Al the Human

Whenever I watch Finn's quest to implement Pareto-improving moves despite the incompatibility of others' wants and the downright misanthropy of some actors, I, like you, can't help but think of Al Roth.

Economists know that we could save lives if we allowed markets in human organs. Because many people who do not need organs, and some who do, find such markets repugnant, they would oppose political candidates who would change the laws to allow these markets to exist. Transplant surgeons and medical ethicists loudly oppose such moves. Because politicians wish to be elected, they also oppose policies that would save lives but that many voters oppose. And so we cannot have nice things.

Most of us spend our time yelling about how people should be different and that they should stop banning other people from doing things that don't affect them. Al Roth instead finds moves that work despite the stupid-people problem, and rightly won the Nobel for it.

Becker & Elias have updated their prior work on the number of lives that could be saved if we had market incentives encouraging organ supply. Al Roth comments on it here.

So, the arguments that they repeat have gotten stronger over time: the shortage of organs is costly in every sense, and could likely be relieved by allowing kidneys to be bought and sold by live donors, and allowing the purchase of organs from deceased potential donors, i.e. by repealing the part of the 1984 National Organ Transplant Act that makes such sales a felony in the United States. (Similar laws exist in most of the developed world: the only country that seems to have an explicitly legal market for kidneys is Iran, although many black and grey markets exist.)

So, why hasn't this argument made any headway, either in the U.S. or overseas? Is patient repetition of the argument the best way to make the case? I don't know the answers, but I think that the repugnance of organ sales is a subject worth studying, not just for science but also for those who might like to influence policy.

He further points to work with Stephen Leider looking at public opinion around organ markets. They find that a majority of the public support some forms of organ markets, and that this is consistent with prior survey evidence. They also note prior evidence that transplant specialists and physicians are far more opposed to donor compensation than are other members of the public. There's greatest support for compensation where compensation is paid by the insurance system or the government rather than by the person needing the kidney.

We find majority approval of each kidney market, though a majority supports legality only for markets with the government or insurance companies as purchaser. This suggests that monetary compensation to donors by institutional intermediaries could receive public support. Both general disapproval of body-related markets and disapproval of market encroachment on traditionally non-market spheres contribute to disapproval of kidney markets; however we find no evidence that generally negative attitudes towards markets drive this repugnance. Social conservatism and being a religiously active Christian also predict of kidney market disapproval, though largely as proxies for general disapproval for body-related markets. Furthermore, disapproval for kidney markets seems driven by concerns about repugnant transactions at least as much as sensitivity to specific policy details. Unless proposals engage these fundamental concerns, perhaps by addressing the long-term welfare of kidney providers, they will fail to address the objections of a substantial minority. 

If New Zealand voters are similar to those in the States, then the policy recommendation would be payments from the government to live donors, payments from the government to cadaveric donors, and a guarantee that live kidney or liver donors get priority queueing should they ever need a kidney or liver. It also suggests that public opposition could be far less fierce than we might have thought if we only listened to the transplantation ethicists.

Roth continues:

Judd Kessler and I have a paper forthcoming in the American Economic Review papers and proceedings (May 2014) called "Getting More Organs for Transplantation," in which we summarize the issue this way:

"Kidney sales are often the leading example of a repugnant transaction cited by those who would put stricter limits on markets in general (e.g. Sandel 2012, 2013), because of their sense that such sales arouse widespread opposition. A representative sample survey of Americans conducted by Leider and Roth (2010) suggests that disapproval of kidney sales correlates with other socially conservative attitudes, but that it does not rise to the level of disapproval of other repugnant transactions such as prostitution. In addition, there is evidence that the manner of the payment to an organ donor may mitigate some of the repugnance concerns. Niederle and Roth (forthcoming 2014) find that payments to non-directed kidney donors are deemed more acceptable when they arise as a reward for heroism and public service than when they are viewed as a payment for kidneys."

That paper closes with this thought on the presently available options: 
"While these potential donors could save thousands of additional lives, at current rates of medical need, these donors alone would not be able to supply all the demand. Consequently, we must continue working on numerous fronts to solve this growing problem. "

In summary, the issue of whether and how organ donors might be compensated is an important policy issue that also touches on an important and still poorly understood social science phenomenon. Repetition of the basic arguments may move the discussion forward as the background facts become more severe, and it's great to see the issue addressed in such a public forum as the WSJ. But it may also be that repetition of arguments is not enough. To make progress in the face of opposition, it seems likely to be useful to understand better the nature of the opposition.

 I wonder whether there's any New Zealand survey data.

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.

The Shapley-Roth Nobel

Alvin Roth and Lloyd Shapley won this year's Economics Nobel.

The prize was awarded "for the theory of stable allocations and the practice of market design". The Swedish Academy has awarded a few prizes in game theory and mechanism design recently,* so this one came as a bit of a surprise to me. In the office pool, my three guesses were Shiller (likely in combination with Fama for financial markets); Tirole (industrial organisation); or, Gordon Tullock and Anne Krueger for rent-seeking. The last was mostly wishful thinking. 

Shapley is famous for the "Shapley Value"** - a solution for surplus-sharing among players in a cooperative game. The Shapley-Shubik power index occasionally shows up in applications in public choice. Shapley also is known for having developed matching algorithms with some rather desirable characteristics: the Gale-Shapley algorithm results in stable matches. A set of stable matches obtains when no pair, matched with other partners, would mutually wish to break their current matches for a new partnership. Roth extended the algorithm and applied it pretty ingeniously to help save lives. 

Here's Alex Tabarrok's roundup:

What Roth has done is extend the Gale-Shapley algorithm to more complicated matches and to actually design such algorithms to solve real problems. In the 1970s, for example, the medical residency algorithm began to run into trouble because of a new development, the dual career couple. How to match couples, both doctors, to hospitals in the same city? By the 1990s assortative matching in the marriage market was beginning to derail matching in the doctor-hospital market! Roth was called in to solve the problem and moved from being a theorist to a market designer. Roth and Peranson designed the matching algorithm that is now used by Orthodontists, Psychologists, Pharmacists, Radiologists, Pediatric surgeons and many other medical specialties in the United States.

Most famously, Roth has worked on improving kidney allocation. I first wrote about this in 2004 (see also these posts):

Your spouse is dying of kidney disease. You want to give her one of your kidneys but tests show that it is incompatible with her immune system. Utter anguish and frustration. Is there anything that you can do? Today the answer is yes. Transplant centers are now helping to arrange kidney swaps. You give to the spouse of another donor who gives to your spouse. Pareto would be proud. Even a few three-way swaps have been conducted.

But why stop at three? What about an n-way swap? Let’s add in the possibility of an exchange that raises your spouse on the queue for a cadaveric kidney. And let us also recognize that even if your kidney is compatible with your spouse’s there may be a better match. Is there an allocation system that makes all donors and spouses better off (or at least no worse off) and that maximizes the number of beneficial swaps? Inan important paper (Warning! Very technical. Requires NBER subscription.) Alvin Roth and co-authors describe just such a mechanism and show that it could save many lives. Who says efficiency is a pedestrian virtue?

Since that time we have seen many such swaps including this record of 60 people and 30 kidneys. Truly a noble match.

New Zealand is also looking to implement a version of this algorithm. 

Al Roth has been a bit on my mind lately as well. The University of Canterbury is considering mandating some kind of cultural competence requirements for students (maybe for faculty too, who knows); we're busily documenting how we're already incorporating cultural things into our courses.

In my Economics and Current Policy Issues course, we spend a week on the economics of organ transplantation. I there note the many ways we can improve upon the current system, ranging from presumed consent systems to compensation for cadaveric organ donation, then on to compensation for live organ donors (kidney, liver lobe), and, potentially, full but regulated markets in organs. And I touch on Al Roth's work on repugnance constraints. Even if we can prove that a well-designed, well-regulated market in organs would save thousands of lives, cultural constraints among voters make some of those those solutions impossible; Roth tries to design mechanisms that route around that inefficiency. I suppose I ought to add Roth's paper to the recommended readings for that week and tick the "cultural competence" box in a productive way.

Congrats to Shapley and Roth. And, hopefully next year, congratulations to Tullock and Krueger.***

* 2007 to Hurwicz, Maskin and Myerson (mechanism design); 2005 to Aumann and Schelling (game theory); 2002 to Kahneman and Smith (the Smith half was for experimental economics).

** The calculation of which was something I desperately hoped would not show up on my micro prelims. Fortunately, it didn't.

*** Tullock is a year older than Shapley - he turned 90 this year. If Stockholm is just waiting out the clock so they can award the prize to Krueger alone, I hope Tullock's ghost haunts them forever, pestering them with insults, derisive comments about their intelligence, and tangential remarks about ancient China whenever they're trying to concentrate on anything.