Patrick El-Hage Professor Trela ECON 2169F December 3, 2012

The Ethical and Positive Analysis of Organ Markets

Nearly every country in the world is facing a serious problem regarding organ shortages that result in thousands of people dying each year. As diabetes is becoming more prevalent due to a rise in obesity coupled with an aging population, so is kidney failure - fueling the gap between the supply and demand of organs. Iran, meanwhile, is the only country in the world that allows compensation for organs and has eliminated shortages for kidneys altogether. This is a sensitive issue not only because of its morbid nature, but also because of the ethical quandaries associated with potential solutions that can help relieve the growing organ shortage in Canada and around the world. By analyzing prohibition’s effect on organ supply, the ethical concerns surrounding organ selling, the black market, and non-monetary alternatives to an organ market, we can conclude that a regulated market that ensures the protection of buyer and seller, coupled with non-monetary incentives can prove to be a viable solution to the organ shortage crisis we face today.

According to Ontario’s provincial law, “No person shall buy, sell or otherwise deal in, directly or indirectly, for a valuable consideration, any tissue for a transplant.”(“Trillium Gift” 1990) Similar provincial laws that forbid the sale of organs exist in the rest of Canada. These regulations effectively act as a price ceiling set at $0, as the only way organs can be legally supplied is through donation. According to basic economic theory, when the price ceiling is below the equilibrium price in a market with conventionally sloped curves: there will be excess demand for the good, the market will under produce relative to the efficient level, producer surplus will be lower than with no ceiling, and there will be a deadweight loss (Besanko 2010). This is showcased in the diagram depicting the regulated market for organs (Figure A1). The quantity of organs available in a regulated market can be observed at the intersection of the price ceiling curve and the prohibition supply curve. Since supply under prohibition remains constant due to the lack of price, the supply curve is vertical. As illustrated, supply is unable to meet demand, thus resulting in a shortage of organs. Furthermore, since producer surplus is the difference between the amount received by the producer and the amount he or she would be willing to accept for the organ, producer surplus is $0 since the amount received is $0.

A1: Regulated Organ Market

In a perfectly competitive market where organs can be sold freely, producers who are only willing to supply an organ in exchange for money will be allowed to do so. As a result, the price system can allocate resources more efficiently without a ceiling and the quantity of organs available will increase and satisfy demand (curves will intersect). What used to be a deadweight loss to society will recover as a net benefit to society. Both consumer and producer surplus will increase (Figure A2).

A2: Unregulated Organ Market

Although it is clear that creating a market for organs will reduce shortages and save lives, the law prohibits sale on the basis of ethics and distribution. Many bioethicists oppose a market based on the belief that selling organs leads to the commodification of human bodies, which they consider to be undignified and devaluing the sanctity of life. However, taking this argument to its logical conclusion would suggest that surrogacies, as well as the sale of blood, sperm, and eggs are also immoral or unethical, yet these are widely accepted in the United States (but prohibited in Canada). While acceptance does not necessarily constitute morality, it is important to note this legal inconsistency given the amount of lives affected by prohibition and subsequent short supply of organs. Other public policy analysts argue that if organs can be sold, people will no longer have an incentive to donate their organs (Hippen 2008). However, looking at Iran’s kidney market proves that living organ donations and living organ vending are not mutually exclusive. Biologically related donation has remained at a consistent 12-13 percent of all donated kidneys despite the rapid growth of kidneys procured, while 28 percent of all kidney recipients in 2006 chose to receive a donated kidney (Hippen 2008). Thus, within the market system, individuals are free to follow their own morals, and those who oppose the selling of organs can remain altruistic.

Another reason why bioethicists oppose selling live organs stems from the paternal belief that allowing people to harm their bodies in order to receive payment is also unethical, particularly given the fact that those who will sell their organs are more likely to be poor. In Iran for example, over 70 percent of kidney sellers are impoverished (AJ 2007). However, it can be argued, based on the logic that we should protect poor people from inflicting damage to themselves for financial gain, that we should also prevent the poor from receiving salary for high risk careers such as enlisting in military, firefighting or crab fishing- all of which are more dangerous than donating a kidney (Castle 2011). The risk-reward tradeoff is different for each individual, and thus the individual is the only one truly capable of making such decisions to maximize their welfare.

The strongest and possibly most accepted argument against a living organ market is that allowing sales would exploit the poor. Those who earn the least are more desperate to earn money, and therefore more likely to sell their organs. The risks associated with selling one’s organs therefore also fall disproportionately onto the poor, while many argue that it is the rich who benefit from the increase in supply. Opponents of the Iranian system argue that sellers are coerced into selling their kidneys out of financial desperation. However, in the Iranian system doctors seeking an organ are specifically not allowed to approach sellers, and the seller must initiate all transactions (Ghods 2006). It is also a requirement to disclose all information about the risks associated with surgery so the seller is making an informed decision. Coercion is ultimately a subjective term, with some academics going so far as to say that some people may feel psychologically coerced by family members or friends through the simple process of being asked to donate. A person may feel responsible for the life of a family member or stranger if they are the only compatible match and therefore feel obliged to donate, or cope with feelings of guilt if they choose not to (Hippen 2008).

The simple reality is that sellers who are informed about the process are maximizing their well-being by participating in the marketplace, at least in the short run; otherwise they would not have sold their organs (Dworkin 1994). This is where a regulated market could in fact benefit poor sellers, because it could require post-surgery care and medicine, such as in Iran, which is rarely provided in a black market system.

In Canada, prohibiting the sale of organs has resulted in a lack of both equity and efficiency. Equity has been compromised because the rich are more capable of avoiding waiting lists by flying to a different country for a transplant if they are unable to receive an organ locally. Efficiency has been compromised due to shortages and long waiting times. Increasing the supply of organs through a market benefits everyone regardless of wealth, as organs are distributed in an equitable manner within the Canadian healthcare system (Carlestrom 1997).

The inefficiency due to prohibition is not only attributed to the 3,000 citizens on the waiting list for a new kidney each year, but also to the amount of taxpayer money being spent treating them while on dialysis. The Canadian Institute for Health Information estimated that providing those on the waiting list with a new kidney would have saved taxpayers about $150 million annually. The annual cost of dialysis is estimated to be about $60,000 per patient, while a transplant would consist of a one-time cost of $23,000 and an annual $6000 for medication (“Renal” 2011). Perhaps this inefficient use of money could be spent more productively elsewhere in the healthcare system if more kidneys were available.

If detrimental shortage and inefficiency was not sufficient of a reason to reconsider the way organs are allocated within society, the black market and the crimes associated with it should be. According to the World Health Organization, an estimated 10 percent of all kidney transplants in the world are performed in the black market (Shimazono 2007). Prohibiting the sale of organs when demand is extremely high artificially increases price through scarcity, incentivizing organ brokers to enter the black market. Since organ brokers in the black market monopolize the sale of organs, lack of competition causes buyers and sellers to face dangerous health hazards due to the lack of contract enforcement and substandard medical practices. Paid donors, for instance, are often misled about risks and left without treatment or care after surgery and, as a result, end up in a worse financial situation than prior to surgery due to lost productivity (Shimazono 2007). It is beneficial to future payees if a regulated system is established that treated paid donors with dignity, provided adequate healthcare, and provided full disclosure as to the risks of surgery.

Buyers in the black market also seem to experience an increased amount of medical complications, which includes HIV, hepatitis B and C, and even death (Shimazono 2007). Allowing a market would benefit these buyers as quality control of screening processes would ensure organs are free of disease, while competition amongst transplant surgeons would improve medical practice. If a competitive market was allowed to exist, black market brokers would lose monopoly power as only legitimate brokers entering the market would be sought out by potential payees and hospitals.

While the debates regarding ethics and distributive justice continue to prevent the formation of an organ market, there are still non-monetary methods that can incentivize more people to donate organs, also helping to reduce the size of the black market. A “mandated choice” law, for instance, would require all adults to choose between donating and not donating their organs. In 1996 Sweden passed a mandated choice law and saw an immediate increase of 600,000 potential donors, and when Denmark passed a similar law in 1990, 150,000 people were added to the donor registry. Such a law presents citizens with a conscious choice that they may not have made otherwise and allows them to seriously consider donating their organs (McArdle 1998).

A “presumed consent” system can be even more effective in increasing organ donors. As the name suggests, all citizens are presumed to be donors unless requested otherwise through paperwork. Such a policy has been proven to be very effective in countries such as Austria and Belgium, with organ donations increasing by over 100 percent since law implementation (McArdle 1998).

Lastly, a reciprocity system in which those who are registered as donors are given priority to receive transplants could incentivize others to donate as well.

While policy makers may not agree on whether it is ethical to create a legal market for organs, there are still conclusions that can be drawn from the evidence. First, non-monetary incentives are viewed as more ethical, and have shown to be effective in other countries such as in Sweden and Austria, and should therefore be implemented immediately in order to increase the amount of donors in Canada. Second, prohibition undoubtedly limits the supply of organs brought into the market (creating shortages) and creates incentives for the creation of a black market that is harmful to both buyers and sellers. Third, the establishment of a regulated market in conjunction with non-monetary incentives could help eliminate the black market, provide a safe environment for transactions, and eliminate waiting lists as seen in Iran. Even though there are solutions that are feasible in solving the growing problem of shortages, it seems that this is a matter of ethics and morality. In conclusion, opinions are ever changing, and what may seem unethical at this point in time may be rendered harmless in the future. I believe that it is only a matter of decades until society adopts a market system that resembles that of Iran.

Works Cited

AJ, Ghods, Ossareh S, and Khosravani P. Comparison of Some Socioeconomic Characteristics of Donors and Recipients in a Controlled Living Unrelated Donor Renal Transplantation Program. Tehran: Academy of Medical Sciences of Iran, 2007. Web.

Besanko, David. “Price Ceilings and Floors.” Microeconomics. 4th ed. N.p.: Wiley, 2010. 400-01. Print.

Carlestrom, Charles T., and Christy D. Rollow. “The Rationing of Transplantable Organs: A Troubled Lineup.” Cato.org. The Cato Journal, n.d. Web. 27 Nov. 2012. < http://www.cato.org/sites/cato.org/files/serials/files/cato-journal/1997/11/cj17n2-3.pdf >.

Castle, Erik P., M.D. “Nephrectomy,.” Mayo Clinic. Mayo Foundation for Medical Education and Research, 21 May 2011. Web. 27 Nov. 2012. .

Dworkin, Gerald. “Markets and Morals: The Case for Organ Sales.” Morality, Harm, and the Law. N.p.: Westview, 1994. 155-61. Print.

Ghods, Ahad J., and Shekoufeh Savaj. “Iranian Model of Paid and Regulated Living Unrelated Kidney Donation.” Iran University of Medical Sciences (2006): n. pag. Clinical Journal of the American Society of Nephrology. Oct. 2006. Web.

Hippen, Benjamin E. “Organ Sales and Moral Travails: Lessons from the Living Kidney Vendor Program in Iran.” Cato.org. Policy Analysis, 2008. Web.

McArdle, John, Ph.D. “CRT — Is There Really a Human Organ Shortage?” CRT. Campaign for Responsible Transplantation, 1998. Web. 27 Nov. 2012. .

“Renal Transplantation Saving Millions in Dialysis Costs.” Canadian Institute of Health Information (2011): n. pag. Print.

Shimazono, Yosuke. “The State of the International Organ Trade: A Provisional Picture Based on Integration of Available Information.” WHO. World Health Organization, 2007, Web. 27 Nov. 2012. .

“Trillium Gift of Life Network Act, R.S.O. 1990, C. H.20.” Trillium Gift of Life Network Act, R.S.O. 1990, C. H.20. N.p., n.d. Web. 27 Nov. 2012. .

I'm Patrick El-Hage and I live and work in San Francisco. I'm also on Twitter.