Transcript Should We Allow a Market For Transplant Organs?

Repugnance as a Market
Constraint
Ewww!!!!
Prostitution
Gambling
Tradable Pollution
Permits
Interest on loans
Ticket scalping
Horse meat
Smoking Marijuana
Sperm donation
Dwarf-tossing
Selling human organs
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
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.
• 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
• 2005
1,000 people died
4,000 people died
• 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.
The Demand for Kidney Transplants
Has Grown Faster Than the Supply
Source: Becker and Elias, 2007
Total cost of kidney transplants
Market for Kidney Transplants
P
S
$160,000
Price Ceiling
Legal max price of kidney = $0
D1
Qs Qd
Number of kidney transplants
Q
Total cost of kidney transplants
Market for Kidney Transplants
P
S
Waiting List
$160,000
Price Ceiling
D1
Qs Qd
Number of kidney transplants
Q
Total cost of kidney transplants
Market for Kidney Transplants
P
S
Technological advances have
increased the number of patients
eligible for transplantation
Growing Waiting List
$160,000
Price Ceiling
D1 D2
Qs Qd
Qd
Number of kidney transplants
Q
Total cost of kidney transplants
Market for Kidney Transplants
P
S
$160,000
Price Ceiling
D2
Qs
Qd
Number of kidney transplants
Q
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
• 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
Reservation Price of a Kidney
Risk of death
$ 5,000
Foregone earnings
$ 2,700
Reduced quality of life
$ 7,500
Total
$15,200
Total cost of kidney transplants
Allowing for Legal Market Transactions
P
S
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
S2
$175,200
$160,000
Price Ceiling
D2
Qs
Q*
Qd
Number of kidney transplants
Q
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.
Can We Increase the Supply of
Cadaveric Donations?
• Presumed consent
• Public and professional education
Total cost of kidney transplants
Presumed Consent and
Supply Shift
P
S
S2
$160,000
D2
Qs Qs Qd
Number of kidney transplants
Q
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.
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?
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?
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.
Total cost of kidney transplants
Black Market ?
P
Black Market
Kidney Price= $100,000 (?)
S
P*
Prohibition
Kidney Price= $0
S2
$175,200
$160,000
D2
Qs
Q*
Qd
Number of kidney transplants
Q
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-forsale/#more-2089