Tag: Kidneys

Shapley and Roth Get the Nobel Prize for Economic Engineering

A much-deserved Nobel prize today for Lloyd Shapley and Alvin Roth for their theoretical and practical work on designing markets. In particular, matching markets where you don’t have prices to help you.

The Royal Swedish Academy of Science released a very readable account of their contributions here. Here’s the introduction:

This year’s Prize to Lloyd Shapley and Alvin Roth extends from abstract theory developed in the 1960s, over empirical work in the 1980s, to ongoing efforts to find practical solutions to real-world problems. Examples include the assignment of new doctors to hospitals, students to schools, and human organs for transplant to recipients. Lloyd Shapley made the early theoretical contributions, which were unexpectedly adopted two decades later when Alvin Roth investigated the market for U.S. doctors. His findings generated further analytical developments, as well as practical design of market institutions.

Traditional economic analysis studies markets where prices adjust so that supply equals demand. Both theory and practice show that markets function well in many cases. But in some situations, the standard market mechanism encounters problems, and there are cases where prices cannot be used at all to allocate resources. For example, many schools and universities are prevented from charging tuition fees and, in the case of human organs for transplants, monetary payments are ruled out on ethical grounds. Yet, in these – and many other – cases, an allocation has to be made. How do such processes actually work, and when is the outcome efficient?

Along with his colleague David Gale, Shapley provided theoretical answers to these questions based on the idea of finding stable allocations (i.e., allocations in which no one would later have an incentive to change their mind). Roth then studied how those answers apply in real markets, e.g., designing algorithms to match doctors to hospitals.

Roth also blogs at the aptly-named Market Design. What did he write about yesterday? How Nobel Prizes correlate with chocolate consumption.

P.S. For a moving example of how well-designed matching markets improve human lives, see this post about kidney exchanges.

The Miracle of Chained Kidney Transplants

Most modern markets operate on money. I sell my services as an economist, for example, and use the proceeds to buy Tazo Tea, vacation trips, and a surprising number of Apple products.

But that approach doesn’t transplant well (so to speak) to living human organs. Many people find the idea of markets in organs repugnant. As a result, money-based organ markets are generally outlawed.

As economists often point out, that moral stance comes with a major cost: many people who need a new kidney can’t find one. Humans have two kidneys, but can live healthy lives with just one. So there is the potential for gains from trade between those who need a kidney and those who have one to spare. The challenge is getting enough people to donate kidneys, when it isn’t possible to compensate them with money.

Some good samaritans do donate kidneys to strangers. But that’s very rare. Far more common are people who will donate a kidney to a relative or friend. But those offers often run into a harsh biological reality. Just because you want to give someone a kidney doesn’t mean it will be a biological match.

Enter the kidney exchange. Simple case: Alice may want to donate to Bob but not be a match. Chuck may want to donate to Daphne but not be a match. But if Alice is a match to Daphne, and Chuck is a match to Bob, then can make an exchange. Alice donates to Daphne, Chuck donates to Bob, and everyone is happy. The miracle of a good match in the kidney barter market.

The trick is finding those matches and extending them to larger groups. Today’s New York Times has a moving article that illustrates how far this idea has come. Kevin Sack recounts how the 60 people shown above were linked through a chain of 30 kidney transplants thanks to the efforts of Garet Hil and the National Kidney Registry. The first donor,Rick Ruzzamenti (upper left), is a good samaritan who felt inspired to give a kidney to a stranger. The other 29 donors all donated on behalf of a friend or relative.

What made the domino chain of 60 operations possible was the willingness of a Good Samaritan, Mr. Ruzzamenti, to give the initial kidney, expecting nothing in return. Its momentum was then fueled by a mix of selflessness and self-interest among donors who gave a kidney to a stranger after learning they could not donate to a loved one because of incompatible blood types or antibodies. Their loved ones, in turn, were offered compatible kidneys as part of the exchange.

Chain 124, as it was labeled by the nonprofit National Kidney Registry, required lockstep coordination over four months among 17 hospitals in 11 states. It was born of innovations in computer matching, surgical technique and organ shipping, as well as the determination of a Long Island businessman named Garet Hil, who was inspired by his own daughter’s illness to supercharge the notion of “paying it forward.”

Dr. Robert A. Montgomery, a pioneering transplant surgeon at Johns Hopkins Hospital, which was not involved in the chain, called it a “momentous feat” that demonstrated the potential for kidney exchanges to transform the field. “We are realizing the dream of extending the miracle of transplantation to thousands of additional patients each year,” he said.

The entire article is inspiring.

Human Organs, Behavioral Economics, and Insurance Mandates

Like the minimum wage and rent control, the market for human organs is a classic topic when teaching the basics of supply and demand. Organ markets are largely outlawed and, as a result, the demand for organs greatly outstrips the supply. For example, according to some estimates, as many as 4,000 people in the United States die each year while waiting for donor kidneys (some of which could, in principle, come from healthy donors).

As Dick Thaler notes in the New York Times today, the usual economist solution to this problem – allowing the buying and selling of human organs – is a political non-starter. Many people find the idea “repugnant,” as economist Alvin Roth has put it.

One solution, which Roth helped pioneer, is to create organ swaps rather than sales. Suppose, for example, that my wife needs a kidney and that I am willing to donate, but am not a match. And at the same time, a woman wants to donate a kidney to her sick brother, but also isn’t a match. That seems like a dead end (so to speak), but if I am a match for her brother, and she is a match for my wife, then we can arrange a swap – my kidney for hers. Two lives get saved, and there’s nothing repugnant about it.

Over time, this basic idea has expanded to include “daisy chains” of donations involving numerous donors and recipients (for a nice description see this recent article in Wall Street Journal).

Thaler considers another way to address the problem of organ supply (from individuals who become brain dead, not those who are healthy)  using the insights of behavioral economics:

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