1. Repugnance as a Market Constraint

2. Ewww!!!!

3. Prostitution

4. Gambling

5. Tradable Pollution Permits

6. Interest on loans

7. Ticket scalping

8. Horse meat

9. Smoking Marijuana

10. Sperm donation

11. Dwarf-tossing

12. Selling human organs

13. Should We Allow a Market For Transplant Organs? Or... Economics for Journalists March 11, 2008 Dr. Norman Cloutier, Director UW-Parkside Center for Economic Education Brother, can you spare a kidney?

14. Kidney Transplant Background From the first kidney transplant in 1954, both transplants and those seeking transplants have grown over time. Transplants 1990 10,000 2005 13,700 Most of this increase came from live donors. Waiting list 1990 17,000 2006 65,000 Reasons for the increase? –Technological advance. –Inability of the current system to procure enough organs.

15. Waiting list is not a complete measure of kidney demand. In 2004, there were 50,000 on the official waiting list, but 335,000 on dialysis. The median waiting time for people placed on the kidney transplant waiting list is more than 3 years. People suffer and die while waiting for a kidney transplant: 1990 1,000 people died 2005 4,000 people died

16. In 2004, 80% of living donors and recipients were related. The opportunity to buy and sell kidneys has the potential to save lives and improve the quality of life for many people.

17. The Demand for Kidney Transplants Has Grown Faster Than the Supply Source: Becker and Elias, 2007

18. P Q $160,000 D1D1 S Number of kidney transplants Total cost of kidney transplants QsQs Price Ceiling Legal max price of kidney = $0 Market for Kidney Transplants QdQd

19. P Q $160,000 D1D1 S Number of kidney transplants Total cost of kidney transplants QsQs Price Ceiling Market for Kidney Transplants QdQd Waiting List

20. P Q $160,000 D1D1 S Number of kidney transplants Total cost of kidney transplants QsQs Price Ceiling Market for Kidney Transplants QdQd Growing Waiting List D2D2 QdQd Technological advances have increased the number of patients eligible for transplantation

21. P Q $160,000 S Number of kidney transplants Total cost of kidney transplants QsQs Price Ceiling Market for Kidney Transplants D2D2 QdQd

22. The Market Price of a Kidney Monetary incentives would change the supply of kidneys from completely inelastic to highly elastic. The potential supply of kidneys is very large relative to the number transplants. The “reservation” of price of a kidney? Risk of death Lost time on the job Risk of lower quality of life

23. Risk of Death Reported donor death rates.03 –.06% Assume a conservative.1% risk of death “Value of a statistical life,” VSL= $5 million Value of risk of death=.001 x $5 mil = $5,000 Value of foregone earnings VSL is derived for a person earning $35,000/year Four weeks of recovery= $2,700 Reduced Quality of Life Difficult to estimate Arbitrarily assume $7,500

24. Reservation Price of a Kidney Risk of death$ 5,000 Foregone earnings$ 2,700 Reduced quality of life$ 7,500 Total$15,200

25. P Q $160,000 S Number of kidney transplants Total cost of kidney transplants QsQs Price Ceiling Allowing for Legal Market Transactions D2D2 QdQd $175,200 S2S2 Q*Q* There would be a 9.5% increase in transplant cost, but a 44% increase in actual transplants. In 2005: 1.44 x 13,500= 19,440

26. Not Only Saving Lives: Reduced Time on Waiting List Average time to graft failure increases with immediate transplant. Reduced pain and suffering Employment rate of transplant patients is 15 points higher than those on waiting list. Measures of quality of life increase with transplant relative to those on dialysis.

27. Can We Increase the Supply of Cadaveric Donations? Presumed consent Public and professional education

28. P Q $160,000 S Number of kidney transplants Total cost of kidney transplants QsQs Presumed Consent and Supply Shift D2D2 QdQd S2S2 QsQs

29. Objections to the Sale of Organs Objectification Money changes the nature of social relationships. Coercion The poor should be protected from exploitation. Slippery Slope Leads to unacceptable secondary effects and to the possible legalization of truly repulsive transactions.

30. Objectification Money transforms a “good” deed into a “bad” one. “…any procedure which tends to commercialize human organs or to consider them as items of exchange or trade must be considered morally unacceptable, because to use the body as an ‘object’ is to violate the dignity of the human person.” Pope John Paul II, 2000 Does the fact that the poor tend to take more dangerous, life-threatening jobs diminish their humanity?

31. Coercion “It is an unethical approach to shift the tragedy from those waiting for organs to those exploited into selling them.” Coercion in the absence of monetary compensation? In Iran, the introduction of monetary compensation has reduced the non-monetary coercion of relatives. Is it ethical to deprive the poor of the opportunity to increase their standard of living – and save lives?

32. Slippery Slope Opposition to compensation for cadaveric organs is that it will lead to live organ sales. More support for live donor compensation among surgeons and the general public. Organ theft and black market in organs? Legalizing live organ sales will reduce the chances of organ theft and illegal markets.

33. P Q $160,000 S Number of kidney transplants Total cost of kidney transplants QsQs Black Market ? D2D2 QdQd $175,200 S2S2 Q*Q* Prohibition Kidney Price= $0 Black Market Kidney Price= $100,000 (?) P*

34. References and Further Reading Becker and Elias, “Introducing Incentives in the Market for Live and Cadaveric Organ Donations, Journal of Economic Perspectives 21(3), Summer 2007, p.2-24 Howard, “Producing Organ Donors,” Journal of Economic Perspectives 21(3), Summer 2007, p. 25-36. Roth, “Repugnance as a Constraint on Markets,” Journal of Economic Perspectives 21(3), Summer 2007, p. 37-58. Teaching the Ethical Foundations of Economics, National Council on Economic Education, 2007. http://freakonomics.blogs.nytimes.com/2007/11/13/kidneys-for- sale/#more-2089