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Yves here. This post exemplifies why economists should not be in charge of anything important. Keynes was correct when he said, “If economists could manage to get themselves thought of as humble, competent people on a level with dentists, that would be splendid.”
Mind you, I am not disputing that there are many area of life where people can and do engage in transactions that raise serious moral issues. But what is troubling about this post is that it appears completely pre-occupied with more efficiency, as in “How do we get more kidney trades done despite public squeamishness about them?”
I have a well-off friend who had to have a kidney removed as a result of a bad infection. He is keenly aware of how the loss of that kidney increases his risk of mortality and takes steps to reduce his risk of impairing his remaining kidney, like giving up sushi and sashimi entirely due to hepatitis risk. Yet this article fails to acknowledge why selling one’s kidney is morally dodgy: the donor is potentially lowering his lifespan and the existence of a market allows the wealthy to take advantage of the poor. Even though this article gives survey responders a scenario in which money is given on a priority basis (flattening one side of “the rich are exploiting the poor” scenario), it fails to address what is a fair price to the donor as in what data is there on the health and lifespan loss for people who give up a kidney at a young age.
By Julio J. Elias, Professor, Department of Economics and Business School, University of CEMA, Argentina; Nicola Lacetera, Associate Professor, Institute for Management and Innovation, University of Toronto; and Mario Macis, Associate Professor of Economics and Management at the Carey Business School, Johns Hopkins University. Originally published at VoxEU
Imagine that you or a loved one were suffering from kidney failure. Receiving a kidney from a donor would be a far better option than dialysis – it would improve your life expectancy and the quality of your life, and it would also save money to you and the health system. Imagine that you cannot find any matches among your relatives, friends or acquaintances, or the donor registry – an all too common scenario in the US and elsewhere. There is, however, someone who is willing to give you a kidney in exchange for monetary compensation. You are willing to pay the requested amount and as such, you will be better off if the transaction occurred, and so will the donor. However, unless you happen to live in Iran (Ghods and Savaj 2006) you would not be allowed to do so. Alvin Roth defines this transaction as repugnant – because of moral concerns, individuals and societies oppose that such a transaction occur, even if the parties directly involved benefit from that trade (Roth 2007).
There are many activities and trades toward which there is a feeling of moral repugnance, often translated into laws that prohibit or restrict these activities. Examples include prostitution, commercial surrogacy, selling human eggs or plasma, as well as the trade of certain types of meat, and pricing practices for certain products. Attitudes toward these as well as other repugnant transactions vary across countries and over time; for example, indentured servitude contracts were once permitted but they are now universally prohibited, and conversely life insurance contracts were considered immoral in the past.
Repugnance considerations can therefore have important consequences on the types of markets and transactions that we observe, and pose challenges for policy and market design.
The Kidney Market: Repugnance-Driven Regulations and Costs
The market for kidney transplantation is one such example of the restrictions that repugnance imposes on the exchanges that are allowed to take place, as well as of the costs associated with these limitations. For example, although the US system allows kidney exchanges – whereby pairs of living would-be donors and recipients who prove incompatible look for another pair or pairs of donors and recipients who would be compatible for transplants, cutting their wait time – monetary compensation is prohibited by Federal law. The National Organ Transplant Act of 1984 prohibits transfers of human organs for ‘valuable consideration’ for use in transplantation, and punishes violations with a fine of up to $50,000 or five years in prison, or both.
To the extent that monetary compensations can increase the supply of kidneys and organs in general, as some scholars estimate (Becker and Elias 2007), prohibiting these transactions is costly. Each year in the US, approximately 35,000 new patients require a kidney transplant, but only about 17,000 obtain one (Held et al. 2016). Recent estimates indicate that each additional transplant leads to about $200,000 in direct savings; the social benefits rise to $1.1 million per kidney recipient if we add the value of the increased life expectancy and quality. The total cost of the kidney shortage in the US is estimated to be about $20 billion annually.
If indeed the population shared this repugnance, and considered it a sacred value – that is, a position that cannot be traded for other considerations – then the prohibition and the ensuing costs would be justified. Cultural and moral beliefs are important factors in the cohesion of a society and, as such, can themselves enhance welfare; the respect of deeply held principles, in particular, may trump considerations about the potential efficiency gains from a payment system.
There is, however, no evidence on the precise nature of the moral opposition to payments for organs, and in particular, on whether and how other factors, such as consideration for efficiency (the surplus created by these trades), enter individual positions about how kidney transactions should be organised:
- What drives the rejection toward payment to donors?
- How intransigent is the position of those against payment?
- Does information matter?
- Are there finite increases in the supply of kidneys for transplants generated by payments that would lead individuals to express a preference for a paid-donor system versus an unpaid-donor alternative, even if payments were considered morally problematic?
Understanding Repugnance: An Experimental Approach
We recently carried out a survey-based choice experiment to address these questions and quantify the trade-off between the morality and the efficiency of alternative kidney procurement systems. We found that although systems that allow for payments to donors do raise stronger moral concerns than a system with no payments, a majority of individuals would be willing to accept a more repugnant system provided that it produced a sufficiently large additional number of transplants.
The Repugnance-Efficiency Trade-Off
We recruited 2,918 US residents through Amazon Mechanical Turk. After providing an overview of the state of organ procurement and allocation in the US, we asked the participants to consider three alternative procurement systems to increase living undirected kidney donations:
- A system based on unpaid donors with allocation based on priority rules determined by the patients’ medical situation, age, time on the waiting list, etc. (corresponding to the current system).
- A system where donors would receive $20,000 from a public agency, with allocation based on the same priority algorithm.
- A system of individual, private transactions, where donors would receive $20,000 from the organ recipient (out of pocket or through privately purchased insurance, for example).
After receiving this information, respondents expressed their opinion about these systems related to their morality in terms of ethical concerns emphasised in philosophy and bioethics studies (e.g. Delmonico et al. 2002). We asked the subjects how coercive, exploitative, unfair to the patients, unfair to the donors, and against human dignity they thought each system was, and an overall assessment of how much a system was in contrast with the respondent’s values
Respondents were then asked to assume that each system would result in a given efficiency in terms of the kidneys for transplantation procured, and to choose their preferred system. The efficiency levels were randomly determined, and each participant was presented with three choice opportunities, in a sequential manner.
The unpaid-donor system received low repugnance ratings – that is, individuals, for the most part, did not express moral concerns about this system. The two paid-donor systems received, in general, higher repugnance ratings than the unpaid-donor system. However, there was a large difference according to whether the system contemplated payments by a public agency or by the recipients in private transactions, with the latter resulting as the most repugnant system.
Looking at choices, the results show that the likelihood of respondents choosing a particular combination of repugnance and efficiency increased with the level of efficiency and decreased with repugnance. Respondents thus preferred options with higher efficiency and those considered less repugnant, but also acknowledged, through their choices, a general trade-off between these two characteristics.
We estimated the size of these trade-offs employing discrete choice models. The median respondent would favour payments to organ donors made by a public agency if it increased the annual supply of kidneys by about 6 percentage points; this corresponds to about 2,000 additional kidneys, which would reduce the shortage by around 11% and would result in $250 million saved annually by taxpayers.
However, to accept a system based on private transactions, the median respondent would require about a 30 percentage point increase in supply, corresponding to 10,000 extra kidneys procured (which would reduce the shortage by more than 50%), and $1.26 billion in savings for taxpayers. This difference in the estimated trade-offs appears to derive from the fact that the public agency paid-donor system was considered less repugnant than the private transactions system along all of the morality features that we included. In particular, participants rated the public agency system as being equally ‘fair to the patients’ as the unpaid donor system (these two systems allocated organs to patients based on the same priority rules), whereas private transactions (in which the allocation is purely market-based) were considered highly unfair.
There was heterogeneity in the population, ranging from respondents with ‘deontological’ preferences who were not willing to allow payments, irrespective of the expected number of lives saved, to ‘consequentialist’ individuals who placed a large weight on efficiency over moral concerns. This heterogeneity did not generally relate to the respondents’ socio-demographic characteristics, but was correlated to broader attitudes as measured by a set of moral dilemmas typically used in psychology, thus providing further evidence that ethical views in these choices are central.
Alvin Roth stresses that “we need to understand better and engage more with the phenomenon of ‘repugnant transactions’, which often serves as an important constraint on markets and market design.” The prohibition on payments to kidney donors is one important example of this phenomenon. Our research suggests that individual choices based on repugnance considerations respond in a predictable ways to efficiency information, but also that ethical views play a crucial role in these preferences.
Supplying evidence and promoting studies on such sensitive topics might therefore lead to greater awareness and improved policy design based on the actual preferences of a population. In the case of introducing regulated payments for organ donors and their families in particular, the evidence is particularly strong that informing society about the potential benefits of economic incentives does impact the acceptability of this transaction.
Because individual preferences appear to depend on expected efficiency in addition to ethical considerations, pilot trials testing the outcomes of different arrangements may enhance the ability of a population to determine the preferred organ procurement and allocation system.
See original post for references