An Economic Riddle: Who has Money but One Kidney

"To save your dying son from kidney failure, would you consider donating your kidney to a stranger in exchange for moving your son a few ranks up the transplant waitlist?"

This real-world riddle occurred to Susan Stephen from the front page of The Boston Globe, her story "A Mother's Love: A Catalyst for Saving Two Lives", sparked puzzling questions to fellow economists; If Susan could exchange her kidney for a waitlist spot, could she do the same for a luxury car? Did Susan realize she had undermined her kidney's worth?

A kidney is approximately valued at $100,000 to $266,000-- equivalent to a Lamborghini. As a vital organ in the human body, kidney failure is the most common disease that affects over 800 million of the world's population. Today, more than 106,000 individuals are lining up on the national transplant waiting list (UNOS, 2023). BPJS Kesehatan Indonesia declared that one year of kidney medication treatment was equivalent to 5 years of Indonesia's average wage.

Consequently, hospitals use an unbiased system through transplant waitlists for equitable organ distribution, ensuring that every patient is served in turn based on the kidney donor's match and compatibility (Ministry of Health, 2023). Nonetheless, the average wait for a kidney transplant is about 3 to 5 years. Estimately, 15% to 30% die in the queue. With opportunity costs stacked against Susan, does a Lamborghini still sound appealing?

Your Kidney Today

In Indonesia, the Human Tissue Act prohibits receiving any kind of payment in exchange for donating a human organ. According to UU No 36 Article 192, aside from medical risks, selling organs is deemed unethical and a violation of human rights. When matters of ethics intersect with economics, humans may be drawn to the dark side of Repugnant transactions---arising to Repugnant markets. 

Essentially, the government has set a price ceiling of zero to create scarcity for organ markets. Consequently, when there is an excess demand for kidneys, there are shortages in supply. Realizing that the only way to cure kidney failure (and to solve this kidney riddle) is to balance the supply and demand-- market equilibrium. 

So, Should Kidney Sales be Legal?

In 2007, Gary Becker, the American Economist, demonstrated that altruistic motives are rare, and hospitals must stop relying on these donors. Becker's study reveals that kidney transplants exhibit an inelastic supply curve to altruistic policies, primarily because kidney recipients expect money in return. Becker then proposed a bold solution of providing financial incentives to draw humans in exchange for a kidney donation, believing this approach could promptly empty the waiting list. 

After analyzing 14 more years of data to assess any fundamental shifts, the assumption that to ensure economic well-being, buyers and sellers must benefit from their participation in the market (Consumer Surplus and Producer Surplus). Thus creating market efficiency, and economic welfare, with a total surplus achieved.

(Consumer and Producer Surplus in the Market Equilibrium, source: principles of economics, Gregory Mankiw)

Considering this analysis, introducing a market for organ sales, where kidneys can be readily bought and sold due to financial incentives, will eventually reduce excess demand (shortage). In the end, he asserted that the primary objective should be to increase kidney suppliers-- forget personal incentives.

How Humans Killed for a Kidney

Due to the inaccessibility of kidney supplies, humans often resort to irrational ways to get what they want---all things exist in Black Market. The existence of a black market is mainly attributed to the shortage of organs through legal channels. In the 1980s, a phenomenon known as "transplant tourism" refers to an organ trafficking market where humans from various parts of the world, particularly Asia, travel to regions like India and Southeast Asia to purchase organs for transplantation.  

To some degree, the illegal nature of kidney selling is responsible for the rise of these illegal activities. At any rate, would legalization be an effective means to eradicate these illicit occurrences? 

Legalizing kidneys would offer regulations and a framework for organ procurement, greatly expanding the kidney supply and diminishing the incentive for individuals to resort to illegal alternatives. 

The moment kidneys were to be legalized, price will regulate fixed prices compromising to a kidney's worth. Therefore, setting standardized prices may discourage illegal organ sellers from engaging in the unpredictable and fluctuating prices of the black market.

Trial to Legalization

Legalizing the kidney market is supported based on the principle of bodily autonomy, which asserts the right of individuals to make choices about their own bodies. The perspective challenges the common notion of kidney sales as repugnant and immoral, when voluntarily removing one to supply the market is enough philanthropy. This viewpoint advocates a focus on mutual benefit, ensuring that people like Susan Stephen, will surely be rewarded with a kind compensation for their kind deeds.

Indonesia and several ASEAN nations such as Singapore, Malaysia, and the Philippines have collectively endorsed the "Human Organ Transplant Act," permitting medical professionals to compensate donors with medical savings accounts. Furthermore, Iran, which had legalized compensation for kidney donation since 1988, had successfully eradicated the waitlists of 11 years through financially compensating kidney donors. (Ghods and Savaj 2006).

A simulation proposed by Milton Friedman, the Nobel Prize Winner, suggests hospitals as intermediaries to oversee licensed and reported kidney transactions. Donors strictly complement as suppliers in providing compatible kidneys approved by the hospital, and in return, hospitals compensate them. Recipients can then purchase kidneys from the hospital, enabling easier access to transplantations once the kidney is theirs to own.

In this context, "legalizing" pertains to specific approval of allowing kidney donors to receive financial compensation in exchange for their own kidney.

The objective of legalization is not to turn kidney selling into a commercial enterprise, but rather, to ensure that individuals who choose to donate their own kidneys have the right to receive profit. Noting that the legalization of kidney means regulating, and should not be confused with a free or unregulated market. Instead, be subject to market intervention and transparent frameworks.

Crucially, this regulation will not eliminate the existing transplant waiting list. Instead, it may expedite the list, as individuals who opt to buy a kidney transplant will be removed from it--- the waitlist will gradually shorten and eventually come to an end. 

(Exploitation, benefit, and net benefit for the poor: With donor compensation of $0 and $75,000, An empirical analysis Philip J. Held)

The effectiveness of the regulation is demonstrated in the graph above by Philip J. Held from Stanford, analyzing Americans' responsiveness to government financial incentives for kidney donors from 2018 to 2019. The 1st situation represents the current U.S. state, where financial compensation is illegal. The 2nd situation shows the government offering $75,000 to living kidney donors based on willingness to pay. The 3rd situation is a sensitivity analysis, assessing the 2nd Situation's findings of $75,000 with pessimistic assumptions concerning the well-being of lower-income individuals. 

In conclusion, the 2nd Situation has illustrated a greater benefit and net benefit of $12.4 Billion to the Gross Domestic Product. Hence, aside from economic welfare, economic growth eventually follows its impact. 

Ultimately, legalizing kidney sales can drive economic development by easing household medical expenses, minimizing financial burdens, raising disposable income, and stimulating healthcare industry growth. To a certain degree, the Human Poverty Index, and Human Development Index will improve through overall higher standards of living. Additionally, with no effect on one-kidney donors' lifespans, and by increasing kidney recipients' life expectancy up to 30 years may enhance overall life expectancy rates (Piedmont, 2018).

Yet other economists worry about fairness. In a market-based system, access to goods and services is influenced by income disparities. When kidney demand surpasses supply, prices will continue to inflate, making them unaffordable and discriminatory to those with lower incomes.

No doubt that issuing the legalization will be a complex and costly government intervention. With price control, implementing price ceilings in a legalized kidney market can be difficult to strike a balance between imposed price limits, with how much suppliers are willing to offer, and buyers are willing to pay. Altogether, market efficiency would be challenged due to price inefficiencies, and biased to income demographics.  

The Answer to the Riddle

The overall obstacle of humans' response towards the incentive to convince people that kidney selling should not be an easy way of making money---nor a jump-to-conclusion when money is needed. Theoretically, simply because a kidney's value equals a Lamborghini, doesn't make it rational for someone to trade their kidney for a car.

When the Economy said money is the biggest form of incentive--- is it possible that the nature of organ donation shifts from pure altruism to a mixed-motive--- or simply for the sake of money? 

The harsh truth is today, humans can't always expect altruism. Whether an incentive is motivated by money or pure philanthropy, as long as it resorts to the provision of kidney supplies for medication---personal motives are not the economy's biggest concern. 

Despite the obvious advantages of such an exchange, legalizing the kidney market should sustain mutual benefits. If legalizing the kidney market were to happen, enforcing policies that consider both economic and moral dimensions can be instrumental in establishing sustained parameters.

Without further ado, Who has Money but One Kidney---should be you.

#DonateYourKidneyNow

Diulas oleh: Mahira Alula| Ilmu Ekonomi 2023| Trainee Divisi Kajian Kanopi FEB UI 2023/2024

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