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NOTE On the Ethics of Paying Organ Donors: An Economics Perspective

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Okay, let me just say a few words before we start. This is a topic, the Oregon shortage in the United States.

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I don't know how familiar people are with this subject. It's a subject that everybody ought to be familiar with,

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but in fact, very few people are around the country and around the world.

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The fact is we have first by practice and then codified into legislation a policy in this country that restricts the price paid to organ donors to zero.

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And as most of you guys would not be surprised, there's no product on earth that if you set the price at zero, you don't have a shortage.

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So, naturally, we have a shortage, and the real tragedy is it's a shortage that, at the

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same time, costs the federal government money and kills people. And we now have waiting

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lists totaling close to 90,000 people who are waiting, and as I said in one of my papers,

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they're waiting for either an organ or death, whichever comes first. And for 7,000 of them

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From the year now, death comes first. In the last four years, we've killed six to seven

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thousand people, and then going on back fewer people, fewer people, but a total of probably

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on the order of sixty thousand people now have died because of this shortage, died unnecessarily,

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because the shortage is unnecessary. So I've been doing research in this area for, well

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I hate to think, because I'm always shocked at how long it is now, but it's about fifteen

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and how long do I have by the way okay so finish up by 115 okay just as a

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personal note intersection of events I have a background in industrial

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organization which is a study of markets and how markets work or don't work as

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the case may be and regulation and how regulation works or doesn't work as the

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In 1988, I went on the waiting list and got a kidney transplant. I did dialysis for two years. I got a kidney transplant in 1990. It was a terrible match. I rejected it. I went back on dialysis. I dialyzed until 1992. I had a kidney transplant. I went back on dialysis. I went back on dialysis. I went back on dialysis. I went back on dialysis. I went back on dialysis.

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I had a second transplant, this was a good match, and there's a lot of wood here to knock on, and I'll knock on it.

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I'll just celebrate, well, let's see, you know, the 25th of this month, I'll celebrate my 13th anniversary of having a kidney that works.

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And I can tell you, I always tell people urinating is a highly underrated activity.

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Go for a while without doing it, and you'll see what I mean.

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So that sort of was my interest in this area. It was very personal and I got very frustrated having to wait two years each time for a category organ to become available when I knew for a fact there was not indeed a shortage but a shortage created by this public policy.

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I've been preaching about this now for 15 years and writing about it and I've published, I don't know, a dozen or more articles in various journals and in the book that Mark mentioned.

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And I'm still doing, and this is a topic that is kind of surprising. You think, well, you write one paper and this is the end of the story, but it's not.

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It keeps leading to other ideas and so on.

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What I want to talk about today is a paper that I just gave last month, early last month, at DePaul University in Chicago.

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They had a conference on commodification of the human body.

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And they brought together a lot of people with different backgrounds, legal and ethical, and frankly some that were just crazy.

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I don't know what the hell they were.

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There's a woman there that characterized herself as a medical anthropologist

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who has spent the last several years going around the world trying to catch people selling organs and buying organs around the world

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and trying to get them arrested for that. So I believe she views it as God's work. I don't.

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Anyway, I gave this paper at DePaul, and it's supposed to come out in the DePaul Law Review sometime next year.

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The topic I wanted to focus on was the ethics, and some of these slides I probably, is it okay to walk around here?

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Some of these slides I don't probably need to point out to you guys, but as I said, the audience here was,

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There was a lot of law students and people without backgrounds in economics at all, so

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I wanted to start out with just the definition of what a shortage is, and in the process

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of defining a shortage, to lay claim to certain property rights, to knowing something about

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a shortage. The people that write in this area, I've got another paper, these people

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don't even understand what a shortage is. They keep telling themselves and other people

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So that the shortage is the number of people on the waiting list. That's not the shortage.

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That's the backlog that's built up from annual shortages over probably 30 years now. We've

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had this problem. And so, you know, people on the waiting list die, so they go off the

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list. We add more people to the list. We transplant some of them, but not as many as were added.

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And so the waiting list go up each year. So I try to explain that a shortage is a flow.

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It's not a stock, and because of the definition of a shortage as an excess of the quantity demanded over the quantity supplied at a given price,

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it is a subject about which economists have something to say. We do understand supply and demand if we don't understand anything else.

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And so the obvious solution to the shortage is to allow the price to rise to its equilibrium level.

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In other words, repeal the 1984 and, of course, as all acts are always titled 180 degrees

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opposite of what their effect is, the title of the act is the National Organ Transplant

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Act.

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And, of course, it's the Anti-Transplant Act.

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And there have been a few economists written on this subject.

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There haven't been a lot.

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A fellow named Brahms, who was at Maryland years ago, wrote about it.

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Gary Becker has written op-ed in the Wall Street Journal, Richard Epstein, who's a lawyer economist at Chicago, a couple of guys at Boise, is it Boise State? Yeah, Boise State in Idaho wrote a couple of papers, and then in addition to that, it's pretty much me and some of my colleagues here at Auburn have written papers on this, but the point of this is the shortage is caused by the legal ban on

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Now, what has happened and is what has prevented that obvious solution from being implemented over the years have been a set of alleged ethical objections to paying organ donors and I'm going to get to that in just a second what these objections are, but before I do that I want to stay clear about what I'm going to do.

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are clearly what is and what is not being proposed, at least by me, because in many, many instances, people make arguments against, of course, what you're proposing by mischaracterizing what it is you're proposing to make it easier to criticize.

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All that's being proposed is a small change in the way we currently do things, and I really don't have enough time to go into in any detail the way organs are collected today.

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But there's a very small set of deaths that are potential organ donors.

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Death has to occur under a very particular set of circumstances.

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The person has to be brain dead most of the time, all their organs have to be functioning, they have to be free of infection, which is a strong constraint because a lot of people die of pneumonia and things like that, cancer can't use the organs.

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So there's only about between one and two percent of all deaths in the United States are potential organ donors.

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And what happens is, we have these organ procurement organizations. There are approximately 60 of them in the United States.

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Here's an additional reason we have an organ shortage. Each of them is assigned their own exclusive territory.

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So they're a monopsinist, and they're all non-profit.

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So we have non-profit monopsinists collecting organs under the constraint that they pay a zero price for them.

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Now, if you were to try to imagine a system that was better guaranteed to generate a shortage,

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I don't think you could do it.

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And so, that's how they're collected now, and what happens is, there'll be a death,

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the hospital notifies the organ procurement organization, they send an organ procurement

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officer to the hospital, they meet with the family after the person has been declared

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and try to coax and cajole in a nice way the family into donating the organs. They are successful about half the time. So about half of the potential donors donate and those are the donors that are identified. Now there's a lot of other situations in which there would have been a potential organ donor had the physician, had the attending physician taken appropriate care of the patient when they died, not that they let them die.

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The Theory of Money and Credit

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And all they do now is they say you have the opportunity to make a tragic event into something good.

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A lot of people can benefit from these organs.

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And now, we would say, and in addition, we're prepared to pay you a death benefit of, I don't know, $1,000 to $5,000, in my opinion, would clear the market.

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So we're not talking about a lot of money per donor.

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And remember, each cadaveric donor yields, I think the average is about 3.7 organs.

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They won't be able to use all of them in all cases. Some of them get rejected for various reasons.

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But you've got two kidneys, two lungs, heart, liver, pancreas.

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Okay, so there's seven solid organs that get transplanted.

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So that's all I'm proposing right now. And my idea basically is sort of to confide in this group is that if we can just take that little step that the practice of receiving payment for the agreement to donate will become ingrained.

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People will expect it and we can then relax the barriers to enter into this industry and frankly get for-profit firms competing with each other for these things and I'll tell you when you tell people that aren't economists that it scares the hell out of them.

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They immediately envision car salesmen in white belts, standing by the bedside, you

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know, bidding with the family.

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And what I always try to tell them is, no, no, no, think of the funeral business.

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The funeral industry is a profit-maximizing, private set of companies.

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If they go around acting like that, they'll go bankrupt.

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They know what's required, a little decorum and some concern for the family and that kind

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of thing is the only way to make profits in the business and so that's what will happen.

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But right now all I'm talking about is adding a financial incentive to the current situation

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and I believe that will evolve into a true market for catavaric donors.

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The other thing is, to keep from scaring people off so much, I always say what we're not proposing.

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We're not proposing paying living donors.

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That was why that act got passed in 1984, was there was a physician in Virginia that

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It started a corporation to broker organs, and guess where he went for the organs? Where

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would you go to advertise if you wanted to pay, say, somebody $30,000 for a kidney? He

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went to college campuses, and he had lots of takers, and the surgeons and the AMA were

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just absolutely offended and went to Congress and got this act passed. It was living donors,

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But the act applies to both living and cativary. So what we're proposing is payment, not payment

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to living donors, but payment to cativary. And I always point out to people, if you're

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opposed to the use of living donors, and of course you're opposed to black market activities

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in India and Turkey and Brazil and South Africa, if you're opposed to that, then you ought

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to favor payment for cativary. In my opinion, I think that the payment for cativary organs

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is going to be so low, it'll drive out the market for living organs, pretty much.

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There will still be some living donor's transplants done for kidneys because they work better in the long term.

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But part of that is due to the shortage as well.

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I don't really have time to go into that.

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The other thing is, living donors are not going to solve the shortage for hearts and livers, okay?

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So you're going to have to do something about the shortage to solve that problem with cadaveric donors.

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The last thing is we're not talking about selling these, putting them up for bid to the patients.

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Right now what happens is once the organ is acquired,

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all the costs of the acquisition are paid for under what's called the end-stage renal disease program.

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I don't have a lot of time to go into this either.

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That program was passed in 1976, I want to say.

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And of course, you can guess why it was passed. The Senator had a relative on dialysis. So, end-stage renal disease program gets passed. It's part of Medicare. The original budget was $300-something million. It's now over $8 billion. They pay for all dialysis costs. They pay for all renal transplants. They pay for heart, liver and lung transplants for people that can't afford it now. They pay for

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This is really, this is really good. They'll pay for the immunosuppressive drugs following the transplant for three years, and then they cut them off, and they used to cut them off after one year, so this was a compromise.

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Now, what happens? Poor people don't have insurance, quit taking their medications, they reject the organ, they go back on dialysis. Dialysis costs, I think, about $40,000 a year to keep somebody alive on dialysis. Kidney transplant, one-time expenditure, about $60,000 to $80,000. Okay, so the transplant is much more cost-effective. The immunosuppressive drugs are maybe $10,000, $12,000 a year, so it's much cheaper to transplant.

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That's what they do.

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So that's how things are done now, or not done.

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So shortly after the law was passed, in fact, at the time the law was passed, Ron Paul,

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who was then a senator from, was it New Mexico?

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Was he the senator from New Mexico, Texas, Ron Paul?

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He got up during the hearings and said if you want people waiting in line for organs

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like they wait in line for gasoline past this legislation, well they did. In fact I think

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he was the only one that voted against it. So since then and even before the law was

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passed people have argued, economists primarily, argued for having markets for organs on the

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The buying side, not on the selling side, buying the organs from donors, having more than to distribute, and the way they're distributed now, I won't go into, but it's distributed on non-price terms, it's basically how sick you are and how long you've been on the list and blah, blah, blah.

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but what happened was when people started proposing paying organ donors

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people opposed it

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and they came up with

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this sort of litany of

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just plain loony some of them, just absolutely stupid

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so-called ethical arguments

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there's a really good paper on these by a philosopher named Janet Radcliffe Richards

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It was published in the Journal of Medicine and Philosophy, which I had never heard of it.

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It's a wonderful article. It is a real philosopher writing in just plain talk.

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And I end up quoting her quite a bit in the book. But in reference to these arguments, she said,

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quote, people do not rely on arguments this bad unless they're badly in need of an argument.

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and that really characterizes these things but these are these are that this is the list of the so-called ethical arguments well six is probably economics the rest are are more or less ethical arguments and and I don't have time to really go through them in detail but let me just say number one argument I remember years ago on Donahue he had the talk show he brought

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He brought this up, and he said, oh well, it's just ridiculous to even propose that people would pay donors because then only the fat cats could afford organ transplants.

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You know, as though poor people could afford organ transplants now, they can't.

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That's why the government pays for them.

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And as though the price of the organs would be, you know, some huge number, which it's not.

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and as though the patients would have to pay for it, which they would not.

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So all of these arguments just fall apart on any kind of close inspection whatsoever.

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Look at number four, black market sales.

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There have even been people write in the literature that we should not allow paying organ donors

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because it would lead to black market sales.

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You know, if that isn't a perversion of logic, I don't know one, and so on.

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The last one was what this conference was on, was commodification in the human body.

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Here's the argument. We can't allow organ sales because it would commodify the human body and somehow reduce the value of your humanity to you.

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And I've pondered over this one for I don't know how long.

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And I have a set of responses to that, but I said, okay, what I'm going to do with Professor Beard, we said, okay, let's just take for a moment this argument as though it were, in fact, a serious argument.

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What's the economics?

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The economics is an externality. That somehow, if I buy an organ, if I pay Mark to agree to donate the organ of somebody that's deceased, that somehow that insults a non-participant in the transaction.

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John is now insulted and his value of his, quote, self is somehow reduced from this transaction that he was not a party to.

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So it's an external effect.

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And so he said, okay, let's treat it as that.

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Let's say that it is, in fact, something that does occur.

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And let's say that it is a negative externality, a third-party effect.

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And so this just describes that externality, voluntary exchange between parties transaction lowers the utility of others who are not participants.

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Okay, if we do that then we say, okay, under what conditions would that effect warrant a continuation of the ban on paying organ donors?

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The answer is, the value of that externality would have to exceed the direct benefits generated from paying organ donors.

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And not only that, and that's what we're going to focus on, but importantly keep in mind also that the transplant itself generates externalities.

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The families of these poor people who are waiting to die experience tremendous joy when they get a transplant, and this is one of the interesting things I think about transplants.

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A lot of the medical technology today sort of keeps you alive but you wish it wouldn't, really lowers the quality of life.

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Transplants are not like that.

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If these plans are successful, I won't say you return to your former health entirely,

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but you are to a great extent. A lot of people are able to go back to work where they were

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not able to work on dialysis or whatever. So, it's necessary then, if this argument

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is to warrant a ban on payments.

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It's necessary that the value of that extra now

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to exceed the direct benefits.

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So what we try to do in the paper is to estimate roughly,

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very roughly and extremely conservatively

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what those benefits might be in terms of social welfare.

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And the point here is I'm not an ethicist.

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I haven't studied ethics and so I'm reluctant to get into ethical debates with people who have,

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but I think that an ethical choice cannot be made if you ignore the consequences of that choice,

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the real consequences of that choice. And the real consequences here, of course, are you're killing

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people. So it's very difficult to imagine. So what we do, and this is the part where

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where some economists get excited because we're going to do a simulation model and use some real data and bring this to bear and some economists throw up their hands and say, well, you're stupid and this is a waste of time.

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But we're going to look at some real data here.

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We're going to look at kidneys.

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This is one thing, when you do this, you quickly learn organs are not substitutes, right?

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You can't substitute a kidney for a heart. They are, in fact, separate markets.

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And so we're going to look at kidneys because they are the largest component of the organ shortage.

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And you can see here the number.

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Well, I don't have the whole thing on the graph, on the overhead there,

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The number of people on the waiting list has gone up from just under 30,000 in 1995 to I think today it's approaching 60,000.

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Here it goes up to 50 something thousand in 2002 and look at that line, you can see that that's not much of a challenge to forecast that, is it?

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or the model of what's going on, I mean that's pretty much going straight line upward and

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that's the waiting list, these are the people.

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And then we say okay, what is the process, well let me give you one other number here

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that's kind of interesting and that is the cadaver kidney transplants that are done as

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as a percent of the transplant, as a percent of the waiting list.

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And what's happened is, one of the side effects of this shortage is, of course, people die.

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Another side effect is, we're transplanting more and more and more living donor kidneys.

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I don't know, has anybody in here had a relative that's had a transplant?

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I'm not surprised.

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In my big principles class with 260 students, when I asked that, there's usually about five or six people who will raise their hand, and now today, the number of donors, now not the number of transplants, because you get two kidneys from each cadaver, but the number of donors, living donors, now exceed cadaveric donors for kidneys. It's over 50% of the donors now are living donors, and it used to be very small, and I had a transplant surgeon who's that same age as me,

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The San Francisco hospital who does pediatric transplants tell me one time she said it's a good day when I don't have to do a living donor transplant.

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Because you're talking about taking a kidney out of a kid to put in another kid.

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And so the physician's so-called oath to do no harm is violated.

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Now I will say, we've been taking kidneys from people for a long time, going back to the Civil War, when they got shot in the kidney, they would take them out, and there have been studies on the long-term health effects, and they're pretty minor, they're pretty minor, it's a fairly safe thing to do, to donate a kidney to somebody, but it's not without risk, there have been probably 20 or so deaths on the operating table, anytime you put anybody under anesthesia, there's a chance they're going to die.

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So here's our little model that we have and of course this is anytime you work with Randy Beard there's got to be a model so this is our model and here's what we've got this is the change in the waiting list our data are from 95 to 2002 and we stop at 2002 it's nice because we're going to forecast just one period ahead 2003 and we've got the data for that so we see how our forecast does so we've got an intercept and we got time

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This is the deaths on the waiting list. If you look at the number of deaths on the waiting list each year, it is a virtually constant number of about 6.7%.

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6.7% of the people on the list die every year.

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And that's reasonable, right?

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As the list gets bigger and bigger and bigger, waiting times get longer and longer and longer,

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and a certain percent of the people are going to die.

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So that's deaths.

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This is the cadaveric donors, okay?

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So this is cadaveric kidney donors.

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You get just under one and a half kidneys on average for each cadaveric donor.

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So there's a fair number of cadavers that don't yield two kidneys, okay?

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For whatever reason.

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One of them may have a disease, may have cancer on it.

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Sometimes they don't come with all the plumbing they need.

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Sometimes they drop them in the floor and step on them.

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So you don't get two from each cadaver.

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So that's what this is, is the number of cadavers times, and that comes off the waiting list,

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and this is the living donors, and the living donors is virtually again a constant as a

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percent of the waiting list. It's about 12% of the waiting list donate kidney each year.

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And again, that's pretty expected. I mean, these people on the waiting list have families,

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right? And as the waiting list gets longer, somebody in the family comes forward and

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and Donates a Kidney. So these two numbers here, these two coefficients we estimated with

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OLS. And I've got the results in the paper. I don't think I need to bore you with that.

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But those were estimated with OLS. These other coefficients here are virtually constants.

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And so we just use those constants to simplify this as much as possible. And then we have

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to forecast the number of cadavers so we run a little simple regression there as a function

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of time as well, okay? Let me see, how am I doing? Let me stop a second, does anybody

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have any questions on any of this? I should have said before I started, please just raise

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How did the two folks put on the list get into that equation?

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already. And then, of course, you have the transplants that are done, right? Here and here, cadaveric and living transplants, so that comes off the list, and deaths come off the list. So, three ways to get off the list, transplant, living transplant, cadaver, or die. But, in addition to that, we just have more people getting sick every year, and of course,

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Yeah, and of course the aging of the population and that kind of thing is causing the waiting

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list to go up.

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And this paper, by the way, let me just mention, the paper is already written, I've actually

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sent it.

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It's supposed to be in the DePaul Law Review and I was shocked.

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They had this seminar and these people showed up without papers or anything and then I found

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out that the papers weren't due to the editor of the Law Review until October of this year

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So what we're going to do is we're going to take that little model and we're going to generate a one-period ahead, that's all, one-period ahead forecast of what is going to happen in the next couple of years.

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We're going to take that little model and we're going to generate a one period ahead. That's all.

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One period ahead forecast of what happens to the waiting list.

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And as part of that forecast, we get what the new waiting list will be, one period ahead.

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And this matches very closely to what it actually was.

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We get a number of deaths. We get transplants, cadaveric and living.

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The Baseline is basically nothing changes, right? All the trends continue the way they're going and we just forecast one period ahead, 2003.

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Okay? Now, this is where the simulation starts to get very conservative. We said, okay, suppose that paying organ donors, all it does is it keeps the list constant.

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It eliminates the annual shortage and therefore there's no change in the waiting list.

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Now what I think will happen, and I've got another paper on this,

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I believe what will happen is if we pay organ donors we'll generate surpluses each year.

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And we can start whittling this list down.

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We cannot, we cannot get rid of these lists in one year.

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and in fact for kidneys you know given there's just as there's a fixed number

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of potential donors out there we don't know what that number is there are

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various estimates of it ranges all the way from 8,000 to 30,000 and it makes a

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huge difference in your calculations but using a fairly conservative number for

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that I estimated it's probably going to take 10 to 12 years to whittle the

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kidney list down hearts and livers we can whittle down quicker and the reason

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The reason for that, of course, is, very sadly, hearts and liver, if you need a transplant, if you don't get one, you die pretty quickly.

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Kidneys, you know, you stay on dialysis and you can stay alive for a long time.

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So it's going to take a long time to whittle these lists down for kidneys, not so long for the others.

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So our assumption about compensating donors, I think, is very conservative.

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All we assume is there's going to be enough people, additional kidneys become available so that the list will stay the same.

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All right, so we take the difference and from this we get a number of additional transplants and we are going to assume that

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that proportion of living donors to the waiting list stays the same.

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So what we're going to do is relative to the baseline, we're going to save 390 living donor transplants from being done.

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But we're not going to value that, we're not going to try to value that.

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So again, very, very conservative.

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Here, these are the cadaver transplants, so these are the additional transplants.

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Actually, this is what we're going to value here is the additional transplants.

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Transplant. So this is again very conservative and we're going to value these deaths using other people's estimates of value of life and the cost savings due to transplanting somebody that was on dialysis, okay?

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And again we're going to use very conservative figures for that.

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And here are the figures we use. Transplants, this comes from a British Medical Society study of the call savings course converted from pounds to dollars and it's a fairly recent study and that is a present discounted value over the expected life of the transplant.

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Transplants don't last forever, the average age, the average life expectancy of a transplant keeps going up as the immunosuppressive drugs improve and this and that and the other.

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But anyway, this is what the estimate is of the present discounted value of the cost savings of moving somebody off of dialysis on to transplantation.

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So that's a cost saving per transplant. And then life saved, we had 218 lives saved. And this is an extremely conservative, I think, estimate of the value of life. It's called the VSL, value of a statistical life. A fellow named Phil Held, who's a health economist, has done some work in this area in Viscousi and some other people have done work in this area. And here's why it is so conservative.

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The numbers they get are from observed risk-taking behavior in occupations that people take an increased risk of losing their life and will accept how much higher wage rate does it require for them to take a job with a delta increase in the loss of your life, okay?

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Okay, now it's conservative because for those jobs, that delta is pretty small, right?

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For transplant, especially if you're talking hearts and livers, it ain't small, okay?

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I was told years ago that if you go out to Stanford and you go to the hospital there,

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they do a lot of heart transplants there, that if you go visit the motels that surround

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the hospital, they're full of heart patients waiting for a transplant.

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Okay, so this is a real conservative figure. So anyway, we multiply these, sum this up, and we end up with an annual savings, and this is an annual saving, due to paying organ donors of $1.3 billion. This is for kidneys only. It doesn't count the externalities, the values to the families of these people, which is $1.3 billion.

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It's just that, I think, way underestimated value statistical life using the assumption

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that we don't generate surpluses, all we do is stop the shortages and so on.

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So it's a very conservative figure.

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It's also a very large figure.

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So I will conclude with the point of all this and that is if we interpret the commodification

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argument in economic terms as a negative externality, then we can apply a fairly traditional cost

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benefit analysis to assess the conditions required for that externality to warrant a

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continuation of the legal ban on category donors' payments.

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And we show that the numbers that we're talking about as a practical matter are so large that it's just infeasible to think that the value of that externality would exceed the direct benefits attributable to paying organ donors.

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So that's what's in this paper. There are, of course, a lot more details if anybody's interested in that.

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Any questions on any of this?

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Yeah.

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Yeah, I remember that.

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Mark, didn't you do that?

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Did you do that?

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Yeah, yeah.

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Yeah, I remember you all had to put out some kind of disclaimer or something to try to...

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There are a lot of people out there that are happy to sell kidneys, absolutely.

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And who was the young German fellow that was here? Thomas. He came over and talked to me one day and I know he's gone back now and I emailed him.

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I read this and then I lost the site. There was an ethics conference held in Munich, Germany.

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and it was in I think December of 2002 I want to say it may have been three and at the end and this Janet Radcliffe Richards was there and a lot of these ethicists and to their credit at the end of the seminar at the end of this thing they took a vote and they said all right how many people here think it's unethical to pay organ donors and the vote was 30 to 4 that number stuck in my mind 30 to 4

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and more.

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That there is absolutely nothing wrong ethically with paying organ donors.

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What's happening in this business right now, last year there was a bill in Congress, Bob

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Greenwood in the House and Bill Frist in the Senate, who's a heart surgeon, had bills proposed.

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They got killed in committee, they got killed by Kennedy.

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And they got killed by Kennedy because of a guy named Delmonico, Francis Delmonico, who's

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a transplant surgeon at UMass, or maybe General in Boston.

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This guy is opposed to paying organ donors.

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And these guys get on their high horse, and they are so adamant and so vocal, and he's

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traveling all over the world, I don't know when the hell he does transplants, but he's

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He's traveling all over the world saying it's just totally unethical to pay organ donors.

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Now, I'm starting to attack the guy now in some of the stuff I've written.

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The last paper I wrote, I've got a footnote in there, he wrote, and this just really fried

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me, he wrote in one of his papers that it would be unethical, that paying organ donors

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would, quote, jeopardize the nobility of the medical profession.

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And so I've got a footnote in the paper and I quote him and then I said well that's certainly

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worth 6,000 lives a year and then I said he doesn't explain why paying organ donors jeopardizes

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it but paying physicians doesn't.

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And so I'm starting to attack this guy and I told the doctor I see here that I had thought

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What about writing the guy a letter and saying, you know, in the history, the most successful

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serial killer killed less than 100 people, but you're killing 6,000 every year.

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You know, congratulations, you son of a bitch.

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When you talk about this commodification angle, and if these people really understand the argument, you're saying one system kills lots of people.

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And the live donations, I've heard that people say that living people who give them kidneys is the most painful thing they've ever experienced in their lives.

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No, not today. In fact, a lot of them, they can do laparoscopy. They can remove the kidney.

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That's what we're saying in this paper. Let's say that. I don't believe it, but let's say it.

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How do they win the argument? I don't know how they win the argument.

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I'll tell you something interesting. I get calls from people. I did when the book came out. We did radio shows all across the country and everything. I got calls from people.

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I had a call about a month ago from the woman at AEI that edited that book. Real nice woman and really good editor.

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She said, I've got a friend in San Francisco and said she's been on dialysis three years and she said, I sent her a copy of your book, she'd like to talk to you. I said, all right.

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And she said, now, her name is Fireman, maybe I shouldn't say it, her name is Fireman and she's of Fireman Insurance Corporation.

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And so I called her up and I said, well, the first thing is, I said, how many waiting lists are you on? She said, well, I didn't know you could get on more than one.

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I said, well, they won't tell you that because they think, again, they think it's unethical for you to go. I said, I was on three. No, I was on four. I was on the waiting list at Birmingham, Emory, Minnesota, and Pittsburgh. The reason, Birmingham, Pittsburgh, and Minnesota are three of the very top kidney transplant centers in the country. That's one thing we can be proud of in Alabama. We've got a really good transplant program. And of course, Emory, I got on four.

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I would have been on more than that, but I was running out of blood. I had to send each one of them eight tubes of blood every month.

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And I said, hell, if I'd had more blood, I'd have been on 20 lists, but I couldn't get on 20.

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But I said, yeah, get on some other lists. It'll shorten your waiting time.

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But we talked and everything, and then she left me a message on the phone and said,

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well, maybe we could do a paper on the politics of organ donation.

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I thought, well, I don't know what I'd say about the politics, but you can do kind of a, in fact, one of the papers we have, which is the one I wanted to title, Rent Sinking in the Graveyard, but I didn't, has to do with kind of the public choice aspect, why physicians and transplant centers might favor a policy that generates a shortage.

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Of course, the answer is it's like OPEC, right? I mean, if you can cut the output, it's like a cartel. It acts like a cartel. I'm not saying they are a cartel, but it acts as if there were a cartel.

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And wrote that altruism at one stage of production can serve the purposes of greed at another.

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But anyway, she proposed we do this paper, and I got to thinking, and this was a few weeks ago, and the news was just consumed with the Terry Shivo thing.

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And I said, damn it to hell. Here we've got a person that's in a vegetative state that's drawn the attention of the president, the federal congress, a governor, a state legislature, and all these actors and actresses and everything.

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But we've got 6,000, 7,000 other people who are not in a vegetative state, who are real people, dying every year, and nobody pays any attention.

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I said, you know what needs to be done? We need to do a documentary movie. And so I got her interested. She said, that is a great idea. So maybe we're going to do one. And what we need to do, I said, we need, we need at least three individuals to follow. One that gets a transplant and starts, you know, working out again, goes to work, does all this, and the family's, you know, one that dies while waiting and one that's still waiting at the end of the movie.

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Not just that, and visit a dialysis clinic, go in there with your cameras and show what

358
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these people go through in these dialysis clinics.

359
00:48:15.440 --> 00:48:19.560
And I've always told people, if you ever get a feeling sorry for yourself, go visit a dialysis

360
00:48:19.560 --> 00:48:20.560
clinic.

361
00:48:20.560 --> 00:48:24.200
And I also say, if you ever think you're making a lot of money, go drive through Buckhead.

362
00:48:24.200 --> 00:48:29.640
But anyway, because I drove through Buckhead one time, I said, damn.

363
00:48:29.640 --> 00:48:35.880
But anyway, the other thing that needs to be done then is go and interview Gary Becker,

364
00:48:35.880 --> 00:48:43.600
Richard Epstein, come interview me, Lloyd Cohen at George Mason has written some really

365
00:48:43.600 --> 00:48:49.780
good stuff on this, interview Radcliffe Richards over in London, and then go and talk to that

366
00:48:49.780 --> 00:48:57.740
shithead, Francis Delmonaco, go talk to him, talk to Arthur Kaplan, who I had a debate

367
00:48:57.740 --> 00:49:03.180
with him on the radio one day, and I told the moderator, I said, if Mr. Kaplan would

368
00:49:03.180 --> 00:49:33.180
Arthur Kaplan, Arthur Kaplan, Arthur Kaplan

369
00:49:33.180 --> 00:49:44.180
The best thing you can say, how on earth can somebody defend a policy that kills people and claim to have the moral high ground?

370
00:49:44.180 --> 00:49:53.180
You know, I mean, it's just insane. But these guys, I mean, they've got the ear of some of the politicians.

371
00:49:53.180 --> 00:49:56.180
What's wrong with paying living donors?

372
00:49:56.180 --> 00:49:59.180
There's not a thing wrong with paying living donors.

373
00:49:59.180 --> 00:50:06.180
Now, with the college kids, were they being offered to take their kidney out right then or just to get on the list?

374
00:50:20.180 --> 00:50:24.180
Why not pay people to come to sign the cards?

375
00:50:29.180 --> 00:50:32.180
There's all kinds of ways to have a market, as we all know.

376
00:50:32.180 --> 00:50:34.180
There's futures markets and there's spot markets.

377
00:50:34.180 --> 00:50:37.180
And what you're talking about is the futures market.

378
00:50:37.180 --> 00:50:41.180
And there are different forms of the futures market.

379
00:50:41.180 --> 00:50:48.180
If I say I'm going to pay you to sign your donor card and make that a legally binding thing,

380
00:50:48.180 --> 00:50:50.180
I don't think that's going to do much.

381
00:50:50.180 --> 00:50:54.180
And the reason is, is the equilibrium payment for that would be so damn low,

382
00:50:54.180 --> 00:50:57.180
I think it would be overwhelmed with the transaction costs.

383
00:50:57.180 --> 00:51:02.180
I think the transaction cost would be higher than the price. Here's why.

384
00:51:02.180 --> 00:51:07.180
It's way out in the future, we're talking about collecting, and the probability of collecting is one to two percent.

385
00:51:07.180 --> 00:51:12.180
Right? It's only one to two percent of the deaths occur under those circumstances.

386
00:51:12.180 --> 00:51:19.180
And it's way out, and so by the time you discount for the probability of collecting and you discount for the time,

387
00:51:19.180 --> 00:51:24.180
you know, you're talking about two dollars or something would be the market value of it.

388
00:51:24.180 --> 00:51:37.180
But, the other type of futures market is this. You sign a contract that says that we can have your organs, and we're an organ procurement firm, okay, at your death.

389
00:51:37.180 --> 00:51:48.180
Now, if you die under circumstances where we collect those organs, then we will pay your estate $5,000. That's fine. That would work. That would help.

390
00:51:48.180 --> 00:51:58.180
But what people are wanting to do now is, they're wanting to say, well, I'm the true organ donor. My family shouldn't have any say-so in it whatsoever, okay?

391
00:51:58.180 --> 00:52:09.180
But, you know, my take is this. I try not to tell the market how to work. We've got spot markets and futures markets for everything.

392
00:52:09.180 --> 00:52:15.180
Half spot market and future market for this. There's no reason to rule out one or the other.

393
00:52:15.180 --> 00:52:18.180
Let the market decide which one is going to do it best.

394
00:52:37.180 --> 00:52:39.180
I have not looked into that.

395
00:52:39.180 --> 00:53:09.180
I suspect it's probably illegal to compensate people for that. It's illegal to think. Now, let me say this. One of the kidney transplant surgeons, to his credit, said, if I had to guess, he said, between a quarter and a half of all the transplants I do, he said, of the living donor transplants, he said, I think the donor got some payment. He said, one of them I know drove away in a new car. So, you know, if it's inside

396
00:53:09.180 --> 00:53:13.180
How are you going to control whether it's paid or not?

397
00:53:13.180 --> 00:53:20.180
Although now I did a radio show just on spring break in Montreal and a big issue right there was

398
00:53:20.180 --> 00:53:25.180
a person showed up at the kidney transplant center with a donor in tow.

399
00:53:25.180 --> 00:53:27.180
They wouldn't transplant. They would not.

400
00:53:27.180 --> 00:53:34.180
They refused to do the operation because they suspected that the donor was being paid.

401
00:53:34.180 --> 00:53:39.180
So they're the damn payment police now. They're not in the business of doing

402
00:53:39.180 --> 00:53:44.180
transplants. They're in the business of policing this idiotic policy. Yeah.

403
00:53:44.180 --> 00:53:48.180
Just eyeballing the data. It looks like the demand curve is inelastic.

404
00:53:48.180 --> 00:53:55.180
Oh yeah, sure. Right. But for somebody like me who, and it's a pain, but I go through it to get my

405
00:53:55.180 --> 00:54:01.180
playlist and the exercises for like two hours and all that. I see myself as a very inelastic

406
00:54:01.180 --> 00:54:14.580
in Elastic Supply. I don't think that, you know, they could change much, change my behavior, but looking at the data, it appears that the supply side is much more elastic than what my intuition would be.

407
00:54:14.580 --> 00:54:23.380
I think the supply is pretty elastic too, John, and I'll tell you three, sort of three sources of that.

408
00:54:23.380 --> 00:54:29.380
Number one is, a couple of them is theoretical. First of all, we've got a huge excess capacity out there.

409
00:54:29.380 --> 00:54:35.460
We don't have to go kill anybody to get more. We are collecting way less than half, probably

410
00:54:35.460 --> 00:54:41.220
on the order of 30%. So we could expand it three times, you know, before we hit that.

411
00:54:41.220 --> 00:54:46.660
And there's a constraint out there, right? I mean, but we've got a lot of exescapists.

412
00:54:46.660 --> 00:54:52.140
Second thing is, what's the opportunity cost of donating cadaveric organs? You feed them

413
00:54:52.140 --> 00:54:58.980
to the worms. If you donate, you can still have an open casket funeral, and the people

414
00:54:58.980 --> 00:55:06.980
They send this cadaver, they send this person back to the operating room. They open them, they close them. I don't know if they use anesthetic or not.

415
00:55:06.980 --> 00:55:16.980
And I don't know if they need to. But they open them and close them and everything and you can still have an open casket if you can't tell at all.

416
00:55:16.980 --> 00:55:25.980
And so the opportunity costs are very low. The third thing is Frank Adams and Andy Barnett and I published a paper in Contemporary Economic Policy a few years ago.

417
00:55:25.980 --> 00:55:55.980
This is really, really, really sloppy empirical work. But in the absence of any other kind of data, we did a survey of students at Auburn. So we've got a survey where you shouldn't be doing a survey. You ought to be doing trials. A student sitting in a classroom is not the same thing as a grieving parent or brother or sister or son or daughter sitting in the intensive care waiting lounge.

418
00:55:55.980 --> 00:56:04.580
But anyway, we did the best we could do, and we asked the question two different ways to try to get a boundary on the supply price.

419
00:56:04.580 --> 00:56:14.080
We said, how much would you accept? What's the minimum amount you would accept to supply the organs of a recently deceased relative?

420
00:56:14.080 --> 00:56:24.080
So we're looking at a spot market transaction. And how much would be the maximum amount you would pay to keep us from taking those organs and bury the body intact?

421
00:56:24.080 --> 00:56:35.480
and so we kind of get a bound on the supply and what our estimates indicated and we used a perfectly inelastic demand which is probably a pretty reasonable assumption

422
00:56:35.480 --> 00:56:47.120
and we ended up with a market clearing price of depending on what numbers you use between five hundred and fifteen hundred dollars per cadaver.

423
00:56:47.120 --> 00:56:53.480
That's per cadaver. So per organ you're talking about a few hundred bucks to clear the market.

424
00:56:53.480 --> 00:57:03.480
And we assumed that we were going to replace all living donors and completely solve the shortage, you know, annual shortage.

425
00:57:08.480 --> 00:57:15.480
In all deaths, we were going to replace, we were going to save everybody, eliminate all living transplants and solve the shortage.

426
00:57:15.480 --> 00:57:22.480
And the estimates indicated that it is a highly elastic supply. Now, people say, well, that's bullshit, you know, it's based on serving.

427
00:57:22.480 --> 00:57:44.480
One last thing that I just ran across recently. In Spain, there are a couple of guys at NBER now that are body and gay who've done a study on what's called presumed consent that a lot of people are pushing and it's used in a lot of European countries.

428
00:57:44.480 --> 00:57:53.480
Presumed Consent is just what it said. You check in the hospital, we presume it's okay to take your organs if you die, unless you explicitly state otherwise.

429
00:57:53.480 --> 00:57:59.480
As it turns out, it operates just about like our system operates. The physicians will still go and ask the family.

430
00:57:59.480 --> 00:58:06.480
And to me, that makes sense. I mean, my God, I mean, you just, you know, you go out and you tell them, we lost him.

431
00:58:06.480 --> 00:58:14.480
Now you're going to add insult to injury and say, oh and we're taking his organs, you know, we don't care what you say.

432
00:58:14.480 --> 00:58:22.480
You're going to talk to the family and even in these countries that have legally presumed consent, they won't take the organs if the family says no.

433
00:58:22.480 --> 00:58:27.480
And of course part of that I'm sure is, you know, dead men don't sue and families do.

434
00:58:27.480 --> 00:58:28.480
Management.

435
00:58:28.480 --> 00:58:29.480
So that's what families do.

436
00:58:29.480 --> 00:58:36.000
But anyway, Spain, if you look at the countries that have presumed consent, these guys find

437
00:58:36.000 --> 00:58:42.760
that they do have a statistically significantly higher rate of collection of category donors.

438
00:58:42.760 --> 00:58:46.560
Not high enough to solve the shortage, but it doesn't solve the shortage, but it's higher.

439
00:58:46.560 --> 00:58:52.840
But then Spain is up here, and all these others, and it's got presumed consent.

440
00:58:52.840 --> 00:58:56.360
And if you go to Spain, and I haven't been, but the people that have, so you talk to them

441
00:58:56.360 --> 00:59:24.640
Oh, well, we're doing this, we're doing this. Lloyd Cohen was over there and during a break during the seminar, he found out they're paying donors. They're paying the organ donors. Not a lot. And right now, there's a bill in Ohio to pay 500 bucks. It can't be legal because of the National Organ Transplant Act. Well, Trump it, I'm pretty sure. And it's a felony. $50,000 and I think three years in jail.