About 90,000 Americans are on kidney dialysis and transplantation lists, waiting an average of four to five years for a new organ. Dialysis is life-saving but also results in a tremendous deterioration in quality of life, and some patients don't survive the long wait.
Efforts to increase the supply of donor organs such as opt-out donor registries and organ exchanges have not significantly reduced patients' wait time on transplant lists.
To Gary Becker, this is a classic supply-and-demand problem markets could solve. In this talk for Chicago Booth MBA students, he proposed the radical solution of paying people to donate a kidney, arguing that this could increase supply and reduce wait time. He supplied updated evidence from recent research to make his case.
The US relies on an opt-in system, where individuals must sign an agreement to donate their organs after death. Some have argued to reverse that in favor of an opt-out system, where people must explictly declare that they do not want to donate organs. But careful empirical analysis of opt-out systems shows that an increase in cadaveric organs harvested is offset by an equal reduction in donations from live donors.
Likewise, kidney exchanges designed to increase live donations by matching willing donors beyond immediate families have not solved the problem. "It's actually worse; the wait has grown from four years to six, and 4,000 people a year are dying on the transplant list. We have to ask ourselves why," Becker said.
The answer is that there is a gap between the need for organs and the people willing to make an altruistic donation. "It's basic economic supply and demand. If you keep the price below market clearing price, you get excess demand," Becker added. In this case, the excess demand shows itself in the waiting list."
Allowing financial incentives could increase the supply of organs for transplant sufficiently to eliminate the large queues in the organ market. His research shows that the supply of live donations would be "quite elsastic at a price of about $15,000 per kidney, although he said that estimate could vary significantly. Purchasing an organ would increasing the overall cost of transplant surgery by no more than about 12 percent.
Becker suggested ways that a market in kidneys could be managed by government oversight to avoid abuse. To those who argue that selling organs is immoral, he asks, "Which is more immoral: to allow 4,000 people to die unneccesarily because you don't have a good organ donation system, or allow a sale? It seems to me the answer is obvious. We're facing an annual cost of more than $7 billion for those who die waiting for a kidney."