcher’s function is to buy a bundled product and resell subsets of the components. This is an economic model we can formulate! In a competitive market, the butcher supplies animal products so that, at the margin, every possible subset is priced consistent with the cost of whole livestock. If people suddenly really enjoy eating fried paws in gravy, PPP can probably make money by producing more paws and liver (and everything else).⁷ Basically, “I look at the prices of all of the pieces and if they are higher than the whole, I’ll keep butchering more.” Every decision is made based on prices, rather than weight.

The butchershop model

I propose a novel product-to-animal-lives calculation which I call the butchershop model:⁸

\(\frac{\text{price of animal product consumed}}{\text{price of whole animal livestock}} = \text{animals killed}\)

I guess I have to defend this now. Let’s start with an idea from financial markets. There’s this idea from financial economics called “market impact” that refers to how much the price moves if someone makes some trades in a product. A useful rule of thumb (and a well-studied model) is that your impact on the price is linear in your dollar volume. If I buy $100 worth of chicken paws, I can push the price of paws from $1.00 to $1.01. If I buy $1000 worth, it’ll go to $1.10. So the total economic value of the animal product basket I buy determines how much I push the price of wholesale livestock, which might then linearly impact the supply of that livestock.

An economic argument applies too. We typically think about demand in terms of demand curves. In particular, demand curves are locally linear.⁹ If I buy one more product at market rate, the demand curve shifts right and the new equilibrium price moves up by some percent. Note that the change in price is proportional to the change in quantity demanded. If I move the quantity demanded of chicken breast (which costs $5) by 1% and of chicken liver (which costs $0.50) by 1%, then the former will have an absolute price change that’s 10 times larger. And of course, for baskets of goods, things are all linear and work out accordingly.

Demand curves. Here’s some helpful intuition. Every time you eat at PPP, some D turns into a D1. The D1 then randomly samples and murders some poor chicken out there.

Here’s a final argument from a business perspective. The butcher is in a competitive market with fixed poultry prices. His goal is just to order as many livestock as he can afford, butcher them, and sell them. Every couple of minutes, he sells just enough chicken that he can afford a new, raw whole bird, which he will buy immediately. If you buy some amount of chicken from him, in expectation, he will order exactly the price of your order divided by the wholesale price of the chicken. Clean!

This model is satisfying. It meets all of our intuitions¹⁰. If you consume every piece of a chicken individually, you’ve killed a chicken. If you buy some waste product (consider literal chicken waste) that the market values at $0, then you aren’t really killing any chickens. Buy a lot of expensive cuts of steak and you kill more cows. Nibble on cheap scraps and you probably don’t kill as many.

What’s in and what’s out

This small correction has some interesting implications. I used online butchershop prices to do rough calculations based on the butchershop (price-based) model. Let’s revisit our original menu.

A1. Whole roast chicken ⦾ $27.45 ⦾ 1 chicken killed

A2. Pan fried chicken breast ⦾ $7.74, 0.282 chickens killed

A3. Two fried chicken legs ⦾ $12.22 ⦾ 0.223 chickens killed

A4. Six chicken paws ⦾ $2.40 ⦾ 0.0876 chickens killed

A5. Gravy made from one chicken liver ⦾ $0.50 ⦾ 0.019 chickens killed

I knew it! You’re 50 times better ordering mashed potatoes than eating a whole roast chicken. This isn’t just an artifact of weight either. Paws are something like a third of the price of breasts on a pound-for-pound basis.

These differences are even greater for beef.¹¹ Here’s an illustrative subset of weight-to-price multipliers ($/lb).

Filet mignon ⦾ $82.45

NY strip steak ⦾ $27.93

Tri-tip ⦾ $19.11

Ground beef ⦾ $11.99

Beef spleen ⦾ $5.71

Filet mignon is over an order of magnitude more expensive than cheaper cuts like beef spleen. One wealthy glutton eating filet mignon for lunch and dinner kills as many cows as six people eating ground beef. In fact, I calculate that while filet makes up just one-fortieth (1/40) of the cow’s meat weight, it constitutes more than a tenth (1/10) of the cow’s economic value. The numbers are, I imagine, similar for pork, lamb, and other livestock.

The butchershop model has some direct implications for how we should think about animal harm. Looking at beef consumption by weight, you might conclude that Taco Bell and Fogo de Chao have similar impacts on animals. But these rough calculations suggest that this is probably off by almost a factor of 2. Our taste for fine cuts of meat at an individual level does more harm than we may think.¹² Thank you, Yum! Brands.¹³

We can also evaluate veganism using our model. What is the value of avoiding non-flesh animal products? Consider oysters. Shucked oysters run for something like $25 a pound; oyster shells go for $400… per ton. Buying a shell kills approximately zero oysters, though you wouldn’t know it by weight. Leather? This article suggests that the hide is a byproduct, contributing between 1 and 4% of the cow’s wholesale value. All the bags made from the finest cow hide combined kill about as much as one pound of filet mignon.¹⁴ The butchershop model could be used to directly measure the marginal harm of all animal products in an elegant, apples-to-apples way.

Something worth noting here is just how easy these calculations are. Whereas the weight of your chicken tenders or the grams in your steak often isn’t obvious, the price tag is right there! With the obvious caveat that menu prices aren’t the same as raw meat prices, you can probably get a great idea of how many animals you’re killing at a KBBQ place by just looking at your receipt.¹⁵ The butchershop model has the added advantage of relative ease of use for the average meat-eater.

A lingering discomfort

The vegetarians in the audience probably feel a mix of disgust and anger at this point. Justifiably so, and it’s worth unpacking why. There are at least two sources of disease. The first: this all feels so heartless and reductionistic. It makes a marginal improvement on an existing, crude measure of animal suffering. Doesn’t this subvert the moral force of the animal rights movement? In particular, does this not tacitly endorse animals as commodities, rather than as fellow creatures with whom we share the world? Shouldn’t we be clamoring to shut down the Peter’s Poultry Products™ of the world?

Moral disgust is a visceral response and I can’t fix that. But this article is for meat-eaters who might be open to making adjustments in their diet. It suggests that they think clearly about the burden on animals of different everyday products and explore more unconventional animal products. Spending 20% less on meat can accomplish something like “1/5th vegetarianism,” so that 5 enlightened meat eaters can save the same number of animals as one vegetarian. Which suggests a second concern: what do we want in the limit? If everyone thought this way, what relationship to meat would we have?

I imagine a world where animal products are priced efficiently. By “efficiently,” I mean that people weigh their altruism against their gluttony and make a rational decision about their consumption. People who crave meat but want to reduce suffering might consume more exotic cuts. A high rolling animal lover who regularly enjoys premium cuts could downgrade to economy cuts. As altruism for animals grows, animal products might be priced according to their ability to meet just our needs—and not to delight the tongue. The customers of Peter’s Poultry Products™ recognize the tragedy of farming animals and make the most out of it.

1.  Fictional and no association to the halal meat processing plant of similar name.

2. Which means: Assume I don’t make any profit from my business (PPP is a nonprofit with the mission of delivering cheap poultry). And assume that supply chains are efficient and supply elasticity is 1. One whole chicken ordered at PPP is one more chicken raised by a neighborhood factory farmer in Iowa. If this seems super unreasonable, this paper makes some useful arguments for the competitiveness of meat production and the efficiency of supply chains.

3. Not because “well they’re already dead!” There’s some discussion about that here.

4. Combination of products of different weights. Could be one chicken thigh, half a chicken wing, or a whole KFC bucket.

5. You can make the calculation based directly on weight (e.g. of poultry, see here) or from some downstream product (e.g. wings or gravy, see here).

6. In a competitive market, I adopt the market price for selling each component chicken product. I then buy whole, raw chickens as long as I can still make money by selling the component products. In an uncompetitive market, I pick a price and a quantity to maximize profit.

7.  This is essentially an arbitrage argument. In a ruthlessly cold and capitalistic way, animals are ETFs: baskets of cuts of meat and bone that customers demand. A butcher’s job is to do the redemption arbitrage. They collect the spread between the price of the whole animal and the grocery price of meat.

8. Or equivalently, this equation but with the first term broken into pounds of products consumed times price per pound. This is actually how I do some of the calculations later, so maybe all I’m doing is adding a correction term. But it’s deeper than that. Price has no theoretical relationship to weight other than being con-founded by quantity. If there was demand in the spiritual/religious sectors of the economy for animal sacrifices (one sacrifice per animal life!), then it’s not clear how that would scale.

9. Which is why we use demand elasticities, which are local partial derivatives, to describe this slope. 

10. Worth scoping the argument here. I’m talking mostly about widely eaten meats with established butcherhouses. In highly illiquid markets (for products like shark fin), you may see very different conditions. For one, demand curves can look a lot more non-linear so that ordering even a modest amount of product can move the price a lot. Moreover, if butchers aren’t able to access liquid markets for different parts, then they may react a lot to demand in just one product (suppose someone can’t sell any part of the shark except for the fin, even if it has economic value—then your one fin is basically one shark). Thanks to Jo Park for pointing this out!

11. A natural follow up is to compare moral worth between species. In moral decision making, we actually care about something like “moral weight of a chicken life x number of chicken lives + moral weight of a cow life x number of cow lives.” Comparative moral weight is a complex question that’s discussed and debated already. Measuring lives is an orthogonal question that seems equally important and much more empirically resolvable.

12. A little quirk of this calculation: The price doesn’t directly and always scale with animal harm. For example, eating A5 Wagyu will be way more expensive than normal filet. But the livestock itself—the Wagyu cow—will also be proportionately more expensive. And so the larger denominator might push the proportion of cows killed to be back in line with other filet cuts. What really is at stake is: relative to the animal which died for my meal, how much of it did I eat (in economic terms)? This also means that paying more for ethically raised animal products doesn’t cause more harm in the sense we care about. In fact, we should probably model free range chickens separately from factory farmed chickens insofar as they are different products with very different amounts of associated suffering.

13. Are fast food companies “good” for animals? An argument could go like this. The fast food business strategy is to find the cheapest ingredients and make them dopaminergic. If they are able to make random ground up chicken scraps taste like a delicious McNugget that kids would choose over a grilled breast, then that might be good for the chicken? In expectation, under ideal conditions, and without considering externalities.

14. The price of “a hide from an unbranded heavy beef steer” is $38.50, while the pound of filet costs $42 at the grocery store.

15. Noise varies, obviously. At a KBBQ place, you can compare the prices between cuts of beef and they’ll almost directly reflect the relative animals killed. But comparing a Big Mac and a chicken nugget? Good luck. If companies were transparent the costs of their raw inputs, then that might be a much more tractable calculation.