Without Market Pricing, Kidney Demand Exceeds Supply 6 to 1, And 1000s Needlessly Die Waiting

From the article "White Collar Reset: Kidney for sale?" by Mark Cohen:

In my last installment, I entertained the notion of opening a medical marijuana store in the New York City suburb my wife and I call home. This week, while we wait for the New Jersey legislature to finalize the legality of that option and as I begin year two in what is now semi-officially the direst U.S. job market since the Great Depression, I'd like to move on to the next previously taboo plan for recapitalizing our household.

I'm considering selling one of my kidneys.

Now, before you say, "Oh, come on, that's absurd!" and immediately skip to the next story about housing starts or crude prices, hear me out for a few seconds. I, too, had my doubts and recognized the potential for a jump-the-shark moment. But that was before I spoke to Dr. Sally Satel, M.D., a resident scholar at the American Enterprise Institute in Washington, D.C., and author of the book When Altruism Isn't Enough: The Case for Compensating Kidney Donors.

While the two statistics admittedly most on my mind when I called Satel were 17.5 and 892 (that's the percentage of underemployed workers in last Friday's job report and dollars in my checking account, respectively), the number always front and center for her is 13. That's the average number of people who die every day in this country awaiting a kidney transplant. Despite decades of work encouraging people to sign donor cards and donate to loved ones, the number of kidney donors last year was less than it was in 2005. Clearly, the current system of appealing exclusively to people's better natures isn't working. What's interesting is how the economic downturn has suddenly created a whole new class of constituents for Satel's more free-market approach.

The more Satel talked, the less selling my kidney seemed like some bizarre, macabre act of depravity, and the more I wondered why the hell I hadn't thought of it before.

I'll put it this way: A hundred thousand dollars (for a kidney) would do a lot more to stabilize our finances than the other items (a Pottery Barn cabinet, a Thomas O'Brien leather club chair, a cowhide rug) currently under consideration for sale around our house. Although I've been bringing in more freelance and consulting work, the checks have been slow to trickle in, and, at any rate, it will likely take months before I figure out how to organize and focus my business to where it comes close to approaching my old salary. The other option up for discussion -- emptying my 401(k) -- now seems more irresponsible and injurious to my future than my new (k)idney plan.

If all this were happening two years ago, my mortgage company would be encouraging me to take out a second mortgage or tap my home-equity line. That's obviously no longer on the table, but is tapping the one truly valuable asset I have left really so much different?

As my mortgage broker used to say about the home-equity line: It's just sitting there. Why not use it?

MP: The chart above shows the current number of registered patient candidates waiting for a kidney transplant (data here) and the number of kidney transplants performed this year from January 1 to August 31 (data here). That's a ratio of 7.3 patients on the waiting list for each kidney transplant performed through August. If we increase the number of transplants for September, October and the first half of November by 1,131 per month (the monthly average for Jan.-Aug. 2009), it would still be a ratio of almost 6 candidates on the waiting list for every kidney transplant.

ECON 101: Congestion, shortages, and surpluses are always caused by a failure to apply market pricing. The market for kidneys is no different in principle than the market for gasoline, Miley Cyrus tickets, old coins, pork bellies or unskilled labor. Since the demand for kidneys exceeds the supply by a factor of 6, it seems obvious that the deadly kidney shortage is artificially created because the current "price" for kidneys is way, way below the market-clearing price, and people will continue to die waiting until some type of market pricing is allowed.

Interestingly, there is actually one country that currently allows various forms of cash compensation for kidneys, and that country has completely eliminated its kidney shortage to the point that nobody dies anymore on a waiting list - find out here.