A Market for Human Organs

One of my students James Snowden writes about whether there should be a legal market in trade in human organs

The case for the legalization of markets for organ donation has been rapidly growing in strength and support. The debate has become largely polarized between medical professionals and economists in support of a legal market, and religious or cognitive ethical objectors. I would like to straddle these two opinions. I propose that, under the right conditions, an organ market would be economically and morally beneficial towards the welfare of the state however there are more effective solutions to the organ shortage in the UK. Other countries such as the USA with its private health care system are likely to benefit even more from a free market in organs but the UK will be the focus of this essay.

The sale of a second kidney, because of the diminishing returns of organs, could produce an efficient welfare outcome, with both parties gaining from the sale of a kidney. If the value of a life on dialysis was taken to be £490,000 less worthy than a life with one kidney and £500,000 less worthy than with two the benefit of the first kidney would be £490,000 and the second only £10,000. Hence the cost of a healthy sale would be £10,000 of utility while the benefit to the recipient would be £490,000. The seller could then be compensated by the recipient with, say, £20,000, leaving the seller £10,000 better off and the recipient £470,000 better off.

The benefit of a market for sale of kidneys can also be shown using game theory.

Currently the pay-off matrix for kidney donation looks like this:

Receive Don’t Receive
Donate -10 , 490
Don’t Donate 0 , 0

The game is a game of pure conflict with no equilibrium. As the decision lies entirely with the donator the less desirable outcome, (Don’t Donate, Don’t Receive) is reached. Although the pay-off matrix will look different for particularly altruistic people from an economic perspective of rationality it would be irrational to donate a kidney.
However if the Donator was compensated with a utility of 20 (£20,000), the pay-off matrix would look like this:

Receive Don’t Receive
Donate 10 , 470
Don’t Donate 0 , 0

In this pay-off matrix the equilibrium is (Donate, Receive) which is more pareto efficient than (Don’t Donate, Don’t Receive). Therefore it becomes rational to donate a kidney. Thus it makes economic sense to allow a market for non-essential organs such as kidneys.

The economic benefits of organ markets means that the onus of evidence for preventing such markets lies with the condemners rather than the condoners. There must therefore be a strong ethical objection to prevent organ markets rather than any vague feelings of queasiness. Probably the most common moral objection to organ markets is that it extends the alienation of rich and poor beyond material welfare, into physical wellbeing. However this fails to account for the lack of any rational economic distinction between material and personal physical welfare. For example few would argue that a free market in healthy food should be prohibited because of the unfair distribution of health between those who can and cannot afford healthy food. The human body should be considered as a unit of capital, which can be invested or disinvested in according to the autonomy of the agent.

Another common ethical objection is that a market would encourage organ thieves. However practical considerations stop organ theft from being a real threat. Firstly the market would obviously be regulated, with a single buyer, either the NHS or another government organisation. Moreover organ removal would have to be carried out by a qualified surgeon. Therefore the urban legend of people waking up with a kidney removed is unfounded. In fact legalising organ markets would make organ theft less likely by destroying the black market prices.
So far I have largely considered donation of organs which are non-essential such as second kidneys or lobes of the liver. However there is also the case of essential organs such as hearts or lungs. Clearly a market for these goods will not naturally emerge as they have infinite value to the potential supplier. These organs could be traded on a futures market, with the money received either going to the next of kin or being paid out in advance of death through a binding contract.

I have argued that legalising organ markets would be beneficial to welfare and solve the organ shortage in the UK. However it does have practical economic and ethical costs. An example of an ethical dilemma is if a potential donor or their family chose to back out of a contract but did not have the money to repay the contract. Clearly it would be wrong to enforce organ seizure against that person’s will but then the respectability of the contract is diminished. The economic cost is specific to the case of the UK. Whereas hospitals in the USA would be free to charge the recipient of the organ, therefore creating a pareto efficient trade, the NHS is committed to being ‘free at the point of delivery.’

The NHS currently carries out about 3000 transplants each year although there are 8000 people who require a donation. These 3000 organ donations are all free whereas if 8000 people were willing to sell their organs the NHS would be required to pay for them, including the first 3000 who would no longer be willing to donate for free. This could translate to a huge government cost.

A cheaper way for the NHS to ensure an adequate supply of organ donations would be to make the system opt-out instead of opt-in. Only 24% of the population are on the organ donation register, despite the fact that in surveys 90% of people say they want to donate their organs after death. Because most people die in a manner making them unsuitable as donors the pool of donors must be much bigger than the demand for organs. However a system of presumed consent could raise the number of donors to about 95% of the country if we presume that a certain number of potentially unwilling donors will be persuaded to donate, either through inertia or moral pressure. This would fulfil the NHS’ need for organs while keeping its cots low.

In conclusion the best way for the UK to handle organ markets is to legalise markets for living donors of non-essential organs (which are generally higher quality than dead donors) while keeping the market for essential organs (hearts, lungs) closed and moving to a system of presumed consent. A regulated market mechanism could also be adopted for other non-essential pre-death body parts, particularly blood should levels of altruistic donorship be unable to keep up with demand.