The value of pets: The quantifiable impact of pets on life satisfaction

There is substantial evidence from psychology and medicine that pets are associated with better health and higher life satisfaction of their human companions. Yet whether this relationship is causal or purely a correlation remains largely unknown. We use an instrumental variable approach to overcome this, specifically exploiting relationships in which neighbours ask individuals to look over their property when traveling, which is correlated with pet companionship. We control for baseline relationships with neighbours as well as various other potential sources of bias. Using the Innovation Panel as part of the UK Household Longitudinal Survey, we find that a pet companion increases life satisfaction by 3 to 4 points on a scale of 1 to 7. Moreover, we estimate the size of the impact of pets on human life satisfaction and wellbeing in monetary units. We find that having a pet companion is worth up to £70,000 a year in terms of life satisfaction, similar to values obtained in the literature for meeting with friends and relatives on a regular basis.