Organ transplants for organs like kidney, liver, heart have grown substantially since 1970 with the development of drugs to prevent rejection. However, the shortage of organs also continues to increase over time. In an academic paper in Contemporary Economic Policy, January 2011, Alison J. Wellington and Edward A. Sayre reported that in the winter of 2009, close to 100,000 people were on the waiting list for organ transplants, and most of those were waiting for kidney transplants.
In the private market for other commodities, where price mechanism is allowed to function, the shortage of anything will cause the price to rise until total quantity demanded is equal to quantity supplied. However, in the human organs' market the government does not allow the price mechanism to function, perhaps due to fear or moral guidance that it may lead to financial exploitation, especially of poor people. The National Organ Transplant Act of 1984 does not allow financial incentives for organ transplants. But faced with increasing shortages, even AMA is favorably inclined to consider financial incentives for families of cadaveric donors. Research on the estimated price from cadaveric donors, which tends to equate demand and supply, is spotty and finds very large differences in prices of organs. This could change once markets with appropriate regulations are allowed to function.
In a study in the Journal of Economic Perspectives, Summer 2007, Garry Becker and Julio Jorge Elias estimate that a large supply of live kidney donors would be available relative to the demand at the cost of $15,200 per donor; cost per liver donor is estimated to be $37,600. Perhaps Congress should allow pilot projects in different regions of the country where financial incentives are used to procure organs from cadavers. In fact we have a voluntary system now where we can indicate on our driver licenses, our willingness to donate organs at the time of death in a motor vehicle accident. Financial incentives could be given to those who would like to donate their organs at the time of death in an accident. Wellington and Sayre find that approximately "a quarter of the donated kidneys and one-third of donated hearts came from people who died in motor vehicle accidents..."
Another regulatory mechanism can be found for non-drivers and others who die in other fatal mishaps. The market price prevailing at the time of death will determine the compensation. Perhaps simple procedures and regulations could be implemented for people for drawing up the power of attorney on health matters, and denoting the party receiving the compensation. The compensation can only be paid after verification that organs are healthy and suitable for transplants.
Becker and Elias reason that organs from cadavers will not be enough to meet the demand for transplants. They favor financial incentives for live kidney donors, because they argue that lack of information on the health status of cadavers increases the chance of getting unhealthy organs and thus the failure rates in transplants.
But the failure rate can be minimized if compensation is paid after verification that organs are healthy enough for transplants. In addition, in pilot projects one can at least examine the successes and failures of financial incentives in procuring organs before extending it to kidney procurement from live persons, thus minimizing unwanted consequences.
Altruism has not solved the severe shortage problem, and until new technology is capable of producing kidneys in the lab, financial incentives will go a long way to remedy the shortage. Besides the morality of financial incentives, one has to consider the morality of saving someone's life and at the same time improving the economic well-being of donor's family after his/her death.
Wellington and Sayre report that currently many states, including Utah, have limited financial incentives for live donors of organs in the form of paid leave for government employees or tax deductions to live donors. But they did not find any significant effect of these limited incentives on kidney donations. The authors are of the view that limited financial incentives in states and lack of information to people about the existence of financial incentives for organ donations may be responsible for their weak results.
It seems that a well thought-out program, which compensates for organs from cadavers at full market price, is worth pursuing. It will draw people who are not altruistic and those who are altruistic at the margin.
Mathur is former chairmen of the economics department and professor emeritus of economics at Cleveland State University, Cleveland, Ohio. His articles also appear at vijaykmathur.blogspot.com. He also writes original blogs for the Standard-Examiner at http://blogs.standard.net/economics-etc/