The Economics of Pets

Are pets a financial luxury or a household necessity? Matt and Jadrian break down the economics of pet ownership—from the true cost of bringing a furry friend home to the surprising ways people go into debt for their pets. They dig into the "adopt don't shop" debate, the business of pet breeding, and why vet bills can feel a lot like human healthcare costs. Whether you're a pet owner or just curious about the billion-dollar pet industry, this episode sheds light on the financial decisions behind our four-legged companions.

In this episode, we discuss:

• The cost of pet ownership, from adoption fees to ongoing expenses

• Why vet bills can be unexpectedly high—and how some owners take on debt to cover them

• The economics behind the “adopt don’t shop” movement and its impact on pet markets

• How people make financial trade-offs when it comes to caring for their pets

• The labor market for veterinarians compared to other professions

• And a whole lot more!

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Some show notes:

By the time this episode airs, we’ll be in the middle of Spring Break, catching up on projects and hopefully enjoying a little downtime. But before the break officially begins, we decided to squeeze in one last conversation—drinks in hand, of course. Jadrian was still at the office, so he grabbed a Coke Zero from the department fridge. Matt was planning to work out after we chatted, so he mixed it up with a non-alcoholic Moscow Mule.

James Pomykalski submitted today’s topic—the economics of pets—which immediately caught Matt and Jadrian’s interest as dog lovers. While they both prefer dogs, they recognize that many of the same economic ideas apply to all pets. Matt’s first thought was the economics behind the “adopt, don’t shop” movement—an effort to encourage pet adoption over purchasing from breeders or pet stores.

While adoption is often seen as the more ethical choice, does it actually reduce demand for bred animals, or does it simply shift where people get their pets Regardless of how someone brings a pet home, the financial commitment doesn’t stop there—adoption fees, vet bills, food, and other costs can quickly add up.

One of the biggest ongoing expenses is veterinary care. Routine check-ups, vaccinations, and emergency treatments can quickly add up, and many pet owners find themselves facing difficult financial decisions when unexpected medical issues arise. Jadrian recently listened to a fascinating podcast about the rising trend of pet owners going into debt to cover vet bills, highlighting how some are using credit cards or personal loans to pay for costly procedures. Whether you have pet insurance or not, it’s an interesting look at the financial realities of pet care.

Pet ownership doesn’t just affect the owner—it also creates externalities, or spillover effects, for the people around them. Both Matt and Jadrian enjoy the direct benefits of having dogs, but their neighbors and friends also experience positive externalities, like getting to pet or play with a friendly dog during a walk. On the flip side, not all pet-related externalities are positive. Incessant barking, off-leash dogs, and owners who don’t clean up after their pets can create real nuisances for others.

Lastly, we explored the veterinary profession and how it compares to other medical careers. While veterinarians earn good salaries, their pay is significantly lower than that of medical doctors or dentists, despite requiring years of advanced training and often carrying similar levels of student debt. This wage gap could stem from a demand-side issue—pet owners may not be willing (or able) to pay as much for veterinary services as they would for their healthcare. Another possibility is a compensating differential, where lower pay is offset by benefits like a more predictable 9-to-5 schedule and fewer high-stakes emergencies compared to human medicine.

This episode covered a lot of economic concepts related to pet ownership, but there’s always more to explore. If there’s a pet-related economic question or idea we didn’t discuss, let us know in the comments—we’d love to hear your thoughts!

This week’s pop culture references:

Jadrian shared an ad from Thinkbox about a shelter dog struggling to get adopted. To stand out, the dog finds a creative way to differentiate himself and grab attention—just like a firm in a monopolistically competitive market.

Matt’s pop culture pick was 1923, which is currently in its second season and offers interesting lessons on inflation and economic growth. In the episode he highlighted, a character reacts to a neighbor having a home phone—something revolutionary at the time.