From the Vault: My 1983 Piece on Market for Kidneys
By David Henderson
I came across this memorandum I wrote while I was the senior economist for health policy with the Council of Economic Advisers.
COUNCIL OF ECONOMIC ADVISERS
December 29, 1983
TO: Bill Poole
FROM: David Henderson
SUBJECT: More on Kidneys
Could legalizing a market in kidneys from only dead sellers solve the problem?
Yes. Every year, 10,000 to 11,000 kidney transplants are demanded and 5,000 are supplied. You might think that as the unsatisfied demand grows, the number of demanders would grow substantially over time. But as the 5,000 recipients leave the waiting list, and as some of the remaining people on the list die from kidney disease or other causes, they are replaced by approximately the same number of people. Therefore the stock of demanders holds reasonably constant from year to year.
Approximately 69% of the 5,358 transplanted kidneys in 1982 came from cadavers, and 31% from living related donors. Thus, only about 3700 kidneys came from brain-dead donors, compared to a potential of almost 20,000. If another 2500 kidneys were taken from dead donors, then all demands would be satisfied within two years. After that, all future demands could be satisfied with only a few hundred more kidneys from cadavers than are currently supplied, about a ten percent increase.
This is not large. The numbers suggest that simply allowing a market for kidneys from cadavers but not from the living could satisfy the demand.
Note a further implication. If the government allowed a market for kidneys from cadavers but not from live sellers, the market price for a kidney would probably be below the supply price of most potential live sellers. [DRH comment in 2010: Duh! I know this is obvious, because how many of us would sell a kidney for even $20K. What can I say? I was in a hurry when I wrote this because we were in the midst of writing the Economic Report.] This means that preventing live people from selling their kidneys would not do much harm.
These are fortunate implications because many of the objections people have to a market for kidneys from live sellers don’t carry over to the market for kidneys from cadavers.
However, it is still important to set the record straight on whether the risks to a live seller are high, absolutely, relative to other activities, and relative to the rewards.
How High are the Risks?
The incremental risk is low. According to Dr. Robert Rubin, Assistant Secretary for Policy and Evaluation at HHS and a nephrologist, only one person, out of thousands of donors, may have died as a result of donating a kidney. And, he says, even this one case is not clear.
There are a few reasons for this. First, nature gave our kidney systems an incredible amount of redundancy: we can do fine with 1/2 of one kidney. Second, donors are carefully screened for pre-existing medical conditions. For example, people with heart or lung disease face a higher risk of dying under anaesthetic, and are therefore not allowed to donate. People with systemic diseases (i.e., diseases, such as diabetes or hypertension, that affect multiple organs) or with any abnormalities in their urine, are not allowed to donate. Third, all intrinsically kidney diseases attack both kidneys. Therefore, the incremental risk from intrinsically kidney diseases is zero: if one kidney is in trouble, both would have been anyway.
This doesn’t mean that the incremental risk from giving up a kidney is zero. There are other dangers to the kidneys besides intrinsically kidney diseases. Rubin cited three main causes of kidney problems that don’t necessarily affect both kidneys: cancer, renal artery stenosis, and trauma. The incidence of kidney cancer in the adult population is 7.5 per 100,000 per year. The incidence of renal artery stenosis is 9 per 100,000 per year [equal to the fraction of the population with hypertension (.16 to .18) times the fraction of this pool that gets the disease (.02 to .025) divided by the number of adult years per person (50)]. The incidence of loss of kidneys due to trauma is unknown, but let’s assume it’s 3.5 per 100,000 per year. The first two will be high estimates because some diseases might have attacked the kidney that was donated but not the one that remains and some might have affected both kidneys. The sum of these risks is 20 per 100,000 per year. And this is not the risk of death but rather the risk of losing another kidney. With a well-developed kidney market, the unlucky donor could acquire another one.
2. Relative to other activities.
Motor vehicle deaths per 100,000 population were 23.2 in 1980, or 15% higher. The incremental deaths per 100,000 per year for firemen, mine operatives, and lumbermen were 44, 176, and 256, respectively, according to Richard Thaler of Cornell University. This means that the incremental risk from being a lumberman is an order of magnitude higher than from donating a kidney. So donating kidneys is much less risky than many other activities that are currently allowed.
3. Relative to the rewards.
The risk premium paid to live kidney sellers could exceed the risk premium paid to workers for risking death on the job. The unemployed worker in Michigan who has received so much publicity has offered to sell his kidney for $25,000. If he received his asking price, he could earn 3% real interest or $750 a year for taking an annual risk of 1 in 5000 of losing the other kidney. This is higher than the $450 that workers are paid for risking a 1 in 5000 chance of losing their lives. And remember that this risk of losing one’s only good kidney is by no means that same as the risk of death. Losing a remaining kidney is less serious than dying. Of course, if kidneys fetched a much lower price than $25,000, then selling them wouldn’t be such a good deal for the seller. But then they probably wouldn’t be sold, in all likelihood having been priced out by cadaver supplies.
cc: MF, WN, AW (Marty Feldstein, William Niskanen, Alice Williams)