I recently posted on some descriptive aspects of pet ownership in the US - the claim was that $41 billion was now spent of pets. A study by Schwartz, Troyer and Walker (STW) looks at more economic, analytical aspects of the issue - they seek to embed pets in a theory of the household that includes children as substitute or complementary goods. STW claim the number of US households with pets increased from 52 million to 69 million from1988-2002. The 2002 total included an estimated 65 million dogs and 78 million cats, comparable in magnitude to census estimates of 72 million children under the age of 18.
Pet spending in the US increased at a faster rate, from $17 billion in 1994 to $34 billion by 2004. Pets have been gaining attention, with the press taking note almost daily of the latest pet-related business trends, such as pet insurance, day care, and pet-friendly hotels. My earlier post also comments on these issues.
Health professions have been giving attention to the physical and mental health benefits of pet ownership. But STW note pets have hardly been touched in any formal economic analysis even though the fastest growing segments of pet owners are empty nesters and young professionals who postpone starting families but want a substitute, suggesting parallels with the economics of the household. There are differences between pets and children. It is legal to purchase pets but not children, unwanted pets can be abandoned and pets cannot provide for parents in their old age. Single or gay people can have a pet without any social stigma!
STW support a model of the family that includes pets and children, allowing for substitutability and complementarity between the two. Increasing the number of children reduces pet spending in married households, suggesting that children and pets are substitutes. However, households with young children are less likely to own pets, while families with older children are more likely to own pets. Hence pets are viewed as a substitutes for very young children and complements with older children.
Positive income elasticities show that pets are a normal necessity goods with women in married households having smaller income elasticities for pet expenditures than do men. This is the opposite of what has been found for women and men with regard to expenditures on children.
I assume the same sorts of trends hold iin Australia. I would be interested if there was any data out there at all.