Monthly Archives: December 2015

The Washington Post Debates Organ Donor Compensation

imrs.phpIn my black market Rhino horn post yesterday, I mentioned that a recent proposal to legalize a market in sustainably harvested Rhino horn:

. . . highlights some pretty standard debates about taboo markets in a new context. For example, one common point of contention is whether, when banning the market has failed to stop trading, society is better served by a regulated, legal market. This debate has occurred recently with respect to markets in prostitution and human organs, for example.

As if on cue, the Washington post began running a debate today on compensating organ donors. They begin with a “Primer” (my Kidney Transplantation Primer with Phil Cook is better, though 🙂 ) that emphasizes some of the points I made in the Rhino post:

The proponents for change also say that a ban on selling organs helped to create the global black market for organs, mostly in the developing world. The literature on this topic is terrifying: stories of political dissidents killed to have their organs harvested or impoverished citizens tricked into dangerous operations. Some advocates say that a government-regulated system of compensation could help end organ theft.

The participants are:

Sally Satel, resident scholar at the American Enterprise Institute and practicing psychiatrist at the Yale University School of Medicine,

Francis Delmonico, Harvard Medical School professor of surgery at the Massachusetts General Hospital, and Alexander Capron, professor of law and medicine at the University of Southern California,

Scott Sumner, economist at Bentley University and blogger at The Money Illusion,

Benjamin Humphreys, program director at the Harvard Stem Cell Institute,

Nancy Scheper-Hughes, founder of Organ Watch and anthropology professor at University of California, Berkeley.

So far, the posts from Sally Satel (Generosity won’t fix our shortage of organs for transplants) and Frank Delmonico, with USC Law Prof Alex Capron (Our body parts shouldn’t be for sale) have been posted.

Related Posts:

How Can the Shortage of Kidneys for Transplantation Be Rectified?

Reverse Transplant Tourism

Happy Birthday NOTA! (Now Go Away)

Flesh List Is Me

Cash for Kidneys: Reality is Complicated

Kidneys, Part II: The Limits of Deceased Donation Proposals

Innovation and Incentives: Beyond “Cash for Kidneys”

More Organs & Inducements

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Black Markets Versus Regulated Markets (Rhino Edition)

gallery_rotator_768e56e664c6150a2560ec988193a589Over at Market Design blog, Al Roth flags an interesting controversy developing in South Africa – whether to abandon the current ban on Rhino horn and horn products, in favor of a regulated market in sustainably harvested Rhino horn.   Both the WSJ and NY Times carry recent articles.

As a bit of background (from the WSJ):

“The global rhino population has dwindled from 500,000 at the beginning of the 20th century to about 29,000 today. The surging trade in illicit horn has cut the population of the three remaining Asian species to just a few thousand, including about 40 Javan and less than 100 Sumatran rhinos. Just about 20,000 Southern White Rhinos and 5,000 black rhinos, which include three subspecies in Africa, survive.

“Black-market rhino horn can fetch as much as $100,000 a kilogram in Vietnam and other Asian countries, where it is peddled as a cure for ailments ranging from headaches to cancer.”

_56742389_hi013341533_rhinohorns_gettyI find this latest controversy interesting, because it highlights some pretty standard debates about taboo markets in a new context. For example, one common point of contention is whether, when banning the market has failed to stop trading, society is better served by a regulated, legal market.

This debate has occurred recently with respect to markets in prostitution and human organs, for example. In the case of Rhino horn, advocates of a legalized market argue that sustainable herding would both reduce the demand for poached horn and apply price pressure, thus dampening incentives to poach. Again, from the WSJ:

Rhino horn is made of keratin, like human fingernails. It grows as much as 5 inches a year. Biologists say that as long as a stump of 2 to 3 inches remains, it can be trimmed, doing a rhino no more harm than a manicure. “There are no nerves in rhinos’ horns,” said Raoul du Toit, director of Zimbabwe’s Lowveld Rhino Trust. He said there is no evidence that the procedure affects rhinos’ breeding practices or leaves them more susceptible to predators. “Why would you hunt a rhino for seven, eight, nine, 10 kilos of horn when, in a lifetime, it can grow 70 kilos of horn?” Mr. Hume asked.

econ_london13__01inline__4051Many animal rights activists disagree, arguing that a legal market would make enforcement more difficult and raise demand by whetting appetites for Rhino horn, as apparently happened after a one-time sale of elephant ivory stockpiles in 2008. They insist that education and publicity campaigns designed to counter myths regarding Rhino horns’ healing powers are the answer.

Market advocates counter that time is of the essence – Rhino populations are now so low that we can’t afford to wait for societal views to change — and dispute the lessons learned from the 2008 ivory auction:

The sides argue about precedents. A one-off sale of elephant-ivory stockpiles from four southern African nations in 2008 only whetted appetites for tusks, and elephant poaching has since soared to all-time highs. But a sustained, legal tide of supply—not a brief flood—has worked for other species, like South America’s vicuña, a llama relative. Mr. Hume notes that vicuñas were once slaughtered for their softer-than-cashmere coats but are now farmed sustainably, back from the edge of extinction.”

And, as with other taboo trades, you can count on the opponents to differ when it comes to concerns about commodification and the crowding out of nonmarket ideals:

“Where we differ is with your attitude towards the exploitation of an endangered species with the intention of making large profits,” Margot Stewart, founder of the nonprofit group Wild and Free South Africa, wrote in an open letter to Mr. Hume. She argues that rhinos are wild animals and should not be kept in paddocks like sheep or cows—and that it is unethical to farm and sell rhino horn since it has zero medicinal value. “Only two parties want this to continue: the rhino farmers and organized crime syndicates,” she added.

Sources:

Market Design: Rhino horns: flood the market with sustainable horn, instead of prohibiting the market?

WSJ: Would a Legalized Horn Trade Save Rhinos? With poaching on the rise, ranchers in South Africa want to flood the market—but conservationists warn of corruption and cruelty

NY Times: U.S. Pours Millions Into Fighting Poachers in South Africa

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Gordon and Hedlund On Financial Aid And Rising College Tuition

Over at Marginal Revolution, Alex Tabarrok discusses a new NBER paper, Accounting for the Rise in College Tuition, by Grey Gordon and Aaron Hedlund:

Grey Gordon and Aaron Hedlund create a sophisticated model of the college market and find that a large fraction of the increase in tuition can be explained by increases in subsidies.

With all factors present, net tuition increases from $6,100 to $12,559. As column 4 demonstrates, the demand shocks— which consist mostly of changes in financial aid—account for the lion’s share of the higher tuition. Specifically, with demand shocks alone, equilibrium tuition rises by 102%, almost fully matching the 106% from the benchmark. By contrast, with all factors present except the demand shocks (column 7), net tuition only rises by 16%.

These results accord strongly with the Bennett hypothesis, which asserts that colleges respond to expansions of financial aid by increasing tuition. Remarkably, so much of the subsidy is translated into higher tuition that enrollment doesn’t increase! What does happen is that students take on more debt, which many of them can’t pay.

In fact, the tuition response completely crowds out any additional enrollment that the financial aid expansion would otherwise induce, resulting instead in an enrollment decline from 33% to 27% in the new equilibrium with only demand shocks. Furthermore, the students who do enroll take out $6,876 in loans compared to $4,663 in the initial steady state….Lastly, the model predicts that demand shocks in isolation generate a surge in the default rate from 17% to 32%. Essentially, demand shocks lead to higher college costs and more debt, and in the absence of higher labor market returns, more loan default inevitably occurs.

Read the whole post, along with some caveats on the results, here. And the full paper here.

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BioNews: Egg donors to challenge US payment rules in court

From BioNews:

Egg donors are suing the American Society for Reproductive Medicine (ASRM) and the Society for Assisted Reproductive Technology (SART) in a class-action lawsuit for setting a ‘price cap’ on compensation to egg donors. . . .

The guidelines, which have not been adjusted since they were first established by the ASRM in 2000, advise that reimbursement above $5000 for egg donation requires ‘justification’ and that compensation above $10,000 is ‘beyond what is appropriate’. . . .

Despite these guidelines, compensation for donor eggs in the USA regularly goes up to $75,000 dollars and there are even reports of six-figure sums being paid out.

Law professor Kimberly Krawiec from Duke University, North Carolina, argued that the guidelines are a clear violation of the legislation against price-capping, and that if the subject had been anything except human eggs ‘we wouldn’t be having this conversation’.

In contrast, Professor of Bioethics Arthur Caplan at New York University said: ‘Egg sale is not egg donation. Opening a free market in human eggs risks increasing bamboozlement of couples with phony eugenic promises of eggs that will result in beautiful geniuses and the risk of exploiting poor women dazzled by money into ignoring risk.’

I’ve seen no evidence that egg donor compensation “regularly” exceeds $75,000 in the US, though there may have been isolated cases. Admittedly, reliable data on egg donor compensation is pretty scarce, but the studies that are out there tend to suggest that most payments are under the $10,000 guidelines. See my earlier posts here and here, for example.

But I’m happy to see Art Caplan protecting young women and intended parents from the coercive effects of money, which apparently only begin at the $10,000 mark.

Related Posts:

The NY Times Weighs In On Egg Donor Price Fixing

If You Want A Market, Have A Market . . . Otherwise

Feeble Even By Normal Litigation Standards

Egg Donor Antitrust Suit In Today’s WSJ

Sunny Samaritans’ Suit Survives

ASRM Seeks Dismissal of Egg Donor Suit

Kamakahi v. ASRM et al. — Updates

Politics And Profits in The Egg Business (When Sunny Samaritans Sue, IV)

When Sunny Samaritans Sue, Part III

When Sunny Samaritans Sue, Continued

When Sunny Samaritans Sue

The Value of Smart Eggs

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