The Economics of Organ Donations: EconTalk Transcript

Richard Epstein*
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Russ Roberts: Welcome to EconTalk, coming to you from the Library of Economics and Liberty. I'm your host, Russ Roberts of George Mason University. We'd love to hear from you if you have any comments or feedback for us here at EconTalk. Please send me an email at mail@econtalk.org. You can find more EconTalk at www.econtalk.org, along with readings and links related to this podcast.

My guest today is Richard Epstein, the James Parker Hall Distinguished Service Professor of Law at the University of Chicago, and he's also the Peter and Kirsten Bedford Senior Fellow at Stanford's Hoover Institution. He's the author of numerous books and articles. His latest book is titled How Progressives Re-Wrote the Constitution, published by the Cato Institute earlier this year.

And he recently had a piece in the Wall Street Journal on organ donation. That is the subject of our conversation today. Richard, welcome to EconTalk.

Richard Epstein: Well, it's very nice to be here.

Russ Roberts: What's the current situation for someone who wants a kidney transplant? How's that work?

Richard Epstein: Right now, it's a very complicated set of procedures. We believe in treating kidneys as an item—this is nationally, not me—which is going to be allocated by queue, so what you have to do is to get on line and wait your turn. It's even more complicated than that because there's more than one line, and there are ways to bust you up to the top. That is, right now, the kidney lines tend to be local, and sometimes, there's a substantial variation between people who live in Dallas on one hand and Ft. Worth on the other, where the difference in the wait can be as much as a year or more.

Right now, the average recipient has to wait four years to get a kidney, and by the time many of these people receive it, they're too old for it to do much good. And unfortunately, along the way, many people are pulled from the list, which is another one of the mysteries of this field, and many die while on it. On average, 18 people per day on the kidney list die, and, on average, probably, the list gets about 5,000 or 6,000 longer per year. I think that's the number. It may be a few less, but it's clear that these queues are growing, not shrinking.

Russ Roberts: The people who are dying—how old are they, typically? Do we have an idea?

Richard Epstein: It varies all over the lot, but most people who are on the kidney situation usually have complications of some other disease like diabetes, and so that will tend to put most of them in their late 50s, 60s and 70s.

Russ Roberts: These are not extremely elderly people about to die anyway? These kidneys that they're not getting make a big difference?

Richard Epstein: Oh, yeah. I mean, I have not done these calculations, but I think it's quite likely that you can say that a kidney is a rather precious commodity in that it can add—if it's in good shape to a recipient who's in good shape—15 years or more to expected life, and the most conspicuous illustration of this is Sally Satel, who's a fellow at the American Enterprise Institute, who received a live kidney donation from her friend, Virginia Postrel. Sally, I think, is just under 50. Without that kidney, she probably would have lived only four or five years at most. With it, she probably has 20 or 25 years, or close to a normal lifespan.

Russ Roberts: And the people are waiting online in the queue, as you call it. They're not literally waiting, but they're on a paper queue, and I assume they're on dialysis or other—to keep them going in the meanwhile.

Richard Epstein: Some people get on before they need to go on dialysis. Most people are on dialysis, and it's a pretty gruesome fate. There was another story in the Wall Street Journal, which indicated that as many as 20 percent of people just voluntarily give up on it because they can't bear the 30-or-so hours a week, three or four sessions a week that it takes, and you never get yourself back to normal. It's a delusion to think that dialysis is just a matter of time. You feel exhausted, even when you're not on the machine because it's a rather poor substitute for one well-functioning kidney.

Russ Roberts: Has dialysis gotten less expensive in recent years?

Richard Epstein: It's a very expensive process. It's a hundred grand a year or something like that. It's a big program. I don't know how many billions of dollars the End-Stage Renal Disease Program does, but it's $10 or $15 billion. It's a big number, and there's a very long queue. And there's also—I mean, thank God—there's a fairly active—I wouldn't say "market"—but certainly a set of activities in which we probably have around 14,000 kidney transplants per year.

A little more than half of those are cadaveric—that is, from dead people—and about 40 to 45 percent are from individuals who are alive, in various kinds of swap arrangements, some of which are clearly within family. Others which are not, for reasons of blood compatibility across couples, which gives rise to a very well known Hobbesian Assurance problem, which is handled in a very clever way. If you want, I'll describe it.

Russ Roberts: Yeah, go ahead. Tell us about that.

Richard Epstein: Yeah, well, the basic problem, and I'll just give you the simplest of illustrations first, and then you could go to some of the more compound ones after. Suppose you have a wife who needs a kidney, and she's Type A and her husband is Type B. He's willing to donate to her, but cannot because the incompatible blood types make this an impossible match.

Then there's another couple, and let's suppose this husband's to give to his wife, and it turns out that he's A and she's B. What you could do is you could cross-match, and you could have the B husband give to the B wife and the A husband give to the A wife, and you get two donations instead of none. But then you have to figure out how do you do this?

Well, the first question you have to ask is do you do it sequentially, first one couple, then the other? And the reason I refer to this as a Hobbesian Assurance problem is that the one thing we know about the law of contract is that it doesn't give you specific performance, so if one couple went through it, the second one would have every incentive to renege. So the way they solve this problem is they quite literally put people under the knife simultaneously so that there could be nobody who could pull out—they have radio contact between operating rooms to make sure that there's no slippage in the joints.

I'm all in favor of this. It essentially allows you to get two people alive instead of none. There is a legal objection that you're not allowed to trade or sell organs for "valuable considerations," but the folks who run the kidney establishment—which is a world unto itself—has managed to delude or persuade themselves that these swaps are, in fact, pure altruism instead of altruism within families or swaps across families. I don't care about the linguistics at this point—I think it's baloney—but the really important thing is the kidneys get transferred.

Russ Roberts: So in the current world, you cannot buy a kidney legally in the United States or sell one, but there is this strange sub-market you're talking about, where—

Richard Epstein: It's a market for barter.

Russ Roberts: And not just that. You gave the example earlier of Virginia Postrel donating a kidney to—

Richard Epstein: Then there's the pure, friendship, altruist market.

Russ Roberts: So you can designate a kidney?

Richard Epstein: Yes, these are called directed donations. To say anything categorical, Russ in this area, is always dangerous—but, essentially, there is no statutory objection to this. There is a very long debate inside the so-called "ethical"—and I use the word in quotes—community dealing with kidneys as to whether or not it's appropriate to designate a kidney to a total stranger or even to somebody not in this family group.

The kidney people treat the list as though it's a sacred artifact, and, therefore, think that any effort of designation is an effort to subvert the list and to circumvent some natural priority—one that they have created. So there are some transplants centers for example, that will not allow anonymous matches to be done in their facilities. I think Beth Israel in Boston is one such place.

And what happens under those circumstances is since the cash market is precluded since there are incredible shortages, just the usual rules of supply and demand—supply at zero price is low, demand at zero price is very high—everybody turns out to wait. There are these facilities—Matchingdonors.com is perhaps the most well known of them—and what takes place on this is that people post their pictures and their biographies, and they try to induce strangers to give them a kidney.

And there are some institutions that say you can't do this—either it's a ruse or a fraudulent cash payment underneath the table or in effect, there's no true altruism in this particular case. So that what we have to do is to tell the person who would give to Ms. X: "Oh, you can't give to her, but if you give to an anonymous donee, that's just perfectly fine."

It's such a bizarre world that you get into, precisely because the [restricted] price mechanism creates persistent shortages, and that's in accordance with just perfectly standard economic theory. Whenever there's a shortage there's a queue, whenever there's a queue, there are efforts by the people to sort of maneuver themselves to the head of it.

Russ Roberts: Well, let's talk about the alternative. What would you prefer to this current Byzantine system?

Richard Epstein: Well, first of all, I'd experiment with anything. When one sees the amount of gratuitous suffering that takes place, you really want to focus in order to find some way to increase the supply. The most obvious way to do it is to have a straight market in which you allow people to bid up the price and to increase the supply of organs.

This is gonna be a funny market in one sense—even if it's completely unregulated—because there are huge charitable and generous motives that are always working in the background. The way in which this happens, for example, is there are lots of people, who will give to hospitals to take care of the ill. There will be many foundations or organizations, I'd predict, which would create separate kidney funds, which would try to help people without means in order to allow them to participate in this market.

So I think that what will happen is, strangely enough, you'll get more rather than less charity. There are lots of people, like myself, who are really too old to give a kidney or who had some kind of illness, which makes it unwise for them to do so. But whereas it may only be that a tiny fraction of the population is willing to give kidneys, I think you'd find a rather larger fraction of the population that would be willing to give cash to allow people to purchase kidneys. In the voluntary market, there is nothing which precludes charitable translations operating in tandem with, or side by side with, or substituting for, various kinds of straight-out, wide-arm's-length bargains, and I think all these institutions would start to emerge. I think the supply would start to increase.

I think that demand would probably shrink a little—generally speaking, you'll have fewer demanders at the positive price than you will at a zero price—but the queues will tend to disappear. The public savings will be enormous because dialysis is enormously expensive, and you would be able to save those funds. In addition, people who receive these kidneys will lead much more productive lives, which means that they'll contribute to the economy and to the tax-base which it supports.

I don't see any real fundamental difficulty with trying this. There are lots of people who have objections to it. If you'd like, I'll go over some of them and tell you why I think they're groundless.

Russ Roberts: Let's talk about some of those objections.

Richard Epstein: Sure. The first objection is that the so-called market in kidneys will take advantage of vulnerable populations. I think there are several responses you could make to that. I mean, the first one is if you really thought this was a matter of vulnerability, you could say the only people who could give kidneys are those who have college degrees or have incomes of $50,000 or whatever it is and knock out the poor. That's one of these usual inversions that we see in which it turns out that poor people are, therefore, going to be denied the opportunity which will be left open to rich people, which is, generally speaking, not the wisest thing in the world to do.

In addition, there's an enormous amount of self-selection in this market. Buying a kidney from somebody's not just buying any old thing. You take a kidney which is diseased, which has been ravaged by alcohol, or by drugs, and you're buying yourself a death sentence. So that, for the most part, people will be very choosy about the organs they use.

In the Wall Street Journal column that you referred to earlier, I mentioned that the sort of external check you might want to use is to say that the kidneys that are purchased have to go through the same kinds of tests and examinations that kidneys that are donated have to go through, and if you did that, if the one set of kidneys is safe to use, then the others would be.

In fact, it's really perverse in this regard. When I testified about this before the President's Council on Bioethics, I heard—previous to my speech—a talk by an ethicist named Robert Veatch, and what he suggested was that the shortage is now so acute, maybe we ought to tell people: "Hey, you can get a kidney—we know it's diseased, we know somebody may have hepatitis or AIDS—but we think it's okay, take your chances.

Well, it's kind of ironic. One of the responses you get to the shortage is a real compromise in quality with respect to the kidneys that are provided so that kidneys that are more and more marginal are being pressed into use, and that would not take place in any kind of a sale market. I don't believe that anybody could sell a diseased kidney. I think the supply of healthy kidney would start to drive it out. How many would you need? I guess it's a fair question, right now, there are about 94,000 people sitting on the kidney waiting list. I don't know if all of them would make suitable donees or be willing to pay or get somebody to pay for them.

You probably would need a burst to get rid of the backlog, but after that, you'd probably have to find—oh, I don't know—maybe 10,000 kidneys a year to cover the shortfall and pay perhaps more money for the kidneys that are already donated, but that's just a transfer payment—I could care less one way or another about it. In steady state, right now, we'd probably need, I don't know, 25,000, 30,000 kidneys per year.

The number might change if the market's available because people who've put off going on dialysis might come on, but if you're talking about a population nationally of 300 million, it means that every year, there are probably 6 million people, who reach the age of donation, and add new entries into the market. I think that with a suitable price system, you could probably find 10,000 people who would be willing to donate. The risks to the donors are not trivial. That's why you don't get it voluntarily, but the death rate is about 3 in 10,000, and the complication rate's somewhat higher than that.

The more you do of this stuff, the better it gets. So those numbers are only going to go down. They're not going to go up, and, in many cases, my guess is is that the numbers will actually be lower because if you get a purchase population, you're probably going to get a healthier stock giving than you will in the family situations, where a husband or a wife may give a kidney to a child, even though he or she may not be the perfect donor. After all, you're willing to take a slightly greater chance for your own kid than you might be prepared to do for money.

So I think that this thing would sort itself out against the vulnerability charges. There are aesthetic charges, which I find just crazy.

Russ Roberts: Let's talk about those.

Richard Epstein: For example, Leon Cass has said that the reason that we don't allow these things is we find a certain degree of revulsion to having these sorts of transactions. Well, frankly, I do find them very unnatural. Our bodies' defenses are made to make sure that no physical invasion takes place. That's why we need anesthesia, but I find things a lot more repellent than selling kidneys.

I find having people die at very high rates a rather tragic and awful situation. I think human suffering's an awful situation, and essentially, what the market says is this: You have huge amounts of suffering. I would have a little amount of suffering if I helped you. A little cash payment will make me better off by making me richer in exchange for the risk that I take and/or make you a lot better off by adding years.

And remember, the usual hedonic calculations would put an individual life at, I don't know, $100,000, $250,000 a year. It's a conservative estimate. I mean, these are big numbers, relative to everything that goes on. You could finance the whole program out of the savings of dialysis if you really wanted to go in that direction.

Russ Roberts: The critics argue that the commodification of the body—that somehow, using your organs as a source of income, which, of course, is something we do all the time with out eyesight and our brains—we use our organs for income all the time—

Richard Epstein: We do it for blood, for sperm, and women do it for eggs.

Russ Roberts: But, somehow, parting with it permanently—I have to mention one of my all-time favorite tabloid headlines was Kidney Donor Wants It Back—but, in general, you part with it forever, so somehow, this is considered by the critics a slippery slope. I'm not quite sure where that slope leads. Do you have any idea what they're worried about?

Richard Epstein: Yeah. Commodification is one of those mysterious things. What they are worried about is that the people who engage in these transactions will somehow lose respect for persons as persons, and so instead of thinking of them as holders of rights, we will start to think of them as mere collections of organs that other people could use at their free will and pleasure.

Now, that would be certainly true if, in fact, what you did is you went on a Long Island railroad and picked somebody out and said; "Hey, you're the organ donor of the week, and we're gonna dismember you." But you've got to get their consent, and the way in which markets always work is you only get consent by treating people with respect.

It would be an absolute delusion and mistake to think that in a market which is this fraught with emotion, a kind of cold hostility, would be sufficient to wean somebody over to it. We do have markets, for example, a gray market in babies, in which couples try to get adoption through private agencies or obstetricians who have access to women who love their children, but don't want to keep them at home, and you watch the way that market works—people prepare these video shows of themselves, their households, their daily lives. They go through interviews, do all sorts of things, and it's not a question of just putting somebody out to the person with the highest bid.

If you care about what's going to happen, there's a lot of affection and emotion in these things, and all of this stuff really matters, and it would show, and, indeed, we know right now that communities get together to finance difficult and expensive operations for individuals within them who get hurt. The same thing would start to happen here. It's a complete lack of imagination to assume that everybody's going to be selfish and boorish because you allow these transactions to take place.

What will happen is that some people will be indifferent and they'll stay on the sidelines, and there'll be other people who care, and they'll come in and they'll contribute in relatively responsible ways. I can't believe that anybody would think that people would be commodified in the sense of being treated as though they were a bunch of bricks and stones by virtue of this. We had the same argument—made for example, by Leon Cass—with respect to in-vitro fertilization 25 years ago that children who are created in test tubes won't be loved by their parents.

I think it has proved to be utterly groundless.

Russ Roberts: It's an interesting social, cultural issue for non-economists and lots of other folks, that somehow, when money gets involved, the whole transaction becomes tainted; that everything is better if we served our fellow human beings purely out of love, which is a lovely idea for a family—

Richard Epstein: But it just doesn't work with a series of large complex societies.

Russ Roberts: It works very poorly.

Richard Epstein: You think of Adam Smith—it's not from the benevolence of the butcher or the baker that we expect our bread or meat, right?

Russ Roberts: And yet, somehow, people—they do see this non-monetary world as an ideal, and it's an interesting challenge for us as economists and lawyers who feel—law professors who feel otherwise to make that case. I think it's an interesting challenge, culturally.

Richard Epstein: Yeah, well, I agree; I mean, I think, as I said earlier on, a lot of this misapprehension comes from the fact that people don't understand the way markets work. You go back to the beginnings of Laissez-Faire in the late 19th century—this was the period in which voluntary donations, creation of great hospitals and universities was the norm. There's a very powerful, cultural element in all of these things, which says that those who benefit enormously from the market should give back voluntarily to the communities from which they receive much of their gain, and it's not just idle chatter.

I mean, you go back and you watch what happens, and that's exactly what did take place. People did go and give back to the communities. I mean, one of the things I always like to do is to ask people who Mr. Stanford was. It's not the name of a farm—it's the name of a guy who gave a huge gift after the death of his son—or who Mr. Harvard was or Mr. Yale was or Mr. Brown was. These are all people who created these great institutions. Or I say to somebody: "You've been treated at Sloan-Kettering. Do you know who Sloan is? Do you know who Kettering is?"

Those are the two guys who founded General Motors back in the 1920s.

Russ Roberts: How awkward (laughter).

Richard Epstein: Yeah. I mean, it seems to me that the way in which you do this—if you caricature markets so as to operate in sort of relentlessly selfless ways, and thereby misunderstand what they're about. The reason market people worry about selfishness is in a case where people are most egotistic and you get a voluntary exchange—you get a social improvement, both sides are better off. But it doesn't say that everybody has to operate out of that particular motivation; I mean, we all know that motivations are highly mixed, and I think the clear thing is the moment you get to matters of marriage, matters of life and death and matters of children, we get lots of mixed emotions.

We do create commodities in many cases, and it's extremely wise that we do so. All of capital markets depend upon commodification. Nobody can sit out there and organize the market in used bolts and rusty nails, so what you do is, you put all the assets into a corporation, create fungible shares, which have no particular subjective value, and those things can be freely traded in a way that the assets that they represent cannot, if you try to trade them piece-meal so, in that sense, commodification just leads to efficient markets.

I mean, in the areas where you see commodification, it's wonderful. It's exactly what we want. If we didn't have No. 4 wheat, we wouldn't know how to organize a wheat exchange.

Russ Roberts: No, I think people have trouble with that mixed motive idea. They—if you ask the doctor why he or she is in medicine, the answer is going to be to serve people, which is fine. I think that is part of the reason, and if it didn't pay, most of them would be doing something else, or many of them, at least, so there's nothing wrong, to me, of having two motives, monetary and whatever else you want too call it, conscience, virtue, etc., and yet I think a lot of people are uncomfortable with that.

Let me turn to one of your critics, Atul Gawande, a medical doctor, who said the following—

Richard Epstein: Oh, this is 1998?

Russ Roberts: Yeah.

Richard Epstein: Yeah, an interesting guy.

Russ Roberts: He says—he is an interesting guy—he says, "My opposition," his opposition to a market—

"My opposition stems from exposure to ordinary people as they make decisions about whether to undergo surgery to take their medicines and so on. Libertarians have great faith that people nearly always make rational choices, and that having more choices, can't be bad, but any doctor can tell you that's not true. In medicine, you come to realize how unreliable the faculty of reasoning is and how susceptible it is to subtle forms of exploitation."

Do you worry about that at all in this market?

Richard Epstein: Oh, absolutely, but it doesn't cut the way he thinks it does. Look—I mean, put it to you the same way—that's an argument against allowing voluntary donations. People are erratic. They don't have consistent preferences. They go up, they go down, they don't always understand about it.

Russ Roberts: I have to tell you that I had a friend, a guest over for lunch one day, who told me exactly that—that she counsels folks often against voluntarily donating because it's risky, and they may not be in their right mind, and I have to confess I was horrified at this. Another guest suggested that it was perhaps a violation of the Hippocratic Oath for a doctor to remove a kidney from a patient to give it to another, and I said, "Well, then, we ought to get rid of the Hippocratic Oath.

Richard Epstein: Yeah, they all have these very strong, odd objections, but I think Atul is correct about the fact of the danger, but again, he misses—I think, the reply is—whenever you enter the delicate transactions, but they're legal, what you do is you get advice before you do it. So what happens is, quite naturally, independent of any government regulation, you announce that you can have these exchanges—somebody would put themselves out as an organ donor or an organ seller consultant, and you could go to them and get some sort of an evaluation as to whether or not you're a suitable donor and what you could expect by going through these things.

You'd get blog sites, which would start to get information, and also, I think he was wrong for another reason. The donor is somebody who's not in any immediate physical peril or danger of his life. He can sit down and take as long or as short as he wants. It's not like somebody who's feeling great pain in one part of his body—he's afraid of dying and so forth. The populations you're talking about are actually somewhat different, and my guess is that you'd get a higher degree of rationality by going to a healthy population and asking whether or not you'd want to take $50,000 for an organ than you would in trying to deal with ordinary surgeries, but he did not take into account the differences in conditions between the donors, on the one hand, and the sick population on the other side.

I think that the arguments that he makes are true, but like every true argument, it's an argument for caution; it's not an argument for abandoning it.

Russ Roberts: Wouldn't the argument, though, be that a person, in say, desperate financial straits might make an irrational decision?

Richard Epstein: He might, and, as I said, if that's the situation, you could easily imagine rules that would limit the people to having incomes above a certain level making donations. But let me put it to you this way. We don't know the answer to those questions in part because we've never even tried anything remotely like this kind of an experiment, and if you did try this kind of an experiment and you saw some kind of abuses, you would then have some degree of information as to what's going on. That's the first point.

The second point is that this is only a series of objections with respect to live transfers. There are the cadaveric transfers, and under these circumstances, you could easily imagine the situation where the payment is made to somebody's estate under these circumstances. There are some risks there that somebody would hasten the death in order to harvest the organs, but I think that those are relatively minor, and that certain safeguards could be introduced against it—

Russ Roberts: That's a lovely thought.

Richard Epstein: And the point is one would be willing to try. To give you another approach, which I don't like, but which I'd accept, is Lloyd Cohen and Henry Hanson. Each said,

"I'll tell you what we'll do. We'll have the state buy the organs at some kind of a fixed price, so you get rid of bidding, and then we'll take those organs and give them to people on the current United Network of Organ Sharing as it is called—the queues that they put up—in order to increase the supply without altering the way in which the demand goes."

I mean, try something, and what was so horrifying about the report from the Institute of Medicine is that they not only opposed having any financial incentives—they opposed any and all forms of experimentation, and it was that which prompted me to write this column for the Wall Street Journal in dealing on this subject.

Russ Roberts: Well, not to be too cynical—

Richard Epstein: I just can't believe what's going on. There was a letter by a man named Charles Fruit, who was himself an organ recipient, and I have to say, it was one of the most astonishing letters that I ever read, and I did write a reply to it in the Wall Street Journal, in the letter, and this man is the head of the National Kidney Foundation, so I regard it as frightening, in which his observation was—well, we can't allow a market because if we have a market, then the distribution of kidneys will be, in effect, no better than the distribution of oil and gas, or gasoline, I think was what he said.

Russ Roberts: I saw that.

Richard Epstein: So the obvious answer is if you want to find out why there are snafus in the distribution of gasoline; look to various forms of price controls, and you'll get your answer. I mean, it's not the market that fails consumers under the circumstances. It's the regulatory overlay and the huge rhetoric about gouging that does it. Lloyd Cohen, who's on your faculty, quipped, "What we really need is to have the United Network of Gasoline Sharing in order to make sure that we solve this problem by requiring that all gasoline be sold at zero price."

Russ Roberts: Yeah, let's let people line up. Let's go back to the '70s and instead of just having price controls at the level they were at; let's put them at zero, and we can really see some lines and some social disruption.

Richard Epstein: Yeah.

Russ Roberts: It's kind of a horrible idea.

Richard Epstein: Yeah, I know, By the way, if people are interested in this, just as we were talking, on my screen popped up a new blog site, which I have contributed to from time to time, called Organomics, which is obviously the economics of organs run by a man named Heaney, and they put various things up, and the last thing is—I opened it up—was a copy of the letter that I sent to the Wall Street Journal last week in response to Mr. Fruit's letter to the Wall Street Journal, protesting my rather, oh, how shall we say, coarse and vulgar views with respect to this issue.

Russ Roberts: You heartless man, you. We'll put a link up to that Organomics web site at EconTalk.

Richard Epstein: You should; I mean, this is a very important issue. Fortunately, I have no horse in this race as yet. It's not as though my wife or my children are in desperate need for kidneys at this point. I got into this mainly because the real test for being an academic, in some sense, is to figure out the way you want to organize markets with very complex goods and services that don't seem to render themselves as amenable to being sold at a checkout line at the supermarket.

I think the answer is it is harder to organize a market for organs than it is to organize a market for wheat; Precisely because organs aren't commodities, but by the same logic, we've organized markets for marriage, even though they're not commodities either.

Russ Roberts: Markets tend to organize themselves. That's the marvelous thing about them, if you leave them alone.

Richard Epstein: Yes, if you leave them alone or better, if you actually know what's going on and participate in them. That is, what happens is you don't want people from the outside saying why the hell it can't work—which is one of the reasons why I disagree so strongly with Atul Gawande in his comment eight years ago—but rather what you really want to do is to have the people who say it hasn't worked well yet, come up with a better way to make it go.

Russ Roberts: Make it perfect.

Richard Epstein: We never make things perfect, but we make them better. Look, basically, the reason why Ronald Coase got a Nobel Prize can be summarized in one sentence, which is there are always gains from trade—which you want—and there are always frictions called transaction costs, which make those gains unattainable, and when the gains from trade are smaller than the frictions, the transactions don't happen, but if you could lower the frictions, you will essentially increase the probability that useful transactions will take place.

And the trick in all of these situations is to find ways in which you make the process for getting organs reliable on the one hand, but not so costly on the other hand as to drive everybody else away.

Russ Roberts: Well, we're almost out of time. I wanna raise one last question. I want to take the so-called commodification of the body and turn it around. Normally, I would not argue the fact that a policy saves lives is enough for it to be made legislation, so; for example, the proponents of mandatory seatbelts or helmet laws will tell you that these laws save lives, and my view is is that they may save lives, but they restrict liberty, and I prefer a world where people take responsibility for their own actions.

Richard Epstein: Yeah, I mean, the seatbelt case is very complicated, and let me explain why. First of all, to some extent, the concern is not whether you live or die, but it's two other things. One, if you don't wear a seatbelt and you're on a highway, which is a common facility with other individuals, you not only increase your own risk, but you reduce the liberty of other individuals by increasing their potential liability.

Russ Roberts: A little bit.

Richard Epstein: And so some people say you don't have to wear a seatbelt, but treat it as contributory negligence. That's one possibility. And the second feature, of course, with seatbelts is it ties in most unfortunately, to our system of subsidized medicine, where if you don't wear a seatbelt, everybody else has to pay for the consequences of the accident.

Russ Roberts: I find that argument uncompelling.

Richard Epstein: Do this experiment, Russ. Ask yourself if you owned a system of voluntary highways, and you charged admissions to all your folks, would you have run a better product, if, in fact, you had a seatbelt rule than if you didn't?

Russ Roberts: Perhaps.

Richard Epstein: So treat the government as running that voluntary highway system, and the answer is correct; it's perhaps. We don't really know for sure, but we'd certainly want to make adjustments on the liability side and on the subsidy side, but we're not running a common network in these cases. The government doesn't have any hold of you by wanting to use facilities that it and only it can create. That is the highway system.

This is a case in which you don't need the infrastructure in that particular fashion.

Russ Roberts: No, I know. Now, I'm asking a philosophical question. Let me try to restate it. In the case of seatbelts, the fact that seatbelts save lives is not enough for me to argue that the state should use its authority to restrict freedom and, similarly, reduce responsibility. In this case, the argument you've made, which I find totally compelling, is that a market for kidneys would save lives and more than save lives, it would also improve the quality of life for thousands and thousands of people.

But we wouldn't, for example, want to argue—I wouldn't argue, and I don't think you would; that, therefore, we should force people to give their kidneys.

Richard Epstein: Oh, God, no!

Russ Roberts: So the question is: is there anything—is there a freedom issue here or liberty issue or values issue of a different kind that a person should have the right to commodify, so to speak, his or her body if he or she so desires?

Richard Epstein: Oh, absolutely; I mean, look—let me put it to you the following way. The argument that you are making could be as follows. Normally, any voluntary exchange between two parties improves their joint welfare and presumptively ought to be respected. So now, the burden is on third persons to explain why it is they're going to block those transactions, and if all you can show is that you reduce suffering and increase the supply of organs and essentially create a healthier and more vibrant society; that doesn't seem like a very powerful reason for blocking voluntary donations.

The seatbelt case is different.

Russ Roberts: I agree.

Richard Epstein: Now the issue is I run this highway system, and I'm a monopolist. What conditions may I as a monopolist impose upon people who want to come on that situation? Surely, it's a loss of liberty to say that you have to stop at a stop sign or a red light, and yet everybody says: "Oh, my God. The gains across it, system-wide, are so much greater. "

Are seatbelts like red lights or are they just impositions? And there's no doubt—and this is a huge area, Russ—for example, one of the famous people's questions we've often asked when we teach Con Law is—all right, the state owns the highway. Are they going say the only people that are allowed to use the highway are those who vote Republican, those who give up their rights to criticize the president, those who accept all sorts of unreasonable searches and seizures?

And, generally speaking, the answer to all those questions is no, because there's always a real nervousness about dealing with monopolists, particularly state monopolists.

Russ Roberts: Sure.

Richard Epstein: But you don't have any of that problem here. If you want to talk about the definition of a decentralized market, one person, at most, has one kidney to give, right?

Russ Roberts: Sure.

Richard Epstein: You're not going to have the concentration issues and the monopoly power issues that lurk behind the seatbelt example and which make it actually a very tricky case, even for a libertarian because libertarians, as you know, always have trouble with common carriers and state monopolies, and they don't like them and they can't do without them, like anybody else.

Russ Roberts: Coming back to kidneys, is there any prospect—do you know, offhand—if there's any prospect of an artificial kidney down the road?

Richard Epstein: Well, people have talked about that. Dialysis is an artificial kidney, and that stinks and will be made better, but never good. There is a movement to try to create what they call xenotransplants, which is to figure out how you can use genetic engineering to make pigs into laboratories that will create kidneys that are compatible with human beings.

And I think the answer is ten years ago, we thought it was ten years away. Now we think it's 15 years away or 20 years away. I have not heard anybody who's really good at this stuff that thinks that those methods, at present, will be a viable source of kidneys.

Russ Roberts: Well, if you could—

Richard Epstein: If it ever came up that pigs could create kidneys, by God, this problem would be solved in an hour.

Russ Roberts: And the incentive to find that solution's going to come—the incentive is going to be larger if people can sell those kidneys on an open market.

Richard Epstein: Oh, I don't think there's any ethical objection to selling pigs' kidneys if you could breed them, so I think that incentive's there. I think it just turns out, technically, to be a much more difficult problem than anybody has expected. I got involved, just as an academic in the organ thing, probably around 1990 or so and talk of xenotransplantation was rife then, they're actually less frequent now than they were 15 years ago.

And my last conversation with several nephrologists is that they were despairing of that as a short-term fix. I mean, there clearly will be visionaries who will work on that, and all more power to them. It's not only that. Remember, we've only talked about kidneys. When you're talking about pancreases and hearts and lethal transplants, you're not going to find a voluntary market emerge in those things. What's the point of taking your own heart out for a 10 percent chance of saving somebody else's life, or a 20 percent chance of doing it?

But if you could get a pig's heart that you could transplant into a human being; that market would transform itself.

Russ Roberts: Of course, the question will eventually be whether those pigs are going have the right to—they'll have to sign some sort of waiver, I'm sure if we ever could generate that market, as some people will speak up on behalf of the pigs to be used as commodities.

Richard Epstein: Oh, I mean, there is an animal rights movement, which I've actually opposed on a whole variety of issues having to do with medical research. I think the answer is if you actually could show this—that movement would be absolutely blown out of the water by people desperate to find organs for their loved ones.

Russ Roberts: No doubt.

Richard Epstein: I do not believe they could survive. I just don't; They can't stop the use of meat in homes, although they would dearly like to.

Russ Roberts: They're working on it.

Richard Epstein: They're working on it, but they're not having any success. In fact, there are many people who become vegans and vegetarians, to which I would say God bless them—those are autonomous choices. Let them do this.

Russ Roberts: Sure.

Richard Epstein: But I think that it's only a tiny fringe that are prepared to blow up various kinds of facilities in order to stop it. The real fierce stuff is against medical research, and kidney harvesting from pigs would not be that.

Russ Roberts: Richard, thank you for an utterly fascinating discussion, and I appreciate your time.


*Richard Epstein is the James Parker Hall Distinguished Service Professor of Law at the University of Chicago and the Peter and Kirsten Bedford Senior Fellow at Stanford's Hoover Institution. His latest book is How Progressives Re-Wrote the Constitution.
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