Americans love their pets, spending more than $70 billion last year on their beloved companions. This far exceeds the $7 billion spent on legal marijuana and $32 billion on pizza, just for two examples.

Of the $70 billion, close to $20 billion pays for veterinary care, $16 billion is on supplies and over-the-counter medicines, and $32 billion is for food.

These large sums make it evident that Americans put great value on the lives of their pets. Yet how much value?

We concluded that the value is of the average dog is about $10,000. While some may chuckle, the research holds important implications for human medicine, health and well-being.

Starting in the 1920s, the federal government initiated efforts to rationalize its decision-making processes by more systematically accounting for potential costs and benefits of public interventions. While the Flood Control Act of 1936 codified these developments, the Roosevelt administrations sought to expand the range of impacts accounted for in these cost-benefit analyses to shape public policy.

Analysts quickly ran into a daunting problem: How should they incorporate the value of goods and services that are not readily traded in the marketplace into their estimates? The valuation of human life serves as perhaps the most controversial such estimate.

Based on willingness-to-pay approaches, researchers have developed a wide variety of these shadow prices.

When it comes to valuing human life, federal agencies have currently settled around values of $10 million.

Other shadow prices have been established to account for the cost of rape and sexual assaults (approximately $300,000 in 2016 dollars) to the benefits gained from recreational activities like backpacking ($64.30 in 2016 dollars) and the preservation of bald eagles ($359 per person in 2016 dollars).

So how much is a dog’s life worth? To most dog lovers, the answer is obvious: They are priceless. As true as this answer may be, it provides little guidance on how to value the effect of private and public decisions on our four-legged companions. The estimates ultimately amounted to a value of a statistical dog life of about $10,000.

There are a number of good reasons to get a better grasp on how Americans value their pets.

The most obvious application of our findings relate directly to the regulation of the health and safety of pets. Federal and state agencies publish hundreds of thousands of pages of regulation annually. Often, these affect the lives and health of animals, including dogs. Regulators, however, largely relied on their best guesses to value their costs and benefits as they related to their effect on dogs.

New regulations issued in the wake of numerous cases of contaminated dog food or pharmaceuticals present a case in point. With well over 1 million dogs killed in traffic annually, another potential use for our findings relates to traffic safety regulation investments.

Of course, the findings also provide a starting point for compensation in tort cases resulting from injuries and deaths of dogs. As currently adjudicated, compensation is solely based on the market value of the dog. Naturally, this severely limits compensation for many dog owners, particularly those whose dogs are not purebred.

Finally, like the baby presented to King Solomon, dogs cannot be split in half. Today, most states still treat dogs merely as property. Particularly, in messy divorces, custody battles over dogs can quickly escalate and turn nasty.

The growing influence of quantification in general, and cost-benefit analysis in particular, has been lamented both inside and outside of academia. Critiques have focused on methods as well as underlying normative and ethical concerns.

Of course, neither the method of cost-benefit analysis nor the underlying developments of shadow prices are without their limitations. Yet, what are the alternatives?

Cost-benefit and policy analyses, when done and utilized appropriately, provide needed insights into complex policy issues. This particularly holds in times marred by excessive partisan wrangling and misinformation.

Moreover, shadow prices allow analysts to incorporate costs and benefits into their analyses for societal groups that often remain unrepresented in the political discourse.

Perhaps most importantly, with governments at all levels facing resource limitations, every policy choice made always entails forgone alternatives. Accounting for costs and benefits, to the best of our abilities, thus offers our best chance to use our limited public resources wisely.

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