Sunday, November 15, 2009

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.

18 Comments:

At 11/15/2009 1:44 PM, Anonymous morganovich said...

this may sound odd, but in many ways this kidney market mirrors prostitution.

think about it: both are actions that are legal if performed for free. i can give you my kidney. i can have intercourse with you.

in both cases, a legal action is made illegal because the giver is compensated financially.

does this strike anyone else as ridiculous?

what right does our government have to tell us that legal actions cannot be done for money?

why not leave each of us to decide these things for ourselves? such "protections" are really nothing more than limits on freedom.

 
At 11/15/2009 2:16 PM, Anonymous Bennt The Puzzled Free Marketeer said...

Yes, this sounds macabre, yet it should be legalized.
The moral issues are that--moral issues, and have no place in our amoral capitalistic system. Remember, capitalism is amoral, defiantly so.
We support capitalism as it seems to bring the highest standard of living, not for its morality. It may be that the Chinese pro-business state directed system will eclipse us. Time will tell, but for now free market capitalism seems to work better,

I do have some reservations about people needing kidneys who die because they cannot afford to buy another. Maybe some sort of loan program could be established for those people.

Prostitution, gambling, drug use, selling kidneys--all would flourish and be commercialized in a true free market society. Imagine bright, blinking neon lights 20 feet tall, "Gamble To Win a Night With a Hooker Here and All the Pot You can Smoke!"

BTW, where is the justification for public universities in a free market system?

 
At 11/15/2009 2:52 PM, Anonymous Anonymous said...

I do have some reservations about people needing kidneys who die because they cannot afford to buy another. Maybe some sort of loan program could be established for those people.

Sounds like a subsidy.

 
At 11/15/2009 3:41 PM, Blogger OA said...

Two former colleagues work for Davita which is a publicly traded operator of kidney dialysis centers nationwide. They've had zero concern about job security. I personally think the baby boomers had too much fun in the 60's and are paying the price.

In lieu of recipients being able to compensate a donor for a kidney, they have to go in for dialysis on a regular basis. And it's mostly paid for by the insurer or government.

Tell me again how new legislation is going to save us money? Seems like paying for a one time operation and donor compensation is way cheaper than paying for lifelong dialysis. But the government forces the more expensive option for most people.

 
At 11/15/2009 5:17 PM, Blogger gusto said...

In Miami over 20 horses have been slaughtered for their meat. See http://www.miamiherald.com/460/story/1311678.html

There would be no black market for kidneys (or horse meat) if there was a legal market for kidneys (or horse meat)

 
At 11/15/2009 8:51 PM, Blogger OA said...

Interesting comparison Gusto. I'm kinda thinking a legal market for horse meat wouldn't change the slaughtering. It would just move it indoors to slaughterhouses.

 
At 11/15/2009 9:05 PM, Blogger Ron H. said...

Morganovich

I agree entirely, except, no, you CANNOT have intercourse with me. :-)

 
At 11/15/2009 9:19 PM, Anonymous Benny "Tell It LIke It Is Man" Cole said...

Anon: You are right, it is a subsidy, unless the loans were market-rate, and collateralized. In which case, the private sector could do it.
Bring on the brothels, casinos, drug dens, and kidney swap houses.
And for heaven's sake, let's start whacking religion with taxes. It is a business.

 
At 11/15/2009 10:52 PM, Blogger sethstorm said...

Organ sales are a case where willingness can and will be perverted towards life-threatening consequences.

See the various cases where informed consent doesn't exist, e.g. Third World countries like India and China. Also see the supposed secondary market that was rightfully prosecuted in NJ recently.

It's not a case of legalizing it, it's a case of increasing regulatory control and sealing loopholes shut. Then pay the regulators enough to overcome bribes and stiffly punish violators.

The man who sells his kidney under financial duress (as opposed to actual, non-academic willingness) will regret it when his other kidney fails.

 
At 11/16/2009 9:01 AM, Blogger juandos said...

"The man who sells his kidney under financial duress (as opposed to actual, non-academic willingness) will regret it when his other kidney fails"...

So what sethstorm?

Since when is it anyone else's business to decide what another adult decides to do with his or her organs?

A bit of excessive nanny state peeking around the corner there don't you think?

 
At 11/16/2009 1:05 PM, Anonymous morganovich said...

seth-

juandos is completely right. so what?

people have to sell assets under duress all the time. houses, cars, boats, equities, their own labor.

inviting government in to prevent any transactions where there may be "duress" is insane. it would never end. imagine needing a fairness opinion to buy a used car...

 
At 11/16/2009 1:22 PM, Anonymous Anonymous said...

When it comes to prostitution, the government will never legalize it because it couldn't stand the competition. In their opinion, they should be the only ones who get paid to F%&* you. - db

 
At 11/16/2009 4:29 PM, Anonymous Anonymous said...

You know the difference between a hooker and a lawyer?

A hooker will stop f'ing you when you're dead.

 
At 11/16/2009 5:11 PM, Anonymous Benny Telling It Like It Is Man said...

The "under duress" idea in an interesting one. Many times, econmists say people will not voluntarily enter a transaction unless both parties think they benefit. Therefore, all voluntary transaction are fair. One side may grumble, but they had the option of not entering a bargain.
There is an interesting story about this. Suppose you are on the rear of an ocean liner at midnight taking a smoke, and only you see a billionaire fall off the liner into the water. He cries for you to toss him a liferaft.
You say "Yes, but for a million dollars."
Both sides benefit from this transaction.
Fair deal? The billioniare was under duress.

 
At 11/16/2009 8:10 PM, Blogger marketdoc said...

Some friends of mine just returned from a trip to San Salvador. They told me the black market for this is big there. The tourists and temporary mission workers are being warned not to wander far from their hotel for this reason.

 
At 11/16/2009 9:05 PM, Blogger harvey said...

Although I support the idea for compensating living donors, developing such a system is controversial, and is not likely to happen soon.

We have a successful living donor model. (See link below for an article describing the current model and how to improve it.) We need to help people who need a kidney transplant pursuing living donation and educate the general public to overcome the myths and misconceptions about living kidney donation.

http://livingkidneydonorsnetwork.org/aakp_mag_article.html

Harvey Mysel
Living Kidney Donors Network
www.lkdn.org
harvey@lkdn.org

 
At 11/16/2009 10:56 PM, Anonymous Yevgeny said...

The answer seems obvious. We need to create an incentive to be a donor so all we have to do give donors priority over non-donors if they need a transplant in the future. When renewing your driver's license you indicate if you want to be a donor and if so your name is added to the priority list. There would have to be a waiting period of some number of years before a person could get on the priority list to prevent sick people getting priority.

What's wrong with this approach?

 
At 11/17/2009 2:04 AM, Blogger juandos said...

There have been fewer living kidney transplants in each of the past 4 years, a cumulative decrease of over 11%. This is a baffling and disturbing trend, especially to experts in the field who recognize the tremendous advantages of living kidney donations...

There's NOTHING baffling whatsoever about this supposedly disturbing trend...

There's a saying probably as old as mandkind, "you get what you pay for"...

 

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