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I Kidney You Not
A literature review concerning the possibilities of a financial
incentive system for kidney donation
Abstract
The gap between supply and demand regarding kidney donations is an increasing gap and many kidney patients are suffering because of this gap. Financial incentives could increase
the supply of kidneys, it is an option worth exploring. This thesis will take a look at: the ethical discussion regarding the sale of kidneys, shifts in demand and supply curves in a
market with financial incentives and tries to give policy suggestions to avert possible externalities that could occur in such a system.
UvA, faculty of Economics and Business
Bachelor thesis by: Yan Crabbendam, 10270698
Thesis supervisor: Andro Rilović
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This document is written by Student Yan Crabbendam, who declares to take full responsibility for the contents of this document.
I declare that the text and the work presented in this document is original and that no sources other than those mentioned in the text and its references have been used in creating it.
The Faculty of Economics and Business is responsible solely for the supervision of completion of the work, not for the contents.
3 Table of Contents
Introduction ... 4
An ethical discussion ... 5
The price of a kidney ... 8
Representation of a market for kidneys ... 10
Would financial incentives increase the supply of donated kidneys? ... 13
Inequality and exploitation in a market for kidneys ... 17
Asymmetric information in India ... 19
Donation and set of choices ... 21
The people’s opinion ... 24
A conclusion with policy suggestions ... 26
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Introduction
Since 1954 it has been possible to transplant organs from a healthy person to a person with dysfunctional organs. However, organ transplantations have only become a feasible possibility in the seventies, due to the development of immunosuppressive drugs that could prevent the rejection of transplanted organs. Since then the amount of
transplantations has grown rapidly. Sadly the amount of people on the waiting list for donor transplantation has grown even more (Becker & Elías, 2007). There is an increasing gap between supply and demand for organ donations, and in 2008 there were over 50,000 people in the U.S. waiting for a kidney transplant, with only 12,000 donors available (Satz, 2008). Between 1993 and 2003 the waiting list increased by 151%, while organ donations in the U.S. increased by a mere 41.2% (Siegel, Alvaro, & Jones, 2005). In 2014 over 120,000 people were on waiting lists for an organ transplant in the U. S, and every year 10,000 of those patients die because of the long waiting time (Kessler & Roth, 2014).
There are two different types of organ donor registration systems, based on two different policies: informed and presumed consent (Kessler & Roth, 2014). Informed consent is an opt-in system where citizens are not considered donors unless they register as such. Presumed consent is an opt-out system where citizens are considered donors unless they register as a non-donor. Research shows that countries in Europe with a presumed consent system have higher rates of registration, although the gap between supply and demand still exists (2014). In 2007, 39% of the Dutch adult population was registered as donors (Friele & de Jong, 2007) while in the US in 2007, 28 % was (Abadie & Gay, 2006). Both policies depend on an altruistically motivated supply (Blair & Kaserman, 1991).
A healthy person can live a normal life with just one kidney. This makes it possible to donate one of the healthy kidneys to a patient with kidney failure, if they have the same blood type. A kidney from a living donor has a greater chance of success and a higher increase in quality of life for the receiver, compared to a cadaveric donation (Smith, Woodward, Cohen, Singer, Brennan, Lowell, …& Schnitsler, 2000). Because of methods developed in the early 1990s making organ transplants from living kidney donors a minimally invasive procedure with low morbidity, there has been an increase in living donor
transplantation. In the year 2000, half of the kidney transplants came from live donors (Becker & Elías, 2007), most of whom were next of kin. Patients who have family members
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that do not want to donate, or whose family members are not suitable donors, are dependent on cadaveric donations or the small supply of non-related donors.
“When an economist sees a persistent gap between demand and supply … the next step is usually to look for obstacles to equilibrating that market” (Becker & Elías, 2007, p. 3). According to some economists, a market for organ donors or financial incentives for organ donors are a possible solution for closing the increasing gap between supply and demand (Becker & Elías, 2007; Blair & Kaserman, 1991). Despite this, the sale of organs in many countries is illegal, and organisations like the World Health Organization ban every kind of sale regarding human body parts (Friedman & Friedman, 2006). Only in Iran (and, for a brief period in the 1980s, in India) is the sale of human kidneys allowed (Satz, 2008).
The system in India was only in place for a brief period, due to negative externalities such as holding a kidney as collateral (Goyal, Mehta, Schneiderman & Sehgal, 2002). The system in Iran, in which a single organization funded by the government and charitable donations allocates kidneys obtained with financial incentives, is rather successful, and has eliminated the waiting list for kidneys (Ghods & Savaj, 2006).
Financial incentives could be the solution to closing the gap between supply and demand for kidneys from live donors, and could increase the average health status and decrease health costs in a country due to the elimination of the kidney transplant waiting list. A kidney is not an ordinary product, and probably will not be available soon in
supermarkets near you. This thesis provides an overview of the potential of financial incentives to increase kidney donation, and also of what kind of externalities might occur when financial incentives are implemented. Through the synthesis of different arguments, an attempt is made to provide some suggestions for a possible new system involving financial incentives.
An ethical discussion
Before introducing financial incentives for kidney donation, we must take a look at the ethical discussion regarding kidneys and monetary payments. Is it ethically defendable to exchange money for a kidney? What then happens to the way we see a kidney as an object? What does a kidney means to us as a body part?
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When a market is implemented for a certain good, it does not only change the way we value a good but also how we appreciate one another. According to Anderson, a donation system based on financial incentives undermines fraternal relations in a society, whereas an altruistic system enhances them:
Citizens have fraternal relations with one another when they agree to refrain from making claims to certain goods that come at the expense of those less well off than themselves and when they view the achievement of such relations with their fellow citizens as a part of their own good. People express relations of fraternity with one another in part through providing certain goods in common. (Anderson, 1990, p. 192) According to Anderson, fraternal relationships do not fit the economic market norms.
Freedom is expressed through voice rather than exit. There is no ‘take it or leave it’ assumption (exit); rather, the good is created through direct participation in the good by both agents (voice) (Anderson, 1990). Good in a fraternal relationship is distributed in accordance with shared principles and valuation, instead of through an impersonal transaction. It is a gift relationship where part of the good is expressed through the transaction itself: it is proved in common.
A clear example of a fraternal relationship is friendship. A friendship between two people arises within the shared values people have about friendship. It is a personal transaction between two people who can express their dissatisfaction through voice. According to Sandel (2013), money cannot buy friendship, at least in the traditional way we define friendship. A market for friendship would not only change the way we see
friendship – it would also change the status of friendship as a good. After a payment, the two agents in the transaction would not share the same values about friendship, and the function of a friendship between two people would be changed compared to a friendship without payments (Sandel, 2013), in that the good is not provided in common. In a fraternal relationship financial incentives do not only change the way we value a good, but they also change the good.
However, the function of a kidney does not change when it is purchased, which is the reason that kidney transplants have been possible since 1954. Kidneys do not fit the
definition of a fraternal relationship expressed above by Anderson. Money can buy you a kidney, but should it be bought? What Anderson is saying is that transactions as gifts will disappear in a market. It will not change the kidney as an object, but merely the way it is
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distributed. Whether or not this is a bad thing is open to discussion. The fact that the number of kidney patients on the transplant waiting list is growing shows that an increasing number of people do not have access to a gift transaction. Does the existence of a gift relationship regarding kidneys balance out the increasing waiting list? This is something that could be studied among kidney patients, through an investigation into their views on the matter. But, as Cherry (2000) stated, kidney patients probably just want to get better. Many opponents of financial incentives for kidney donation argue that financial incentives enhance the commodification of the body; that is, selling body parts objectifies a person. Why do payments for organs, rather than giving them away for free, make one’s body into a mere collection of spare parts? To explain the difference between donating a kidney without compensation and receiving money for a kidney, opponents of a financial incentive system use the second formulation of Kant’s categorical imperative, which states that we should never treat humanity merely as means (Gill & Sade, 1999). So, why is a person who is selling his kidney treating his body as a means and someone who is donating without compensation is not? According to Morelli (1999), giving up a body part for money is treating your body as an object with a market price. When the motivation behind such a transaction is solely the money, then one’s body is being treated as a means. This does not mean that giving up a kidney is wrong, but rather that the financial gain as a motivation is wrong. Morelli does not see donation for altruistic reasons as using the body as a means.
According to Sandel, there are three possible stands regarding this discussion: (1) Removing kidneys shouldn’t be allowed because it violates the sanctity and integrity of the human body; (2) Buying and selling kidneys objectifies the human body, and encourages us to view the body as a collection of spare parts; and (3) We own ourselves and we should be free to profit from our body to help others (Sandel, 2013).
The first two stands employ a deontological view (Frederick, 2010). Payments for donations contradict the values they represent, even if the outcome is positive. From a deontological standpoint it is hard to draw a line between what is right and wrong. Why is putting your life at risk in the army for money less degrading than selling your kidney? Why is a market for blood and sperm cells allowed? These arguments are used by Frederick (2010), and he sees the commodification of the body and the deontological principle as a personal moral view. Gill and Sade (2002) maintain that the use of a Kantian view to justify a prohibition on organ sales is wrong. In some ways they agree with Frederick; they see the
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Kantian view as referring to duties to oneself, and laws should not be used to enforce duties to oneself. This distinction is rather vague and seems more like a personal valuation.
In reference to the other distinction made by Frederick (2010), the difference
between kidneys and blood or sperm cells, Cohen (1999) also uses the second formulation of Kant’s categorical imperative. She argues that the distinction between the two is that the latter are not essential parts of the body. Parts that are necessary for the function of the whole body should not be for sale – it violates that which is essential to the seller and their humanity (Cohen, 1999). Non-essential parts can ethically be bought and sold, according to Cohen (1999).
As discussed in the introduction, the human body functions well with only one kidney, so it is arguable whether one kidney is essential. Perhaps what Cohen is trying to say here is that a kidney is essential in the sense that the body does not naturally replace it the way it does blood or sperm cells.
Even so, it is questionable whether a kidney identifies our humanity more than do blood or sperm cells. Humanity, according to Gill & Sade (2002), is what gives us dignity and intrinsic value; this gives us the ability to make rational decisions. “My kidney is not my humanity” (Gill & Sade, 2002, p. 26): a kidney is not needed to make rational decisions. Again, it is arguable whether the Kantian view justifies the prohibition of kidney sales in the sense that such sales violate the function of the whole person and thus violate humanity.
This thesis focuses on the third viewpoint – in which people should be allowed to profit from their body, if it improves the total social welfare. The deontological viewpoint seems more like a personal valuation. It supplies arguments as to why people make a distinction and it explains their moral standpoints, but is not sufficient enough to justify the prohibition. You could say that this thesis takes a utilitarian economic position: that a moral action is one that increases social welfare and could lead to an increase in the average social economic status (Mariola, 2005). When there is a possibility that financial incentives could benefit the society as a whole, it is an option worth exploring.
The price of a kidney
Financial incentives can only improve social welfare when we know how to calculate the appropriate amount for the incentives. How much is a kidney worth? The price of a
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kidney depends on a few factors: quality of life, risk of mortality, and ability to perform market and nonmarket activities for some period of time after the surgery (Becker & Eliás, 2007). The question is: How much should a kidney cost in order to induce a person to sell it? Becker and Elías (2007) calculated the price for a kidney in this way: The price of a kidney must compensate for three things: the risk of death, the time lost during recovery, and the risk of reduced quality of life. Compensation for the risk of death is calculated by the risk of death multiplied by the value of statistical life (Becker & Elías, 2007). Statistical life is a trade-off between money and fatality risks, a calculation of the expected value of someone’s life based on average annual income and average working life. It is broadly used as a
compensation measurement in risky jobs (Viscusi & Aldy, 2003). Compensating for the recovery time is also based on average annual income, and is multiplied by the average recovery time. Quality of life is again calculated with average annual income, but multiplied by the chance of experiencing a decreased quality of life, which is calculated with data on people who donated a kidney (Becker & Elías, 2007). According to Becker and Elías (2007), the total of these compensations comes to $15,200.
Although these three factors compensate for risk and loss of time, it is hard to say whether such a compensation amount is sufficient to lure people into selling their organs. A rational agent might think that this amount of money compensates for the risks involved and loss of time, and that at this moment in life he values money more than two kidneys. In the article ‘Pay enough or don’t pay at all’ Gneezy and Rustichini (2000) investigated the effect of monetary incentives on performance. People had to do tasks for either no money, a small amount of money, or a large sum of money. The researchers concluded that a high reward is better than no reward, but no reward is better than a ‘small’ reward; hence ‘pay enough or don’t pay at all’.
A reward or financial incentive that people perceive as too small can kill intrinsic motivation. Gneezy and Rustichini give a few reasons for why intrinsic motivation disappears when financial incentives that are too low are implemented. First, a price gives information: when the price is low people will perceive the performance as less important. Also, the incentive of reciprocity diminishes, and this will make the action less appealing.
The question is whether the stated price for a kidney (which compensates for all the risks) is high enough to induce people to sell their kidneys. This is an important aspect when conducting a market analysis regarding a possible financial incentive system. A reason to
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believe that the price calculated by Becker and Elías is a realistic price for a kidney is the fact that the price for a kidney in Iran, when adjusted using the PPP exchange rate, is $14,000. Furthermore, 75% of the kidney donations in Iran are made by unrelated living donors who received this price (Fatemi, 2012) and, as mentioned in the introduction, the waiting list for kidneys in Iran has now been eliminated (Ghods & Savaj, 2006). Comparing prices using the PPP exchange rate does not give an exactly equivalent value (Pilbeam, 2013), but it can be seen as an indication of a price.
Representation of a market for kidneys
A representation of a market for kidney transplants as it is now, has been made by Becker and Elías (2007) (Figure 1) and can be represented by a supply and demand curve.
Figure 1
Source:Becker, G. S., & Elias, J. J. (2007). Introducing incentives in the market for live and cadaveric organ donations. The Journal of Economic Perspectives, 3-24.
They assume that the average price of a kidney transplant is $160,000. The horizontal axis shows the number of kidney transplants and the vertical axis shows the total cost of a kidney transplant. The demand curve (D) is declining because government and health organizations are less willing to pay for a surgery when the price is high. The demand curve is steep, which means it is price inelastic. This is due to the absence of a close substitute for a kidney and the fact that in most cases a third party (such as the government) pays for the procedure;
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therefore, the demand is unlikely to be responsive to price changes over a wide range (Adams, Barnett & Kaserman, 1999). The supply curve is not influenced by the total cost of kidney transplantation (Blair & Kaserman, 1991). This explains the horizontal line of the supply curve. It is perfectly elastic, because there are no financial incentives and supply will not change due to increases in the cost of surgery (Becker & Elías, 2007; Barnett, Saliba, & Walker, 2001). The supply curve becomes vertical when it reaches the point of the total number of altruistic donors, which means that no more people will donate even if the cost of surgery is zero (Becker & Elías, 2007).
The distance between Q0 and Q0’, is the gap that exists between supply and demand caused by a system that depends on altruistic donors alone. The gap between demand and supply is measured with a comparison between annual number of transplants and the growth of the waiting list plus the number of people who died while waiting for a transplant. This gap has grown ever since kidney transplantation became possible. In 1990, 17,000 people were on the waiting list in the U.S.; this number increased to 65,000 by 2006 (Becker & Elías, 2007).
According to Becker and Elías (2007) payments for donations will move the supply curve upwards to S*; the cost of the transplant will increase because of the payment for the donation, and they assume that such a payment will cause an increase in donations, which switches the vertical part of the supply curve to a horizontal position. Becker and Elías (2007) state that with monetary incentives the price elasticity of supply becomes perfectly elastic after the point of altruistic donations, hence the shift from vertical to horizontal. They expect the supply curve to be elastic for the following reason: there is a huge potential of supply compared to the number of transplants, but it is blocked by the current system. Blair and Kaserman (1991) also expect a high elasticity of supply if payments for donations are instituted. They say it is hard to exactly predict in what way the curve will change, although they use a similar reasoning as Becker and Elías. They compare it to an industry with excess productive capacity where a price increase leads to more output; this their reason to believe the supply of kidneys can have a high elasticity. Becker and Elías (2007) assume an
equilibrium will arise at point e* where the new supply curve intersects the demand curve. At that point, the gap between supply and demand will disappear.
According to Adams, Barnett, and Kaserman (1999), there are three possible
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an increase in supply for any price above zero for a kidney, and an overall large
responsiveness to price (high elasticity of supply) and thus a further increase in supply as Becker and Elías (2007) and Barnett, Saliba and Walker (2001) assume. The second possibility is a negative intercept shift, but with the assumption that supply is highly responsive to price and financial incentives will thus eventually increase the total supply, but for a higher price than the first possible scenario. The final possibility is a negative intercept shift and a low responsiveness to price, which predicts that financial incentives could result in a net
reduction of quantity supplied (Adams, Barnett & Kaserman, 1999). They do not discuss the combination of a positive intercept shift and a low responsiveness to price. The reason for this could be that a positive intercept shift already implies a large responsiveness to price.
The second scenario they describe (a negative intercept shift with supply highly responsive to price) would be the one applicable to the ‘pay enough or don’t pay at all’ scenario described in the previous section. A price that is perceived as too low could lead to a crowding-out effect. If supply is highly responsive to price, financial incentives could still have a positive outcome when the price is high enough. The third scenario (a negative intercept shift with supply not responsive to price) assumes that financial incentives kill intrinsic motivation to donate and will thus lead to a decrease in supply. This will be discussed later on in this thesis when I will show that a simple assumption of immediate supply increase is not sufficient.
As for responsiveness of supply to price (the elasticity), it is not only important in respect to quantity but it is also an aspect of the cost efficiency in a financial incentive system. If the supply of kidneys has a high elasticity it could even mean more efficiency regarding the cost of the whole procedure. High elasticity could also mean more donors when the price of a kidney is perceived as high enough, which leads to more transplants and shorter waiting time. This could lead to an overall improvement of quality of life (Becker & Elías, 2007), as there are benefits to reducing the waiting time for transplants. While waiting for an organ transplantation, patients experience decreased health and quality of life and are at an increased risk of dying. For kidney patients the amount of time they use dialysis has a negative effect on the success rate of transplantation. Unemployment rates for patients who are on dialysis are 15% higher than average, and they rate their quality of life 15% to 35% lower than that of people who have received a kidney transplant (Blair & Elías, 2007).
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Besides the personal loss of quality of life resulting from having to wait for a kidney, there are many other costs involved. People with kidney failure need dialysis to stay alive. The cost of one year of dialysis is about $90,000. According to the latest data a transplant costs $100,000 (Kessler & Roth, 2014). This figure differs from that used by Becker and Elías (2007), but is in line with what they predicted: that the price of the surgery will fall over the years. In addition to the surgery cost, patients with a new kidney need immunosuppressive drugs, which cost an extra $20,000 a year. Within the first five years after a surgery, the savings due to a new kidney are $250,000 (Kessler & Roth, 2014). The estimated social cost of people on the waiting list for a kidney transplantation in 2007 in the U.S. was $1.3 billion (Becker & Elías, 2007). An increase in the number of transplants will decrease those costs.
The decrease in costs with a financial incentive system will only occur if the elasticity of supply is high enough, meaning that there are enough kidneys for a certain price so that buying a kidney is cheaper than the cost of dialysis for all those people on the waiting list while waiting for a donation. According to Adams, Barnett and Kaserman (1999), there is no available data with which to estimate the elasticity, although such a system was already implemented in Iran. They did, however, conduct a survey to determine how people would react to various prices for kidneys. Their conclusion, although more research has to be done, is that they expect that the supply of kidneys will be highly responsive to price changes, which is in accordance with the assumptions made by Becker and Elías (2007) and Barnett, Salida and Walker (2001). As we have seen, there is a gap between supply and demand. Financial incentives can affect the supply and perhaps close the gap, but it is hard to say in what way the supply will change. However, there are reasons to believe that in a financial incentive system supply will become elastic. This means a price change above zero affects the total supply in a positive way. Whether or not this would eventually lead to more donors will be discussed in the next section.
Would financial incentives increase the supply of donated kidneys?
Some argue that an altruistic system for donation is more efficient than a system with monetary incentives and that implementing financial incentives could have negative effects on the supply side of donation. Most of the arguments focus on two possible
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and that the quality of the donated organs will decrease. Titmuss (1970) discusses these two arguments in his book ‘The Gift Relationship’ regarding the different policies for blood donation in the USA, where people are paid for donating blood, and the UK, where people donate for altruistic reasons.
He argues that with monetary payments, blood sellers have a reason to be untruthful about their health situation, because the truth might decrease the opportunity to sell their blood (Titmuss, 1970). Titmuss (1970) assumes that mostly poor people will donate, because of the monetary incentive, and that they are the ones more likely to have blood that is low quality and impure. Someone who donates for altruistic reasons, and is aware that he has a disease, will probably not donate if this could harm other people. The extra cost of testing blood for contamination contributes to a higher price for blood, results in a reduction in blood supply and could even lead to inferior quality. What could this mean for a market for kidneys? Before a kidney is donated it goes through a couple of medical tests to see if it is suitable for donation (Frederick, 2010). There is, of course, a chance that with financial incentives, more people who are not suitable as donors will apply to sell a kidney. The question is whether the agency costs (the costs of those extra tests for suitable kidneys), assuming supply will rise because of the financial incentives, will drive up the price of a kidney in such a way that the system becomes inefficient.
According to Frederick (2010), medical tests can help to prevent unhealthy people from donating. He also suggests a way to prevent adverse selection regarding the people who are trying to sell a kidney. He suggests implementing a rule under which a donor can be held legally liable for health issues resulting from an ‘unhealthy’ organ they donated.
However, Frederick (2010) appears to be contradicting himself. First he states that medical test will prevent unhealthy kidneys from being donated, but then suggests that people should be held legally liable for health issues resulting from their unhealthy organ donations. If medical tests prevent unsuitable organs from being used, no one could ever be held liable for health issues caused by their kidney. Therefore, this solution will not decrease the cost of selecting suitable kidneys.
There must be another way to make people legally liable. The fact that the kidney buyer does not know the health situation of the seller is still a problem; there is a sense of asymmetric information which could lead to agency cost (Shapiro, 2005). The agency costs in this case are the costs of the tests that are wasted on people with unsuitable kidneys. A way
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to prevent asymmetric information and keep the cost down is not for a donor to be held liable for any resulting health issues, but to use a system such as that used by health insurance companies. Potential kidney donors would be required to fill in a form with
questions about their current health situation, according to their best knowledge. They could than by held legally liable if they knowingly provided false information on the form. This could prevent unhealthy people from applying to be kidney donors.
Besides the discussion of the quality of the supply of kidneys in a financial incentive system, the quantity of supply is also at stake, according to those opposed to such a system. An argument used by both Titmuss (1970) and Satz (2008) is that financial incentives kill the intrinsic motivation to give a kidney away and thus decrease the supply. Titmuss (1970) studied this phenomenon by comparing the British blood donation system with the US purchased blood policy, as mentioned previously. He claims that the British system is more efficient and results in more blood donations than the American system. A market for blood suppresses altruism and does not increase the sense of community. In not asking for money for a donation, altruistic donors signify their belief that other people will act altruistically as well in the future; this contributes to more cohesion in society (Titmuss, 1970). The
commodification of blood and organs could make people feel opposed to any kind of donation, either paid or altruistically motivated, which could result in fewer donations. Payment for donations limits the freedom to donate in an altruistic way (Titmuss, 1970), and for someone who is intrinsically motivated, donating for money does not feel the same (Anderson, 1990). This is called the crowding-out effect (Titmuss, 1970). If blood or a kidney comes with a price tag, people who were willing to donate without payment may be less eager to do so now. This was also one of the conclusions of the Gneezy & Rustichini (2000) paper, that payment for a performance changes peoples’ perception of the action. An action is intrinsically motivated when satisfaction comes only from the action itself.
It is questionable, however, whether all kidneys are currently donated for altruistic reasons. Next of kin provide most of the kidneys donated today. Family members are sometimes under enormous pressure to donate a kidney through, for example, emotional coercion (Blair & Kaserman, 1991). It is hard to say whether people donate purely for altruistic reasons, and if a financial incentive would thus crowd out the intrinsic motivation.
However, there will be some crowding-out effect and erosion of coherence in society. Frederick (2010) argues that, assuming it is true that a market partly destroys
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intrinsic motivation, it should be easy to avoid this by allowing donors to decline the payment or by advertising that it is still possible to donate a kidney to charity. This could help a bit, however it does not change the fact that a kidney becomes a tradable good, and that some people will be opposed to the idea, which would lead to the crowding-out effect and other externalities discussed by Titmuss (1970).
Besides the fact that some people will not want to donate in a market for kidneys, does the crowding out effect decrease the total amount of supply? A great deal of research has been done on intrinsic motivation, such as the paper by Gneezy and Rustichini (2000) discussed earlier. Their conclusion was that financial incentives change the perception of an action, and must at least be high enough. Other work that has been done in this field had different results, and show that incentives can always increase output (Satz, 2008). It is possible that financial incentives partly erode intrinsic motivations. We cannot say
beforehand if the introduction of a market will enhance or erode the willingness to donate kidneys and whether the net supply will increase. This point of view differs from the views expressed in the papers on the matter by Becker and Elías (2007) and Blair and Kaserman (1991), who assume without any discussion that the supply will increase.
However, as family members provide most of the donations, it is unlikely that their motivations to donate, whatever they may be, will change very much because of financial incentives (Cherry, 2000). But there is a chance that some family members have donated under emotional pressure. The availability of kidneys from anonymous donors could lead to fewer donations by next of kin. This would not decrease supply but would only change where supply is coming from.
One of the other reasons to believe it is unlikely that the number of people who are unwilling to donate with payment exceeds the number of people that are unwilling to donate without the payment, is the thriving black market in kidneys and other organs (Frederick, 2010).
As discussed before, the only country where people legally receive a financial reward for a kidney donation is Iran. They implemented this system in 1988, and kidney transplants increased rapidly. In 1999 the waitlist was completely eliminated (Ghods & Savaj, 2006).
From these arguments we can cautiously conclude that financial incentives would most likely increase the net supply of donated kidneys.
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Inequality and exploitation in a market for kidneys
If there is an increase in supply, where does this increase come from? One of the main arguments in the discussion about financial incentives for kidney donation is the fact that it is very likely that those selling their kidneys will be mostly poor. In the current black market only the poorest are selling their organs. Will a market exploit the poor, and will this be harmful?
Harmful exploitation is when an agent benefits from another agent through a transaction. Harmful exploitation usually happens when a vulnerable agent accepts an undesirable transaction due to inducements (Cherry, 2000). Marxists define harmful
exploitation as when exploiters obtain more value from a transaction than they bring to the transaction. In light of these two explanations of harmful exploitation, organ sellers are only exploited if they receive less than what their kidney is worth. It is hard to say how much, exactly, a kidney is worth to a given individual, but there are ways to compensate for the risks that are involved in kidney donation, as shown by Becker and Elías (2007). A way to avoid a race to the bottom in terms of prices is setting minimum prices, which could prevent at least some types of exploitation (Cherry, 2000). These minimum prices should be prices that at least compensate for the three factors discussed by Becker and Elías (2007).
Not having a donor market protects people against doing something because they need to rather than because they want to. Some people argue that selling one’s kidney is a last resort and no one will do this voluntarily (Schepper-Hughes, 2003). A market is coercive when “the lure of compensation compromises the voluntariness of the potential vendor’s choice” (Cherry, 2000, p. 346). Kaserman and Blair (1990) provide some arguments as to why they think a potential market for kidneys is not coercive. First, they see preventing people from selling a kidney as paternalistic, and feel that opponents of the practice are imposing their own values on others. In a world where we accept the concept of individual liberty, one should be allowed to make one’s own decision regarding the sale of a kidney by weighing the costs and benefits. A system of financial rewards, regulated by the government, could prevent kidneys from being sold for low prices. An economic agent should be allowed to make his own decision and weigh the costs and benefits. In a market an agent is always free to reject a transaction (Barnet, Blair, & Kaserman, 1992). If the expected value of the
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There are some comments to be made here. Saying that because we respect a person’s individual liberty there is no coercive force in a market, is making a dangerous assumption. Respecting a person’s individual liberty does not necessarily mean that all agents are fully aware of all the risks and consequences. Guidance and education before entering into such a transaction could help individuals to make the right decision for the right reasons, and could prevent agents from making hasty decisions. Guidance in a decision without forcing someone in the right direction is called libertarian paternalism. There is little research that shows that agents make fully rational choices, and sometimes allowing people to choose as they see fit is not the best option (Thaler & Sunstein, 2003). Questionnaires and interviews could help agents to make a well-considered decision, without withholding a choice from them. This could increase the cost for a kidney. What kind of tools of libertarian paternalism can be used and what the costs will be could be new topics for research, and could go some way toward preventing decisions made as a result of coercion.
When people argue that a market will cause economic coercion, does that not also imply that the current system causes altruistic coercion? Family members are emotionally coerced in giving away an asset that is worth a significant amount of money for free (Blair & Kaserman, 1991). Not only the fact that they give a potentially valuable asset away indicates coercion, but according to Ghods and Savaj (2006) an altruistic system puts relatives under pressure to donate. Giving family members the choice between a donation by next of kin and donation by an anonymous donor insulates the family members from emotional coercion. In research by Ghods and Savaj (2006), they evaluated the attitudes of donors, recipients, and family toward the current Iranian system. The existence of the option of an anonymous donor was perceived as a stress relieving aspect. Emotional coercion does not only take place when family members have a choice of whether to donate, but also when they are not suited for donation and they do not have the opportunity to make a choice. Family members who were not suitable donors said they felt guilty; the availability of an anonymous donor relieved some of that guilt (Ghods & Savaj, 2006). A coercive force is involved in both policies. The economic coercion in a market can, however, be controlled with a system that employs the concept of libertarian paternalism. Moreover, it relieves the burden on family members who do not want to donate and family members who are not able to donate.
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The fact remains that is most likely that those selling their kidneys will be mostly poor. As noted earlier, in the current black market only the poorest are selling their organs. Satz (2008) characterizes the kidney market as a market where the poor serve the rich. There are already markets where the poor serve the rich. Low-paying and dangerous jobs are manly occupied by the poor in a society. Kidney sales will not cause inequalities, as they already exist. A market for kidney donors will merely reflect the current inequalities. Satz (2008), however, maintains that a market will worsen the current situation. It creates another example of what you can buy with money and, of course, what some cannot buy. This argument will especially apply to countries where there is no social health insurance. In countries with social health insurance, everybody is entitled to the same health care. In the Netherlands, for example, health insurance is obligatory. All costs of a kidney transplant are covered by this insurance (van Buren, Massey, Maasdam, Zuidema, Hillhorst, Ijzermans, & Weiman, 2010). In countries with social health insurance, poor and rich both have access to a kidney transplant.
Another way to prevent kidney transplants from being inaccessible to poor people is the Iranian model, in which the government pays all of the expenses of a kidney transplant. The donor receives a financial payment from the government and from the recipient. If the recipient does not have adequate financial resources, their portion of the reward is paid by one of several charitable organizations (Ghods & Savaj, 2006).
Regulation is needed to avoid inequalities. In a regulated system agents should have the autonomy to make decisions. Autonomy does not necessarily mean an agent is fully informed. To make a rational decision, information should be provided.
Asymmetric information in India
In an ideal and efficient market agents have all the information they need. Many markets, however, do not function on that basis. Problems such as moral hazard and adverse selection are topics that have been thoroughly studied in the field of economics. Asymmetric information is also a problem in many markets. As we have seen in the section above it is most likely that it will be mostly poor people who will sell their kidney. It could be that the poor have a lack of education and are perhaps less aware of the possible health risks and how to minimize them. In a system with financial incentives it is important that donors be
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aware of the risks, but also that the buyers (for example, the government) are aware of the health situation of the donor. The donor’s health situation not only before the procedure, but also after the procedure must be monitored. To better explain this, we will now look at the some data about a kidney market in India.
For a brief period in India in the 1980s it was legal to sell your kidney. A survey done by Goyal et al. (2002) investigated the health situation, after the surgery, of people who sold a kidney. 86% of the people reported deterioration in their health because of the procedure. In contrast, much of the research that has been done on the effects of a nephrectomy (kidney removal) show few health complications, but these studies have mostly been done in developed countries (Satz, 2008). The effects of living with only one kidney in poor countries, where people have little access to clean drinking water and healthy nutrition, are much more severe. Another fact that came to light in the survey by Goyal et al. (2002) was that 79% of the people who sold a kidney regretted their decision. It could be said that a market for kidneys is vulnerable to asymmetric information and that it attracts the wrong donors. The poorest people in a society are more likely to sell their kidney, but they are also the ones with a high risk of future complications. The goal of implementing a market for kidneys is to increase the average state of health in the society. For this to succeed kidneys are needed from people who are aware of the risks and are able to live a healthy life after the surgery. In poorer countries with weak regulatory institutions and a lack of education for the poor it is more likely that the poorest, who are facing the most risk after surgery, will sell their organs (Satz, 2008).
Asymmetric information could have been the reason why a majority of the people in the survey regretted their decision. The people with the lowest standard of living applied for a paid kidney donation, which led to higher risks of loss of health. The government does not know what kidney donors do after the procedure, and in what way this will affect their recovery. Donors also may be not fully informed about the risks. All of this could have been the reason why the received money did not adequately balance the loss of health. It could also be that because of the asymmetric information more risks where involved.
This argument is based on a survey conducted in India, a lesser-developed country. A conclusion of this argument could be that the average health and living standard in a society must be high enough before implementing financial incentives for kidney donation. Lesser-developed countries are more vulnerable to asymmetric information. This, however, does
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not mean that people in developed countries need no information about the risks of the procedure. All potential sellers must be fully informed before selling a kidney, and there must be sufficient controls after the procedure to check the health and living standard of the donor.
Information can help an individual to make a rational decision. This can be a well thought-through decision based on costs and benefits, but what does this decision mean for other agents? In the next section we will look at the consequences of a financial incentive system for people who do not want to donate.
Donation and set of choices
The ideal of a market is that it enhances people’s ability to be free in the use of a good (Anderson, 1990). Is denying a person with no money the opportunity to sell their kidney not also a limitation of their choice set? Allowing a poor person the opportunity to sell a kidney increases the small choice set this person has. The money that a donor receives can be used to pay for education or small business start-ups, and gives the donor the
possibility of increasing his or her social economic status (Cherry, 2000). This could increase the utility of a person.
Satz (2008) claims that denying a person the right to sell his or her kidney is indeed a limitation of the choice set. Respecting people’s autonomy gives them the right to decide what kind of economic exchanges they want to make (Satz, 2008). Taking the autonomy argument into account as was done in the section about inequality, allowing the sale of organs could be seen as a broadening of an individual’s choice set. Autonomy gives them the choice to increase their social economic status, as Cherry (2000) points out. Satz’s point is that although allowing the sale of organs can be a broadening of the choice set, it also is a limitation in the choice set of those who do not wish to sell their organ. If selling your organs becomes legal, every organ has a price tag, even organs that belong to people unwilling to sell them, thus enhancing the commodification of the body. If a market for kidney donations comes into practice and law backs it up, selling of kidneys and possibly other organs
becomes more and more normal. It changes the value people place on certain objects. As Satz (2008) puts it: “While proponents of kidney markets usually focus on individual transactions within given environments, the introduction of markets can change
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environments” (2008, p. 275). Her fear is that people will see the choice of not selling a kidney as a decision to remain poor.
Whether this applies to the selling of kidneys remains to be seen. One way to explore this is to investigate topics where commodification is also in question. For example, is it the case that in countries where prostitution is legal, people see the act of sex with
non-prostitutes more as a commodity than in countries where prostitution is illegal? More research can be done regarding the different views of goods where commodification is at stake. For example, a comparison between countries where prostitution is legal and illegal, or where blood donation is paid or not.
When stating that there is a change in environment, what externalities could this create? It could mean that we see kidneys, because of widespread transactions involving them, as a resource just like any other. In India, where the sale of kidneys was legal for a brief period, creditors pressured those who owed them money to sell a kidney (Cohen, 2003). It might be more difficult to obtain a loan for someone who is not willing to sell their organs and does not want to offer their organs as collateral. For example, Satz fears that lenders could require higher interest for those who are unwilling to use their kidney as collateral.
Thus allowing a market might increase an individual’s set of choices, but also reduce the choice set for people not willing to sell their organs. People should not have to pay a cost for refusing to sell their body parts (Satz, 2008). According to Satz, it is impossible to say that market restrictions are necessarily autonomy-inhibiting. She does discuss other markets where people already pay the price for other agents’ decisions. She points out that “second homes in a rural community may price some first-time buyers out of the market in that community. But people who find kidney markets troubling do not necessarily find markets in second homes troubling” (Satz, 2008, p. 276). Her point is that there is a difference between those markets and a market for kidneys.
Satz uses Ronald Dworkin’s argument that “we have a good reason to draw a prophylactic line around the body, a line “that comes close to making [it] inviolate, that is, making body parts not part of social resources at all” (Satz, 2008, p. 18). To explain this concept better, we could make a comparison with prostitution. Not paying a prostitute for her duties against her will is robbing her of her resources. Rape is a deeper violation than robbery (Anderson, 1990). You could say the same for kidneys: to rob someone of their
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kidney seems a deeper violation than a violent car theft, although a car may cost the same amount as a kidney. To create a difference between these violations, we could set penalties for ‘stealing’ someone’s kidney that are much higher than for other forms of theft.
According to Frederick (2010), the collateral argument does not hold. If organ selling is allowed, some people would sell their organs instead of taking a loan, resulting in less demand for loans and an improvement in terms for borrowers. Implementing rules and regulations regarding the market for kidneys can prevent the extreme example Satz uses: kidneys as collateral. It is clear that if such a market becomes a reality it should be more highly regulated than other markets. These would probably be better regulated in developed countries, in contrast to what happened in India. For example, in countries where
prostitution is legal, like the Netherlands, it is not more difficult to obtain a loan if you do not agree to prostitute yourself.. As stated before, a system with financial incentives for kidney donation must by regulated more than other markets. An example of such regulation could be that the sale of a kidney should always be a strictly private decision. Institutions like banks or social security organizations would not be allowed to ask if you are willing to donate a kidney.
As suggested above, the possible decrease in choice set of people who do not want to sell a kidney can be controlled through regulation. This could avoid the situation where every kidney is seen as having a price tag. We have seen that in the current system there is emotional coercion. You could even say that in this system every kidney has an emotional price tag. Family members are limited in their set of choices. The emotional pressure gives them less freedom to choose not to donate. It is not possible to set rules regarding
someone’s emotions. It could be that in a financial incentive system the freedom of choice regarding kidney donations can be better regulated.
Frederick, like Satz, argues that all our liberties could involve limiting the choice sets of others. Allowing shops to be open on Sunday can limit a Christian shop owner’s ability to be closed on Sundays because this could mean losing customers. Then there is the example used by Satz (2008) herself: the housing market in rural areas. So why are the endogenous effects of the sale of kidneys for persons who do not want to sell their kidney different? Frederick (2010) thinks that all Satz’s arguments come down to Dworkin’s ‘line’, without giving a good reason. What Frederick is trying to say is that it is difficult to distinguish a difference in negative effects between a market for kidneys and other current markets. It
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feels different; this is because of Dworkin’s ‘line’ argument used by Satz. But the question is whether this is a valid argument for not implementing a market for kidneys in order to enhance donations. Dworkin’s ‘line’ can be seen as a deontological standpoint as discussed in the ethical discussion section. Like the distinction between paid or non-paid donations, it is also hard to justify a prohibition because of a resulting limitation in choice set for others and distinguish this from liberties that limit choice sets in different markets. The fact that such a limitation may occur should not be an argument against a policy, but rather a reason to search for ways to avoid such possible limitations.
Strict rules must thus be implemented regarding the privacy of the decision and penalties regarding violations. This could prevent people paying a price if they do not want to sell a kidney. Dworkin’s ‘line’ is, however, an important aspect of implementing a market; it is possible that people will feel morally opposed to the idea. It will take time and education about the problem and possible solution to gain the support of the people.
The people’s opinion
Like Frederick, I believe that a significant portion of Satz’s arguments are based on this ‘line’ of Dworkin’s. Arguments that are used against a market for kidneys also apply to other market activities such as the labour market, hazardous jobs, prostitution, and the sale of sperm, blood, or hair. Many people are opposed of the idea of selling organs. This is supported by survey results. Most of the surveys done among the general public regarding attitudes towards financial incentives for kidney donation show little support for such a system; on average more than 75% of the respondents are against a market-based solution (Kranenburg & Weimar, 2008). Likewise, in a similar survey done in the Netherlands only 25% were in favour of such a system (van Buren et al., 2010). So, for some reason people feel as if selling one’s organs is wrong.
Van Buren et al. did a survey amongst people who had already donated a kidney (2010). Most of the donors surveyed did so for what can be assumed to be altruistic reasons – for close friends or relatives. The results showed that a majority of the respondents did not want a financial reward for themselves. On the other hand, almost half of the respondents (46%) thought that introducing financial incentives in general is a good idea, which is much higher than among the general public. Giving financial incentives to anonymous donors to
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stimulate living kidney donation was perceived as a good idea by 60% of the respondents who had already donated a kidney (van Buren et al., 2010).
Van Buren et al.’s results came from people who have presumably seen the effects of having to wait for a kidney for a long time and the illness that comes with it. This could be a reason that they are more in favour of financial incentives for kidney donation. Although they have donated a kidney for altruistic reasons, they do not disapprove of anonymous and paid donations. Van Buren et al. (2010) suggest that seeing the positive effect of their donation contributed to their belief that any kind of system to stimulate donation is helpful. These results show that a majority of the people who have already donated do not feel repulsed by the idea, and even encourage it. This could be an argument against the
crowding-out effect and the loss of cohesion in the society as a result of financial incentives for kidney donation.
For new policy to succeed, it needs the support of the society. As mentioned before, views on financial incentives for donating an organ usually contain strong sentiments against such a system. People find it immoral and denigrating (Satz, 2008; Anderson, 1990; Titmuss, 1970). One way to increase public support is to raise the awareness of the problem and to educate people about possible solutions.
In research by Elías, Lacetera, and Macis (2015), attitudes towards payments for human organs were investigated. They conducted a study in which they examined the difference in attitude towards payment systems between people who received information about such a system and people who did not received any information. They found that if information was provided the approval rate increased by 19.5 percentage points. They also controlled the test for a couple of biases. Their conclusion was that the support for a market-based solution to the organ shortage can be increased when people are provided with more information about the problem and the potential benefits of financial incentives.
Another way to gain support is to change the discourse. Niederle and Roth (2014) found that people were more in favour of a financial incentive system when the monetary payment was given as a reward for a heroic act. This could change people’s view of the matter and could make them less repulsed by the idea. Heroic awards are used in the army, where commodification of the body is also a topic of discussion. According to Niederle and Roth (2014), awards give people the feeling that they are among a select group of people who did something good.
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A conclusion with policy suggestions
A financial incentive system to increase the supply of kidneys is a topic for an ethical discussion. There are different ethical viewpoints on the matter, but it is difficult to justify a prohibition. Whether or not to donate a kidney is a decision people should make in
accordance with their own moral framework. Seeing a financial incentive system as possible policy is a utilitarian standpoint, where there is a focus on the positive outcome of such a policy. Whether the outcome is positive depends on the increasing supply and if the
externalities can be controlled. Studies show that, although there is a lack of data, there are reasons to believe supply will increase when the price of a kidney is above zero, and this increase will be greater as the price gets higher. More donations means more transplants and an increase in quality of life for the people who are now on the waiting list for a new kidney as wait times are reduced. The reduction of the waiting list could even lead to a decrease in costs associated with kidney patients. More research needs to be done to determine how many kidneys will be donated for a given price.
In the same way that we should respect someone´s ethical viewpoint we should respect the decision to sell a kidney. People should be allowed to balance the costs and benefits of such a transaction. The money received could mean an improvement in social economic status. Not only recipients could benefit but the sellers as well.
As mentioned before, if a market with financial incentives is implemented, more
research is needed and a country must meet certain conditions. It is also important that the market be regulated in some way. Some policy suggestions include:
• Increase the knowledge about the kidney shortage and provide information about the possible benefits of such a system to gain support.
• Change the discourse by framing the financial incentive as a reward for a heroic act. • Conduct surveys on what price people are willing to take to sell their kidney, in order
to get a better estimation of the elasticity of supply.
• The average health situation in a country must be above a certain level, and clean water must be accessible to everyone.
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• A country must have a social security system or a system like Iran’s, involving charitable organisations, to make sure everyone in a country who needs one is entitled to a kidney.
• The market should not be a competitive one, but rather there should be one organization, controlled by government, that buys and distributes kidneys. • Potential sellers must undergo a health check before the procedure starts. • Prior to the health check, potential sellers must fill in a questionnaire about their
health situation, and they should be held liable for the truthfulness of their answers. • The decision to sell or not sell a kidney must be a private decision and should not be
able to be influenced by outside interests, such as lenders.
• High penalties must be set for the theft and illegal sale of kidneys.
One of the most important aspects of the discussion is the coercive force of financial incentives. Although an agent is free to make decisions, guidance can be helpful. This thesis proposed a system with a libertarian paternalistic framework to guide people in their decision. Questionnaires and interviews about people’s motives, could help in advising whether people should make the decision to donate. Questions about education level, age, debt history, motivation, purpose of the money, knowledge of the possible risks, and knowledge about the financial incentive system could help to determine whether it is a well thought-through decision, or if the decision requires more thought. This is a topic for further research: How do you determine if a decision is well thought through?
It is important to know the reasons that people will sell a kidney. People with severe debt problems should be offered other ways to pay the debt, to prevent the decision to donate a kidney being made as a result of coercion, and one that people will regret later in life. One way to investigate this would be to conduct a survey among people with debts and ask them if they would sell their kidney if they had the choice. Respondents who would sell their kidney would be divided in two groups: the first group would be required to follow a strict program to pay off their debt, while the other group would not. During this program the respondents would answer the same question every so often. This could give an indication of how much time and the amount of debt can influence a decision, which could help in setting a waiting time and providing debt programs before a person would be allowed to donate a kidney.
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A financial incentive system could have a positive effect on the sellers, kidney patients, family members of kidney patients, and health care costs. This positive effects can only occur in a regulated market and under certain conditions. These regulations and how to implement them are topics for further research.
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