College of Agriculture, Health and Natural Resources | Agricultural & Resource Economics | Animal Science | Equine Program


VI. Statistical Analysis

VI.1 Determinats of the Market Value of a Horse

The goals of our statistical analysis are two-fold. First, we seek to gain an understanding of the determinants of the market value of a horse as well as its value to the owner (which is often greater). Second, we would like to arrive at a preliminary figure for the value of the horse industry to Connecticut.

Based on our survey, the average fair market value (FMV) of a horse in Connecticut is $7,483 (standard deviation $10,148). There is, of course, significant variation by breed. As Figure 6-1 shows, the average FMV of a horse ranges from $10,084 (for Thoroughbreds) to $1,167 (for Standardbreds) - see Figure 6-1.

Owners were also asked whether they would be willing to sell their horse at fair market value (FMV). About 20% responded that they would do so, 7% said they would only sell at a price higher than FMV (in which case they were also asked to state the minimum price they would be willing to accept) and the remaining 73% indicated that they would never sell their horse. Given these statistics, it is evident that for the vast majority of cases FMV is not a good measure of the true value of a horse to its owner. Indeed, the fact that over seventy percent of owners would not be willing to part with their horses at any price indicates the strong attachment owners have to them as pets. This is also substantiated by the high cost of maintenance incurred compared with any monetary benefits from owning a horse. The implication, of course, is that any estimate of the state-wide value of horses that is based just on market prices is likely to seriously underestimate the true social value of horses.

In order to further explore the nature of fair market value and the willingness of horse-owners to sell (or not sell) their horses at this value, we carried out statistical exercises and regression analysis. Some of the results are noted below.

  1. The market value of a horse increases with age initially, but then falls after it has peaked.

  2. The manner in which the horse is used is an important determinant of its value. For example, if a horse is used for showing and competition or for breeding then the fair market value is higher. On the other hand, horses used for personal and family recreation or work have lower market values.

  3. As the age of a horse increases, the owner is less willing to sell it.

  4. An owner is more willing to sell a horse if she owns more than one horse.

VI.2 Aggregative Analysis and Valuation of the Horse Industry

The results of our veterinarian, horse owner, and horse-related business surveys can be used in combination to perform an aggregative analysis and to draw some interesting inferences regarding the Connecticut horse industry. The key assumption we make is that our business survey mailing list is reasonably comprehensive. This is quite plausible since we used all available sources of business listings and unlike private horse owners, businesses have every interest in being advertised. Going by this information, there are about 550 horse-related businesses in Connecticut. According to our survey, the average number of horses owned per business is 9.08. Multiplying these two numbers yields 4,994 as the statewide estimate of horses owned by businesses. Subtracting this number from the veterinarian survey based total horse count figure (43,059) yields the total number of horses owned privately as 38,065.

The average number of horses per owner can be obtained easily from the owner survey as 2.3125. Dividing the total number of horses owned privately by this number yields a total horse-owner estimate of 16,461.

Given that there are 550 horse-related businesses, we can use the average statistic for full-time equivalent (FTE) employees from the business survey (i.e., 2.068) to infer the total number of FTE business employees in Connecticut as about 1,137. Similarly, multiplying the average annual income of horse-related businesses ($70,840) with the number of businesses yields total annual business income in the state as $38,962,000.

Finally, we can also infer the total values of horses. Multiplying the average fair market value of a horse from owner data ($7,483) with the total number of horses owned privately results in $284,840,395. The total value of horses owned by businesses is $32,192,600. Adding the two yields $317,032,995 as the total value of horses in the state.