Tuesday, April 13, 2010

What is the Marginal Cost of Producing a "Green" Egg McMuffin?

McDonalds has decided not to have 5% of its eggs it buys be from chickens with lots of elbow room (do chickens have elbows?). As a younger man, I loved their Egg McMuffin . But, now that I'm an older man I have new questions.

If McDonalds went ahead and purchased the eggs from the farms that are nice to their chickens, this would raise the marginal cost of production for McDonalds. How much would this marginal rise by? We know that McDonalds has decided not to take this action so by revealed preference we must learn that this firm does not believe that the Egg McMuffin munchers are willing to pay a price premium for a breakfast made in an environmentally friendly way.

Is McDonalds right about this? Is there diversity among McDonalds' customers such that a subset is willing to vote with their pocketbook to be nice to chickens? Now in truth, I would guess that the average person eating at a McDonalds is not a big "organic foods" , Prius driving person but am I wrong?

Could the Sierra Club launch a "hearts and minds" campaign to make the case for why Joe Six Pack should change his dietary habits or at least why he should "go green" in day to day choices. Is an egg better for Joe's health if it is produced by a free range chicken? Will Joe feel any "warm glow" knowing that a happy chicken produced that incredible edible egg?