Tuesday, October 16, 2012


Without taking anything away from the two new economics Nobel laureates, David Henderson comments on the context:
Once Mr. Roth confronted the medical market, it wasn't that big a step to thinking about an especially knotty problem doctors faced: matching live kidney donors and recipients. The fact that the federal government has made it illegal for people to sell their kidneys means that there is a shortage. Mr. Roth's "market design" solution led to the New England Program for Kidney Exchange, which allows husbands and wives with incompatible kidneys to "swap" a kidney with another incompatible pair.

Mr. Roth's solution has not ended that shortage because his solution is essentially one of barter. The only suppliers in the market are those who want kidneys for their loved ones. But his system gives a better match.

There is a more fundamental solution to the kidney shortage. Don't "design" a market; simply allow one. A ban on selling kidneys is essentially a price control of zero and, like other price controls, causes a shortage. There are thousands of "demanders." There are also thousands of potential suppliers who, at a price of zero, are not willing to give up a spare kidney. A straightforward solution is to allow the sale of organs.

Now that the Nobel Peace Prize has been given to such an amorphous entity as the European Union, perhaps next year the Nobel in economics should go to the free market, which would do more than all the market designers to get kidneys to desperate people.
Steven Landsburg makes the point in fewer words:
So Alvin Roth wins the Nobel Prize for, among other things, figuring out the best way to allocate kidneys subject to the constraint that you’re too damned dumb to use the price system.
Next up: A Nobel prize in medicine for figuring out the best way to prolong your life while repeatedly shooting yourself in the head.
And it's been noted many times that Iran has a market in kidneys.

Avoiding the market option also costs lives.  Many viable organs are never made available because many people take them to the grave.  With incentives, some of them might choose to will body parts rights to heirs or directly to an organ exchange.