Nobel Economist: The Market That Lets People Die

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**Brian Keating** (0:57)
A Nobel-winning economist will tell you why you can buy heroin on any corner, but you can't hire a killer and why that same logic means people are dying who don't have to.

**Alvin Roth** (1:07)
Why is it so easy to buy drugs but so hard to hire a hitman? We forbid, as most countries do, any effort to pay kidney donors. In Canada and in Britain, surrogacy isn't illegal, but it's illegal to pay a surrogate. People who need surrogacy service come to California, but they have no trouble bringing their babies back because parental rights in surrogacy are recognized.

**Brian Keating** (1:29)
My guest today won the Nobel Prize in Economics for designing the systems that match kidney donors to patients. What he told me about the markets we're not allowed to have, is going to make some of you uncomfortable and quite frankly, angry.

**Brian Keating** (1:42)
You're the first person I've ever had on the podcast who's been called an organ trafficker. But explain how that came about.

**Alvin Roth** (1:47)
Well, I talk about controversial transactions and one of the things that my colleagues and I have helped medical professionals do is organize what's called kidney exchange. And kidney exchange, which we can talk about more, is a way of getting more living donor transplants than could otherwise be gotten. And that's important because there's a real shortage of transplants. The rate of kidney failure in the United States is at about 130,000 people a year. But we do fewer than 30,000 transplants a year, so it's important to get more transplants.
And we do this in a way that the US Congress didn't find repugnant. They unanimously amended the National Organ Transplant Act to affirm that kidney exchange is legal in the United States. But not everyone is equally happy with it. And one of the funny things about transplant dogma in the world is that countries should be self-sufficient in transplantation.
And one of the things about kidney exchanges, it needs big groups of patient donor pairs to work efficiently. And so, for example, I went to the United Arab Emirates for the first kidney exchange between the UAE and Israel. But the lady who calls me an organ trafficker thinks that countries should be self-sufficient in transplants.

**Brian Keating** (3:02)
One of the things that I never really appreciated as explicitly as you make it in the book is sort of the unintended consequences of many economic actions that then have both political and economic and social ramifications. Can you explain the relationship between bans and black markets?

**Alvin Roth** (3:23)
So one of the themes of the book is that to work well, markets need social support. And to work well, bans on markets also need social support. So often what I'm talking about in the book are transactions that some people would like to engage in and other people think shouldn't be allowed.
And when you ban something that some people would like to engage in, often you're going to find that they try to find ways to work around the ban. And one way to work around the ban is to find another jurisdiction where the transaction you want to engage in is legal. A different way to work around the ban is to find people who are willing to violate the ban and commit criminal acts in order to further the kind of transaction that you're interested in.

**Brian Keating** (4:09)
If you have a ban that protects moral purity, but then it creates a black market, I mean, that ends up hurting people. How do we judge if that's truly moral?

**Alvin Roth** (4:19)
Will?
One of the themes in the book is I think we have to judge the morality of the bans we make and the markets we support, not just by our intentions, but by the consequences. So one of the questions I ask in the book is, why is it so easy to buy drugs, but so hard to hire a hitman? What I mean by that is, we have in the United States, we have bans on commercial murders when we find hitmen, we put them in prison for as long as we can, and when we find heroin dealers, we put them in prison for as long as we can. But those two bans have had very different effects. There's almost no commercial killing in the United States. It doesn't make it into the national crime statistics. But heroin is readily available in the United States, and we have not only lots of dealers and addicts, but many overdose deaths every year, many more than we have homicides of any sort. So the two very similar kinds of bans, catch them and imprison them, have very different effects. So I think we're doing fine on hitmen.