Livestock Trading: Welfare Wins, Health Losses

You're a farmer with a sick cow. Should you sell it? That's the question researchers tackled, using a mix of models and simulations to figure out the welfare impacts of trading sick livestock. They started by building a theoretical model to understand when and why trading sick animals could be profitable. They used a household production model and a disease spread model, known as the SIR model, to crunch the numbers. Next, they introduced an agent-based model to simulate real-life trading scenarios. They divided sellers into two groups: those who know their animals are sick and those who don't. The informed sellers could either act selfishly, selling sick animals to make a quick buck, or altruistically, trying to prevent the spread of disease. Buyers, on the other hand, were always in the dark about the animals' health. The results? Trading sick livestock led to more animal losses, but overall, economic welfare went up. When sellers acted selfishly, household wealth and income hit peaks, but at the cost of greater wealth inequality.