Pet insurance is an emerging growing market. The industry has grown by 13.4% over the past five years and reached a revenue of $1billion in 2018. By analyzing patterns of consumer expenditures for all pet care, I investigate changing market prospects for the pet insurance industry. This analysis examines the microdata files in the Consumer Expenditure Surveys (CES) from 2003 to 2017 across household types and income groups.
I found that compared to the average household, couples without children, couples with the oldest child aged between 6 and 17, and single households spent more on pet care. The average household pet expenditure increased from 2003 to 2017 at all income levels, and the increasing pet expenditure along income levels (which decelerated quickly in 2003) became more linear in 2017. Thus, pet care appears to be going through a transition from a “necessity” to a spending category that grows strongly with household income.
At the average-household income level, median pet care spenders and high spenders (i.e., 50th and 75th percentiles of the distribution respectively) exhibited increased income elasticities in 2017, which suggests that pet care spending grew faster among higher spending households, mirroring the spending pattern on human healthcare.
This research was supported by the Undergraduate Research Opportunities Program (UROP).
Analysis of Pet Care Spending: Implications for Emerging Pet Insurance Markets.
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