To limit tail biting incidence, most pig producers in Europe tail dock their piglets. This is despite EU Council Directive 2008/120/EC banning routine tail docking and allowing it only as a last resort. The paper aims to understand what it takes to fulfil the intentions of the Directive by examining economic results of four management and housing scenarios, and by discussing their consequences for animal welfare in the light of legal and ethical considerations. The four scenarios compared are: ‘Standard Docked’, a conventional housing scenario with tail docking meeting the recommendations for Danish production (0.7 m2/pig); ‘Standard Undocked’, which is the same as ‘Standard Docked’ but with no tail docking, ‘Efficient Undocked’ and ‘Enhanced Undocked’, which have increased solid floor area (0.9 and 1.0 m2/pig, respectively) provision of loose manipulable materials (100 and 200 g/straw per pig per day) and no tail docking. A decision tree model based on data from Danish and Finnish pig production suggests that Standard Docked provides the highest economic gross margin with the least tail biting. Given our assumptions, Enhanced Undocked is the least economic, although Efficient Undocked is better economically and both result in a lower incidence of tail biting than Standard Undocked but higher than Standard Docked. For a pig, being bitten is worse for welfare (repeated pain, risk of infections) than being docked, but to compare welfare consequences at a farm level means considering the number of affected pigs. Because of the high levels of biting in Standard Undocked, it has on average inferior welfare to Standard Docked, whereas the comparison of Standard Docked and Enhanced (or Efficient) Undocked is more difficult. In Enhanced (or Efficient) Undocked, more pigs than in Standard Docked suffer from being tail bitten, whereas all the pigs avoid the acute pain of docking endured by the pigs in Standard Docked. We illustrate and discuss this ethical balance using numbers derived from the above-mentioned data. We discuss our results in the light of the EU Directive and its adoption and enforcement by Member States. Widespread use of tail docking seems to be accepted, mainly because the alternative steps that producers are required to take before resorting to it are not specified in detail. By tail docking, producers are acting in their own best interests. We suggest that for the practice of tail docking to be terminated in a way that benefits animal welfare, changes in the way pigs are housed and managed may first be required.