Heterogeneous Effects of Proposition 12 on Californian Consumer Welfare

California’s Proposition 12 (Prop 12) regulations prohibit certain practices related to the confinement of breeding pigs and sale of pork within the state. These regulations have cost impacts on pig and pork producers, which percolate down to prices observed by consumers. However, little is known about the demand-side implications of Prop 12. This study uses survey data from the Meat Demand Monitor and a random utility framework to estimate the welfare loss experienced by California consumers in the pork chop and bacon markets as a result of Prop 12. Our novel contribution includes showing how economic welfare losses vary across time and across consumers with differing concerns over animal welfare. We find that 20 and 12 percent of Californians exit the pork chop and bacon markets, respectively, as a result of Prop 12-related price increases. In aggregate, the state experiences annual consumer welfare losses of $488 million on pork chops and bacon, and these losses fluctuate across time. The economic impacts of Prop 12 are disproportionately borne by low-income individuals, who have household incomes less than 40 percent of high-income individuals but welfare losses that are 84 percent of that of high-income individuals. Consumers who are least concerned with animal welfare experience annual welfare losses within $0.06 of other consumers. Our results expand Prop 12 discussions and broader food policy literature by showing that the economic burden of a social initiative may not be borne by those most concerned with the initiative, and that welfare impacts vary substantially across time.