When I have approximately 4 hours to research and write a Wall Street Journal article each year on the Nobel prize winners in economics, by necessity, I have to pick and choose what to emphasize. Another constraint is my word constraint: this year I was restricted to 800 words.

But I’m not so constrained on this site. So I want to note a few things that troubled me when I read over the materials for the articles.

The first is the Nobel commitee’s take on the basis for the award. These two sentences, from the Press Release, stand out:

For example, students have to be matched with schools, and donors of human organs with patients in need of a transplant. How can such matching be accomplished as efficiently as possible?

With human organs, we know the answer: it’s to allow free markets so that thousands of people can make some extra money, either by contracting to have their organs to removed after their death or by selling a spare organ, such as a kidney or a piece of their liver, when alive. Now that that question is answered, where is my Nobel? Or Julio Elias’s? Or Alex Tabarrok’s? Or, or, or.

OK, you might say, but this is a press release and they’re trying to be brief. So let’s look at the Nobel committee’s longer statement for the public. Here’s the key section:

Traditional economic analysis studies markets where prices adjust so that supply equals demand. Both theory and practice show that markets function well in many cases. But in some situations, the standard market mechanism encounters problems, and there are cases where prices cannot be used at all to allocate resources. For example, many schools and universities are prevented from charging tuition fees and, in the case of human organs for transplants, monetary payments are ruled out on ethical grounds.

Notice the last sentence. The Nobel committee would have you believe that “monetary payments are ruled out on ethical grounds.” The committee has skipped a step. It’s true that many people oppose monetary payments on ethical grounds. But many people support them. So why are they ruled out? Because they’re illegal. Granted, one main reason they’re illegal is that people want to force their ethics on others. But in the interest of clarity, the committee should have said, “monetary payments are ruled out on legal grounds.” The way the committee did it, it “sold” the idea that ethics are the reason.

Interestingly and encouragingly, one person who I can’t find making that mistake is Nobel prize winner Al Roth. In all the materials I read by him, he always made it clear that he was trying to do the best he could subject to a legal constraint. I can’t find him, fortunately, ever defending that constraint. The closest he comes is in a 2007 debate with Julio Elias about a market for kidneys. But it isn’t really a debate. Elias argues for allowing a market. Roth doesn’t argue against it but, instead, makes the point that one main reason markets are illegal is that people find them “repugnant.”

Which brings me to repugnance. Roth has written a whole article on the issue, “Repugnance as a Constraint on Markets,” Journal of Economic Perspectives, Volume 21, No. 3, Summer 2007. He’s careful throughout not to claim that he thinks a market in kidneys is repugnant. He claims, correctly, that many people do. He does have an interesting section in which he quotes some of the people who find kidney markets repugnant. He writes:

Fox argues, “While the proposed benefit may not be a deciding factor to the CEO of a Fortune 500 company, to someone earning only minimum wage, the compensation may represent several months’ pay. To deny the potential of this proposal to ‘coerce an otherwise unwarranted decision to donate’ reflects the folly of the privileged, not the reality of the poor.” Similarly, Kahn and Delmonico (2004) summarize their opposition to buying and selling organs by saying, “It is an unethical approach to shift the tragedy from those waiting for organs to those exploited into selling them.”

Wow! Giving poor people an opportunity to get out of debt, get a down payment on a cheap house, or use the money for some other purpose they value is to “shift the tragedy” to them and to exploit them. I would have expected Roth to spend a little ink responding to this, but he didn’t.

To Roth’s credit, though, later in the piece he points out, although again without commentary:

Overall, Boulware, Troll, Wang, and Powe (2006) report on the basis of a
telephone survey of randomly selected households: “The U.S. public is not generally supportive of incentives for DD [deceased organ donation], but is supportive of limited incentives for LD [live donation]. Racial/ethnic minorities are more supportive than Whites of some incentives. Persons with low income may be more accepting of certain monetary incentives.”

Poor people may be more accepting of monetary incentives? Gee. Who’d a thunk it?

There are two issues on which I would take issue with Roth. First, back to his debate with Julio Elias. He writes:

If Julio and his colleagues want to remove the legal constraint on buying kidneys, my guess is that they will want to understand better the sources of repugnance that have led to laws against such sales in so many countries.

He’s making an important point to Julio. But notice the subject of the sentence: “Julio and his colleagues.” Isn’t there an important person left out of that subject, namely, Al Roth? Here’s where I would have expected him to say, “If Julio and his colleagues, want, as I do, to remove the legal constraint, etc.” But he didn’t.

Second, and this criticism is less important than the first, in his discussion of repugnance in an unpublished piece on the web, “In 100 Years,” Roth gives examples of things that were once widely thought not to be repugnant but now are widely thought to be repugnant, writing:

On the other hand, where markets for slaves once thrived, they are now repugnant.

Well, yes, but the biggest objection to slavery wasn’t that slaves were bought and sold: it was to slavery itself. So here it wasn’t so much an objection to the market as an objection to the loss of liberty for slaves.

Maybe one day people will regard it as repugnant that other people hold their moral views on kidney sales so strongly that they are willing to cause innocent people to die for them.

UPDATE: A really nice article by Virginia Postrel titled, “An Economics Nobel for Saving Lives.” One great paragraph:

Yet unlike the economists, wonks and polemicists who rail against the prohibition of organ sales, Roth can claim credit for actually increasing the number of kidney transplants. “Alvin Roth has been a major contributor to the fastest-growing source of transplantable kidneys in America, and probably in the world, through paired donation,” says Rees.