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Evaluation of horses: Methods and challenges in determining objective and subjective value

The value of a horse or its depreciation is the most common question asked of a horse expert. The term "value" of a horse refers to relevance, importance or benefit attached to the horse in question.

In this context, it is important to distinguish between objective value, which is the value anyone can understand based on average data, and subjective value, which is the value a potential buyer would place on a selected horse. Personal interest or lover’s value is particularly important with horses. However, when it comes to determining the market or replacement value of a horse, this ideal value is not to be considered. Instead, objective value requires reliable and standardized methods and procedures.

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There are four methods that are commonly used to evaluate horses

These are: the asset value method, the earning value method, the comparative value method and the replacement value method (Schneider, 2008).

The asset value method is primarily based on acquisition or production costs (e.g., purchase price, stud fee, and raising cost, keeping, training, etc.), although this method should only be used when time of acquisition and evaluation are reasonably close - for example, in the case of a newborn foal. The reason for this is that after a certain period of time, the running costs are usually no longer in proportion to the actual market value, since the running costs are always incurred as business-as-usual costs (Schneider, 2008).

The earning value method is used only for horses that generate monetary income. The earning value method makes sense for breeding mares with annual offspring or stallions that are regularly used for breeding, as well as highly successful competition/race horses. The income generated can be taken into account when determining value (Schneider, 2013).

The replacement value method is based on the assumption that the subject of evaluation is to be replaced by another. Here, the replacement value approach is essentially identical to the comparative value approach. If the subject of evaluation is to be replaced by a new subject of evaluation that is largely identical in use and cannot yet deliver the same performance, the necessary "upgrade costs", such as the training of the horse, must be added (Schneider, 2013).

The replacement value method is based on the comparative value method. In this method, depending on the type of use of the horse, an evaluation grid is created based on as many value criteria as possible, such as health, age, pedigree, level of training, disposition or own performance, temperament, conformation, basic gaits, rideability, etc.. The horse in question is then projected onto this grid in order to select, from the available number of comparable objects of a horse population on the existing market, those that best match the animal.

Each horse should be considered individually, as it is a unique living being and cannot be reduced to value-determining factors. Therefore, the evaluation can only ever be as close as possible to the actual value (Schneider, 2013).

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