Wednesday, March 04, 2009

Repugnant Preferences

Harvard economist Alvin Roth again asks 'how much for a kidney?', at his talk at the American Enterprise Institute in Washington. Well, we do have two kidneys, so that makes a surplus of one. And imagine what you could buy with 33,000 dollars (the legal price of a kidney in Singapore- a kidney for your troubles). But that's pretty unsavoury right?

The New York times overviews the commentary after the talk. Paul Bloom voices "The problem is not that economists are unreasonable people, it’s that they’re evil people,”. “They work in a different moral universe. The burden of proof is on someone who wants to include” a transaction in the marketplace.

Michael Novak, Steven Pinker, John Haidt and others point out that disgust is a useful heuristic and guide for decision-making. It tells us to pay attention, there's something untoward going on here. The problem is this rapid response can be hijacked. Psychologists can induce feelings of disgust via hypnosis and this can tip the balance in what we endorse as morally acceptable or reprehensible.

Many of our preferences may be rough and ready guides based on accumulated experience. We give money to animal causes based on how cuddly we judge them to be and we find it off-putting to see these animals traded for consumption. It seems our empathy and our disgust are not always guided by ethical principles. But I still believe it is very easy to put a price on a kidney but a lot harder for someone to understand the decision they are making to sell one!

This transaction feels very exploitative. And this is for many reasons, mainly the information asymmetries tied in and the lack of an incentive for the buyer to provide details to address these. It is also questionable as to whether the seller has the capacity to imagine the lifelong consequences of his/her decision. Even if a fully informed decision could be made the emotive consequences of such a trade could be fuel for social unrest amongst those who feel strongly about what they deem socio-economic and 1st to 2nd/3rd world exploitation.

3 comments:

Kevin Denny said...

Remember those evil people who sell their spare kidney, liver or whatever are the one's doing the exploiting. They are exploiting the fact that they have a spare so as to extract money from some poor bugger with organ failure.
The whole point of trade is that in a sense each side is exploiting the other. Thomas Acquinas (I believe) thought this was why trade was bad. D'oh.

Martin Ryan said...

Michael,

You're delving into the economics of the kidney-market so much, I'd almost think you're considering to sell one!

Michael Daly said...

You're right Martin. What I'm thinking is that it could be a way of getting an interest free student loan. I sell it now and then buy one in 4-5 years when I have the money. And looking at this market in its infancy I reckon with competition in 5 years the price of a kidney will be about half what it is now.. And it's also a positive externality (or internality!) in that I'll have to cut down a bit on the booze in the mean time! Everyone wins!