David R. Henderson  

Ethics, Legality, and Repugnance: This Year's Nobel

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UPDATE BELOW:

When I have approximately 4 hours to research and write a Wall Street Journal article each year on the Nobel prize winners in economics, by necessity, I have to pick and choose what to emphasize. Another constraint is my word constraint: this year I was restricted to 800 words.

But I'm not so constrained on this site. So I want to note a few things that troubled me when I read over the materials for the articles.

The first is the Nobel commitee's take on the basis for the award. These two sentences, from the Press Release, stand out:

For example, students have to be matched with schools, and donors of human organs with patients in need of a transplant. How can such matching be accomplished as efficiently as possible?

With human organs, we know the answer: it's to allow free markets so that thousands of people can make some extra money, either by contracting to have their organs to removed after their death or by selling a spare organ, such as a kidney or a piece of their liver, when alive. Now that that question is answered, where is my Nobel? Or Julio Elias's? Or Alex Tabarrok's? Or, or, or.

OK, you might say, but this is a press release and they're trying to be brief. So let's look at the Nobel committee's longer statement for the public. Here's the key section:

Traditional economic analysis studies markets where prices adjust so that supply equals demand. Both theory and practice show that markets function well in many cases. But in some situations, the standard market mechanism encounters problems, and there are cases where prices cannot be used at all to allocate resources. For example, many schools and universities are prevented from charging tuition fees and, in the case of human organs for transplants, monetary payments are ruled out on ethical grounds.

Notice the last sentence. The Nobel committee would have you believe that "monetary payments are ruled out on ethical grounds." The committee has skipped a step. It's true that many people oppose monetary payments on ethical grounds. But many people support them. So why are they ruled out? Because they're illegal. Granted, one main reason they're illegal is that people want to force their ethics on others. But in the interest of clarity, the committee should have said, "monetary payments are ruled out on legal grounds." The way the committee did it, it "sold" the idea that ethics are the reason.

Interestingly and encouragingly, one person who I can't find making that mistake is Nobel prize winner Al Roth. In all the materials I read by him, he always made it clear that he was trying to do the best he could subject to a legal constraint. I can't find him, fortunately, ever defending that constraint. The closest he comes is in a 2007 debate with Julio Elias about a market for kidneys. But it isn't really a debate. Elias argues for allowing a market. Roth doesn't argue against it but, instead, makes the point that one main reason markets are illegal is that people find them "repugnant."

Which brings me to repugnance. Roth has written a whole article on the issue, "Repugnance as a Constraint on Markets," Journal of Economic Perspectives, Volume 21, No. 3, Summer 2007. He's careful throughout not to claim that he thinks a market in kidneys is repugnant. He claims, correctly, that many people do. He does have an interesting section in which he quotes some of the people who find kidney markets repugnant. He writes:

Fox argues, "While the proposed benefit may not be a deciding factor to the CEO of a Fortune 500 company, to someone earning only minimum wage, the compensation may represent several months' pay. To deny the potential of this proposal to 'coerce an otherwise unwarranted decision to donate' reflects the folly of the privileged, not the reality of the poor." Similarly, Kahn and Delmonico (2004) summarize their opposition to buying and selling organs by saying, "It is an unethical approach to shift the tragedy from those waiting for organs to those exploited into selling them."

Wow! Giving poor people an opportunity to get out of debt, get a down payment on a cheap house, or use the money for some other purpose they value is to "shift the tragedy" to them and to exploit them. I would have expected Roth to spend a little ink responding to this, but he didn't.

To Roth's credit, though, later in the piece he points out, although again without commentary:

Overall, Boulware, Troll, Wang, and Powe (2006) report on the basis of a
telephone survey of randomly selected households: "The U.S. public is not generally supportive of incentives for DD [deceased organ donation], but is supportive of limited incentives for LD [live donation]. Racial/ethnic minorities are more supportive than Whites of some incentives. Persons with low income may be more accepting of certain monetary incentives."

Poor people may be more accepting of monetary incentives? Gee. Who'd a thunk it?

There are two issues on which I would take issue with Roth. First, back to his debate with Julio Elias. He writes:

If Julio and his colleagues want to remove the legal constraint on buying kidneys, my guess is that they will want to understand better the sources of repugnance that have led to laws against such sales in so many countries.

He's making an important point to Julio. But notice the subject of the sentence: "Julio and his colleagues." Isn't there an important person left out of that subject, namely, Al Roth? Here's where I would have expected him to say, "If Julio and his colleagues, want, as I do, to remove the legal constraint, etc." But he didn't.

Second, and this criticism is less important than the first, in his discussion of repugnance in an unpublished piece on the web, "In 100 Years," Roth gives examples of things that were once widely thought not to be repugnant but now are widely thought to be repugnant, writing:

On the other hand, where markets for slaves once thrived, they are now repugnant.

Well, yes, but the biggest objection to slavery wasn't that slaves were bought and sold: it was to slavery itself. So here it wasn't so much an objection to the market as an objection to the loss of liberty for slaves.

Maybe one day people will regard it as repugnant that other people hold their moral views on kidney sales so strongly that they are willing to cause innocent people to die for them.

UPDATE: A really nice article by Virginia Postrel titled, "An Economics Nobel for Saving Lives." One great paragraph:

Yet unlike the economists, wonks and polemicists who rail against the prohibition of organ sales, Roth can claim credit for actually increasing the number of kidney transplants. "Alvin Roth has been a major contributor to the fastest-growing source of transplantable kidneys in America, and probably in the world, through paired donation," says Rees.


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CATEGORIES: Regulation



COMMENTS (22 to date)

Shakespeare--as he so often does--beat Roth to the punch. As Hamlet put it, nothing is either good or bad but thinking makes it so. Though he might be able to quit his day job and make it as a comedian (from the piece on 'repugnance');

....while dwarf tossing is repugnant in many places, wife carrying, another sport that involves persons of disparate stature, has North American and world championships. In wife carrying, large men carrying small women (not necessarily their wives) race to complete an obstacle course in the fastest time, with the prize traditionally including the “wife’s” weight in beer.

That comes after Roth tells the tale of how France outlawed 'dwarf tossing' as an affront to human dignity. A dwarf who was employed as a 'tossee' sued (eventually lost on appeal) and took his case to the United Nations committee on Human Rights. The committee admitted the dwarf had a point--his dignity was affronted by being unemployed--but sided with the French law.

Human beings...they are a funny race.

Ken B writes:
It is an unethical approach to shift the tragedy from those waiting for organs to those exploited into selling them.
I do like this novel use of the verb, exploited into. What's involved in this? My desire to buy something you have. That's it. So if you have two hats and I have one everything is fine, but if I lose my hat and offer to buy yours then suddenly you are being exploited into selling it. If I offer a high enough price, I suppose offering too low a price is OK, not exploitative. I really am an unethical toad aren't I, shifting the tragedy of my hatlessness that way.
David R. Henderson writes:

@Ken B,
I really am an unethical toad aren't I, shifting the tragedy of my hatlessness that way.
Yes, you toad, I bet you shift your "footlessness" daily too. :-)

Chris H writes:

Funny how no one thinks CEOs are being exploited into selling their labor. Those unfortunate souls are being paid millions of dollars so if selling an organ for a few thousand is exploitation then how much more so is this!

I do find a bit of black humor in the thought that the people who in one breathe complain about the privileged not understanding the poor in the next decrying a device by which a poor person may seek to escape poverty. I suppose in a way that second point does prove their first.

Roth is clearly not a person to make the perfect the enemy of the good. Here's a short interview (about 16 minutes) that covers a lot of his work.

Ritwik writes:

I very much like the price mechanism.

I suggest that everything should be sold to the highest bidder.

We could begin with Nobel prizes and tenured professorships.

(sorry for being flippant!)

Ken B writes:

@Ritwik: Tenured professorships are already bought and sold. For a negative price too.

Tom West writes:

The repugnance people feel is, at least in my case, a worry that if the poor as seen as a parts supplier for the rich, there may well be social consequences.

Specifically, once you are willing to give organs for money, the cultural imperative against "forced" donations drops precipitously.

Of course, this is not what is wanted or intended, but I worry about the unintended consequences to these actions based on how human beings work (at least in my personal observation of countries with large gaps between rich and poor).

One questions though. Given the reasoning above, would those who support compensation for kidneys accept someone donating a heart (with presumably fatal results for the donator) for large enough compensation? If not, why not? (Surely one has a right to suicide and assisted suicide.)

Nevertheless, despite my reservations, I would not speak out against the government allowing compensation. I'm just not certain enough that we'd escape the long term costs to advocate for them.

Charlie writes:

Al Roth:

"Legalizing kidney sales faces substantial, perhaps insuperable obstacles. Just as you can't sell yourself into indentured servitude anymore, some transactions are illegal because enough people find them repugnant. But many people are in urgent need of kidney transplants, so it's helpful to think about steps to relieve the shortage now."

David,

Do you think people should be allowed to sell themselves into slavery?

Do you think someone should be allowed to sell their heart, while they are still alive?

I've heard Roth ask both questions. I think about these questions fairly often, especially the first. It is hard to find people that say yes to both, though I would not be surprised if you are one.

Charlie writes:

Another one: Should you be allowed to sell your vote? I heard Tyler Cowen say no to that.

DH, any voluntary transactions you can't stomach?

a pretty libertarian guy writes:

Perhaps you guys should read some Jonathan Haidt. Many people have moral beliefs that are not trumped by efficiency. And many people find it disgusting that the poor should be encouraged (or even allowed) to sell organs. They feel that it is degrading for a person to sell his organs for money, even if he is poor and needs the money; and it is especially unjust for a society to condone such things. You say that selling one's organs can make a person better off financially, but selling organs is not a neutral activity--it is not like selling your TV or your car. All operations have some risk, and the donor's body is to some degree made less robust. One has to wonder if there is anything that you would not allow a person to sell: wouldn't your arguments also permit indentured servitude?

Here's a question for you of the kind that Bryan Caplan likes to pose: What if a poor person could make enough money by selling all his organs to get his family out of poverty. Should he be allowed to trade his life for the financial security of his family? If not, why not? In other words, where would you draw the line? This should make you realize that it is NECESSARILY A MORAL rather than an economic question.

john hare writes:

I would be interested in this groups' take on the larry Niven SF series that included organ banks stocked by criminals convicted of a capital crime. In the series, it eventually got to the point that someone that ran red lights more than five? times in a year qualified.

Chris H writes:

a pretty libertarian guy writes:

One has to wonder if there is anything that you would not allow a person to sell: wouldn't your arguments also permit indentured servitude?

Here's a question for you of the kind that Bryan Caplan likes to pose: What if a poor person could make enough money by selling all his organs to get his family out of poverty. Should he be allowed to trade his life for the financial security of his family? If not, why not? In other words, where would you draw the line? This should make you realize that it is NECESSARILY A MORAL rather than an economic question.

Answers to your questions (from my perspective): yes and yes.

To the first, we already have the concept of a labor contract with penalties for leaving before the contract is up. Indentured servitude is just a form of that. Indeed there's even a form of indentured servitude that can involve jail time for quitting early and we call that the US military. Now one may be against the military's tactics for retaining workers, but first, the point is we do have that kind of strong indentured servitude now and second, one would not expect very many labor contracts with penalties that harsh in a free market, indeed most people don't like the idea they can't quit without penalty so not being able to quit without jail time would be even more avoided.

To the second, I assert that the only person who has a right to say whether another should go on living is that person him/herself. From a natural rights perspective (which I favor) the answer is clear, a person can choose to end his/her own life for whatever reason s/he wants. If Dr. Caplan disagrees he can come up with his own defense for a half-way position.

And Lynne Kiesling has some thoughts;

While I would argue in favor of kidney markets as a preferable way to coordinate and match (and it’s not clear from any of Roth’s writings that he shares that position), if you are in a situation where better matching can increase total welfare, then designs-rules-institutions such as these are an improvement on worse rules or institutions, such as random assignment or using a lottery.
A. Stu(dent) writes:
"Do you think people should be allowed to sell themselves into slavery?"

It would seem that one could never "sell themselves into slavery," as a (the?) defining characteristic of slavery is the prohibition of an individual to pursue their own ends.

Pursuing an end to be subject to the whims and commands of another individual (s) is still pursuing one's own end, so doing so would seem to make the "seller" a masochist, but not a slave.

Tom West writes:

Pursuing an end to be subject to the whims and commands of another individual is still pursuing one's own end, so doing so would seem to make the "seller" a masochist, but not a slave.

When I read a statement like that, I don't think "masochism", I think "desperate". Of course, I tend to conjure up all sorts of unrealistic "demand you enslave yourself for desperately needed medical care for your child" type scenarios, but I think there are more realistic scenarios.

Right now, loan sharking is basically a contract where if you don't pay, you die (at least implicitly, I suspect the details of "or else" are unspoken). Replace "or else" with slavery, which presumably is a lesser of death, and we've examples of a contract that many people have shown themselves willing to take.

Libertarians are going to have to work very hard to show that either Freedom is worth any price, or (for consequentialists) that the benefits of freedom outweigh the repugnance towards now legalized use of such freedoms such as loan sharking.

(On the other hand, those sorts of problems with freedom are *so* far away, I don't think it's worth sweating them now. It would be like communists arguing about the proper end-state government after everyone is equal.)

egd writes:

What's with the obsession on poor people selling their organs?

I'm reasonably well off and I would be willing to sell one of my kidneys. Far from being compelled, I would do it as a service to others. I'm not interested in being a live (gratis) donor because the cost (in excess of hospital costs: particularly the risk of permenant injury or death + recovery time) to me far outweighs the benefit.

If someone were allowed to offer a reasonable price for my kidney that would overcome the costs, I would be happy to sell them my kidney. Compulsion-free.

Maybe the law should only allow non-poor people to sell their kidneys.

Ken B writes:

egd

Maybe the law should only allow non-poor people to sell their kidneys.

This is brilliant.

Tom West writes:

In a properly free market, why on earth would you think the price for kidneys would be anywhere near what you consider reasonable?

Unless, of course, there is a huge premium to be paid for middle-class white kidneys :-).

(Apologies if you're not middle-class or white...)

Having had my fun, the one thing that might preclude a bottoming out of prices is that the cost of a kidney might be insignificant compared to the cost the operation itself, in which case there might indeed be a preference for middle-class white kidneys.

Colin Klein writes:

I'm not sure that organ markets are illegal entirely because of some moral repugnance. It would seem to me that allowing the sale of organs would incentivize certain groups(or corporations) to form that would "coerce" people into selling their organs. It is possible that I've just read to much sci-fi, and there would probably be ways, given effort, to remove this incentive through protective measures in the market. However, when have we ever known governments to be creative enough to pull this off. I think we have to look carefully when opening any formerly illegal markets to legal exchange at what kind of business practices we are incentivizing.

Colin Klein writes:

Also, wouldn't a kidney market have extremely inelastic demand? What would you pay to not die? (I think for everyone the answer would be everything. So this would create inelastic demand constrained only by the consumers ability to pay. So kidneys would probably become extraordinarily expensive. This would incentivize more people to sell their kidneys and make them less likely to make their kidneys available to Hospitals. This would mean their would most likely be a shortage of affordable kidneys, so if you couldn't afford to buy a kidney you would probably be out of luck.

Ohio libertarian writes:

Regarding the notion that the poor will be "coerced" into selling body parts for money, Auberon Herbert (The Right & Wrong of State Coercion) deliniates between direct coercion (a thief steals your kidney at gunpoint) and indirect coercion (a money or barter offer is made for your kideny).

The state is correctly involved in preventing direct coercion; this is the protection we expect government to provide us from attack by others.

The state is incorrect to intervene in indirect coercion (i.e. an unpalatable option presented) because the chooser is free to not accept the offer.

These incorrect interventions to prevent indirect coercion (think the minimum wage law) engender widespread distortions in markets and prevent peaceful, voluntary exchange presuming state knowledge of a higher morality than the individuals potentially involved hold.

The end result is more scarcity in society, not less.

http://oll.libertyfund.org/index.php?option=com_staticxt&staticfile=show.php%3Ftitle=591&Itemid=27

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