The Market for Organs

Not the musical kind, the human body part kind.

We found an article on the BBC website, written by an ethics expert, that states that selling organs such as kidneys should not be a criminal offense. (Click here for article). The author tries to explain the market for organs using supply and demand, then goes on to talk about the ethical and legal implications.

We are not philosophers and can't seem to get "ethics" into our utility functions. As such, we tend not to discuss matters  pertaining to ethics. We could only wish that ethicist didn't play with economics because they don't seem to be very good at it.

In our first year courses, we spend the better part of 4 weeks convincing our students that price affects quantity supplied, not supply, and that other variables such as technology, input prices and number of sellers affect supply. Not apparently true according to our ethicist. And to top that, he suggests that if donors received financial compensation, fewer people would donate. Price goes up, quantity supplied goes down ... a downward sloping supply. An interesting phenomenon.

Whether or not a free market should exist for kidneys, livers, lungs etc., is a normative question and one that has no economic answer. Whether a free market would reduce the shortage is a positive question and one that economics can answer; yes it will.

The market for blood is a little less controversial, since the human body continuously produces blood. When we donate, the body replentishes itself. Kidneys and lungs don't grow back. The Labour Day weekend is approaching and the radio is flooded with appeals for blood donors due to a perpetual shortage of blood. Offering to pay people for their blood would ease the shortage.

For some, giving blood is the 'right' thing to do. Economists argue that these people get some kind of pleasure from knowing that their blood will help a complete stranger. Others would donate blood if needed by a close friend or relative because they get positive utility from that, but otherwise would not. For the first group, the marginal benefit from donating is always greater than the marginal cost. For the second group, the marginal benefit is only greater if they know the intended recipient. Compensating people for the time it takes to donate blood would increase the marginal benefit whether they knew the intended recipient or not. This would reduce the shortage of blood.

No ethics involved, just straight forward economics. Welcome to the dark side.