Wednesday, 17 October 2012

Kidney Counsels of Despair

I love the contrast between Steve Landsburg and Virginia Postrel on the Roth Nobel.

They're both completely right.

Says Landsburg:
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.
Says Postrel:
Imagine a parallel universe in which federal law prohibited Americans from paying anyone to care for their children, whether in cash or in some other “valuable consideration,” and where paid child care was similarly repugnant and illegal throughout most of the world.

In this alternate reality, family bonds would simply be deemed too sacred and children too precious to permit the taint of commercial transactions.Some desperate parents would risk arrest to pay under the table. Parents with a lot of friends and family would help each other out. People with small social networks or loved ones in poor health would be out of luck. A lot of parents would stay home with the kids when they’d prefer to go out, whether to a romantic dinner or a regular job.

The intellectual consequences are equally predictable. Michael Sandel would use child care to demonstrate to his Harvard University classes that there are some things money just shouldn’t buy. The Cato Institute would issue reports showing how the prohibition hurts poor people who would like to be nannies and noting that the law makes an unfair exception for school teachers. Economists would calculate how much higher labor force participation and gross domestic product would be if parents could pay someone else to watch their children. Feminists would debate whether paid child care would liberate women or subject yet another aspect of women’s lives to the brutality of the marketplace.

Meanwhile, Alvin E. Roth, who shared this year’s Nobel Prize in Economic Sciences, would be figuring out how to make it as easy as possible for parents to trade off taking care of each other’s children.
Back in grad school at Mason, the harder core libertarians used to debate these kinds of questions. Roth makes the interventionist world suck less than it otherwise would and has definitely saved lives. In doing so, he has arguably reduced potential pressure for broader changes to the system that would do even more good, although equally convincing cases could be made that he is incrementally helping to make a full market system more palatable to those with strong visceral reactions against any kind of kidney exchanges.

When I attended the Rothbard Graduate Seminar at the Mises Institute, I made the case for free immigration in a session run by Hans Hermann Hoppe. He warned that we couldn't do it while the welfare system remained in place. I reminded him that a big influx of people demanding welfare would be the quickest way to generate real reform moving back to private alternatives, if he really wanted to be rid of welfare anyway. He countered, "But that is a counsel of despair!"

David Henderson criticises Roth for failing to explicitly support full markets in kidneys. If Roth does support them, though, he likely can't say it. If he does, then his system gets tossed out as an incrementalist path towards something some voters find repugnant.

Optimisation constrained by ridiculously harmful voter preferences is a lot harder than unconstrained optimisation. The best we can hope to do is make things suck less. And so Roth has done much good.

Update: Mike Giberson agrees. So does Paul Walker.


  1. Landsburg's comment reminds me of the old joke about economists: "Assume we were in a world without constraints . . ." Which, by the way, strikes me as a pretty un-economic way of looking at things.

  2. "... visceral reactions against any kind of kidney exchanges."

    Was that a deliberate pun?

  3. I like leaving Easter eggs lying around.

  4. Depends whether voter constraints are more like beliefs that can be changed or physical facts of the world that cannot.

  5. I think you're setting up a false dichotomy there - either something is an unchangeable physical constraint, or it should not be conceptualized as a constraint. But of course there are many things that are changeable in principle and hard to change in practice. In some cases, it might be the best analytical decision to see what might happen given certain constraints. It might also be the best political decision. When people are dying, perhaps keeping your libertarian credentials clean should not be the first priority.

    A better medical analogy might be a prize for finding out how to make pills work even if patients take them only from time to time. Of course one might wish for higher patient compliance (and work to achieve it, and research influences on patient compliance), but given that no one knows how to achieve it, a Nobel for increasing the compliance-robustness of medicines would seem fully justified.

  6. I said "more like". Of course it's a continuum.

  7. Duly noted; apologies.