Alex Tabarrok at Marginal Revolution has drawn my attention to an unequivocally excellent bill set to pass with cross party support in New Zealand.
“The Bill effectively removes what is known to be one of the single greatest barriers to live organ donation in NZ,” Mr Reid says. “Until now the level of financial assistance (based on the sickness benefit) has been insufficient to cover even an average mortgage repayment, and the process required to access that support both cumbersome and demeaning. The two major changes that this legislation introduces – increasing compensation to 100% of lost income, and transferring responsibility for the management of that financial assistance being moved from WINZ to the Ministry of Health – will unquestionably remove two major disincentives that exist within the current regime.”
Readers of this blog will no doubt be aware that when there is a chronic shortage of something (as is tragically the case with kidneys) typically the price will increase, and this will incentivise new production. Of course, with kidneys that's not allowed to be the case. It's illegal almost everywhere (not Iran). In fact, it's even worse than that - donating a kidney is extremely costly, it means taking nearly a month off work. Many otherwise very altruistic people simply can't afford to donate, this bill will help them donate. It's not a full incentive, but it does mean that people don't have to go into debt to save a life (or ten thanks to the work of game theorist Alvin Roth).
Interestingly, how compensation is framed seems to play a lot of the role in whether or not lawmakers get on board. In Iran, they're not buying kidneys but "rewarding altruism". In New Zealand, the bill got support because it was framed as compensating donors for lost wages rather than for selling their kidney.
This is objection to sales is typically based on two plausible but wrong objections.
First, some (particularly religious objectors) argue that allowing money to change hands commodifies the human body. The problem is that this is based on an incredible simplified form of Kantianism. Kant objects to people being treated as merely a means to an end– the merely is the key part. We can't go throughout our day without treating some people as means to an end - e.g. bus drivers, shop assistants, and call centre workers. What matters and is morally problematic is when those people are merely seen as means to an end and not as autonomous individuals.
But it's clearly not the case that by buying and selling kidneys we turn people into mere commodities. For example, take pets. Many beloved family pets were at one point bought and sold in pet shops, but they clearly haven't become mere commodities.
Second, some object that poor people will be exploited under this system. But, this too is easily dealt with. Exploitation typically is a result of desperation, but it's the buyer and not the seller who's the truly desperate one. Perhaps, sellers might be pressured into the decision in order to pay off a debt collector knocking on the door. If that's the case, then simply legislate that donors have 6 months or more to back out of the decision, that rules out those caught out in a moment of desperation. Others feel uncomfortable that sellers will be mostly drawn from the poorest groups in society, but this shouldn't worry us. The solution here is not to ban poor people from making money from their non-essential organs, but to tackle the underlying poverty through policies that boost the incomes of the poorest.
I'm a little pessimistic on the prospects of proper compensation for kidney donors making its way into law. But, New Zealand's experience shows that gradual reforms can succeed. Hopefully, these reforms will, as economic theory and Iran's experience predicts, save lives. And if they work, maybe that'll be the first step to more experimentation with compensating donors.