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373
A Free Market in Kidneys:
Efficient and Equitable
—————— ✦ ——————
WILLIAM BARNETT II, MICHAEL SALIBA,
AND DEBORAH WALKER
More than one thousand Americans die prematurely every year because
they cannot get kidney transplants. In addition, more than forty
thousand others suffer while waiting for kidney transplants (United Net-
work for Organ Sharing 1999). Fortunately, this health-care problem—for those
involved, a crisis and a calamity—could be virtually eliminated because its cause is
clear and a solution is available.
The problem persists even though our medical knowledge and technology and our
supplies of appropriately trained medical personnel and relevant equipment are more
than adequate for the performance of the number of transplants that would eliminate
it. The problem persists solely because of an insufficient number of transplantable
kidneys, an insufficiency that exists because both the purchase and the sale of kidneys
are criminal acts under the National Organ Transplant Act of 1984 (U.S. Congress
1984). Economists have shown that legalization of purchases and sales of kidneys
would increase the number of kidneys available for transplant.1However, they main-
tain that although the increased number of kidneys available for transplant would
reduce the magnitude of the current insufficiency, some insufficiency would remain
(Adams, Barnett, and Kaserman 1999; Anderson and Barnett 1999; Barnett, Blair,
and Kaserman 1992; Barney and Reynolds 1989; Blair and Kaserman 1991; Block
William Barnett II, Michael Saliba, and Deborah Walker are associate professors of economics at Lo-
yola University New Orleans.
1. Adams, Barnett, and Kaserman (1999) provide empirical evidence that the supply of kidneys would
increase in a market situation. According to these analysts, “some estimates suggest that [human] organs
would cost less than $1,000 on a free market” (154), a necessary implication of which is that, in a free mar-
ket, a substantial supply of kidneys would exist relative to the demand.
The Independent Review, v.V, n.3, Winter 2001, ISSN 1086-1653, Copyright © 2001, pp. 373–385.
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THE INDEPENDENT REVIEW
374 ✦WILLIAM BARNETT II, MICHAEL SALIBA, AND DEBORAH WALKER
1988; Carlstrom and Rollow 1997; Hansmann 1989; Kaserman and Barnett 1991;
McKenzie and Tullock 1989; Rottenberg 1971; Schwindt and Vining 1986).
That the governmental prohibition of the purchase and sale of kidneys results in
the unnecessary suffering and premature death of thousands of people is an undenia-
ble truth. The obvious question is, Why does this prohibition remain in force? The lit-
erature provides three answers.
First, those who benefit from the current system prefer the status quo. There-
fore, they engage in rent-seeking behavior to maintain the prohibition against the
purchase and sale of kidneys (Barnett 1988; Barnett, Beard, and Kaserman 1993; Bar-
nett and Kaserman 1995; Barney and Reynolds 1989).
Second, wealthy people who need a kidney would bid up the price of the limited
supply in order to acquire one for themselves. Therefore, the “poor” would be priced out
of the market and have to do without a transplant. Moreover, to allocate such an essential
scarce good on the basis of wealth is morally repugnant (Barnett, Beard, and Kaserman
1993; Barnett, Blair, and Kaserman 1992; Blair and Kaserman 1991; DeJong et al. 1995).
Third, if a free market for kidneys existed, only poor individuals would sell kid-
neys, and such sales would be coercive in nature. A market for an essential body part
in which only the poor would be the sellers, and coerced sellers at that, is morally out-
rageous (Barnett, Beard, and Kaserman 1993; Barnett, Blair, and Kaserman 1992;
Blair and Kaserman 1991; DeJong et al. 1995).
We agree with the first answer, which is well developed in the literature. Our pri-
mary purpose of this paper is to refute the second answer by correcting the faulty eco-
nomic analysis on which it rests. We also refute, with a more complete economic anal-
ysis, the third answer.
The Demand for Kidneys and Economic
and Medical Shortages
It is necessary to distinguish two possible meanings of shortage. The first is the cus-
tomary meaning in economics, which we refer to as an “economic shortage.” The sec-
ond, which we refer to as a “medical shortage,” we define as a situation in which,
regardless of whether or not an economic shortage exists, someone who needs a kid-
ney transplant cannot get one because no transplantable kidney is available. The cur-
rent literature explains why, without the prohibition against commercial transactions
in kidneys, the economic shortage would be completely eliminated. However, it also
maintains that because even in a free market the opportunity cost of the marginal kid-
ney would, at some point, exceed the demand price, some people who needed a kid-
ney transplant would still have to do without. Thus, although there would be no
shortage in the economic sense, a medical shortage would exist.2This proposition is
2. Obviously, if the quantity demanded equaled the quantity supplied at a quantity less than that necessary
to provide a kidney for everyone who needed one, a medical shortage would exist despite the absence of an
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A FREE MARKET IN KIDNEYS: EFFICIENT AND EQUITABLE ✦375
the faulty analytical basis of the notion that with a free market for kidneys only the rich
would receive transplants and of the normative conclusion that allocating such an
essential scarce resource on the basis of wealth is morally repugnant.
The key point to be made here is that in addition to eliminating the economic
shortage, a free market in kidneys, in conjunction with the current system of financing
transplants, would also eliminate the medical shortage.3That is, no person who could
benefit physically from a kidney transplant would need to go without one.4This outcome
results from the conjunction of two factors. First, because only a tiny fraction of the
more than 270 million Americans requires a kidney transplant, the need is extremely
limited quantitatively. Second, the federal government is the de facto payer-of-last-
resort for virtually all kidney transplants. Together, these two factors cause the
demand curves for transplants and hence for the requisite kidneys to be truncated at
a price greater than the opportunity cost of providing the marginal transplant and its
requisite kidney.5Consequently, the demand for transplants and hence for kidneys can
be satiated.
economic shortage. Similarly, the use of a nonmarket system to allocate the kidneys procured through a free
market necessarily entails that although the economic shortage would be eliminated, a medical shortage
would persist. On these points, see Barnett and Kaserman (1995, 514); Barnett, Beard, and Kaserman
(1993, 671); Barnett, Blair, and Kaserman (1992, 376); Kaserman and Barnett (1991, 57, 60– 61); and
Barney and Reynolds (1989, 17).
3. Under current law, virtually all expenses not covered by private insurance are covered by either Medicare
or Medicaid or both (Your Medicare Handbook 1995; Medicare Coverage of Kidney Dialysis and Kidney
Transplant Services 1995).
4. We do not assume that the subsidized demand for kidneys would be the same as the unsubsidized
demand. Subsidization would probably increase the demand. However, we assume that then-current stan-
dards of the medical profession would determine who could benefit physically from a kidney transplant. It
is possible that rent-seeking behavior by those in the transplant industry might result in liberal standards,
but such a problem would probably be minor, and in any case the situation would be an improvement over
the current situation. Therefore, only those who could benefit physically from a kidney transplant but, for
whatever reason, chose not to have one would not receive one.
5. It is theoretically possible that the federal government, in its role as third-party payer-of-last-resort, would
set the subsidies for kidneys so that the demand curve would truncate at exactly that quantity at which the
price equaled the marginal cost, and thus no rents would be generated. However, the likelihood of that event
is virtually zero. To see why, consider, first, that if a significant fraction of Americans needed a kidney trans-
plant, the price necessary to generate the requisite quantity of kidneys might be so high as to preclude the
government’s acting as third-party payer-of-last-resort in all cases. In that case, the demand and supply
curves would intersect at a quantity less than that at which the demand curve truncates; the economic short-
age would be eliminated, but the medical shortage would not be. Second, with the federal government act-
ing as third-party payer-of-last-resort, it would set, de facto, the price of kidneys. Neither the politicians nor
the bureaucracy would know the exact price that just equaled the marginal cost of kidneys at the exact quan-
tity that would eliminate the medical shortage. The government, in setting the price, would have to weigh
the costs and benefits of erring by setting the price too low against the costs and benefits of erring by setting
the price too high. It seems obvious that the government would rather err by setting the price too high. In
that case, the quantity supplied would exceed the quantity demanded, allowing the government to exercise
a choice with regard to suppliers and providing a kidney to everyone eligible to receive one. If the govern-
ment set the price too low, some eligible potential recipients would not receive a kidney. That outcome
would not be politically palatable, as, no doubt, the “victims” would be both highly visible and highly vocal.
Moreover, politicians and bureaucrats would have another incentive to set the price above the marginal cost,
even if they knew it: the creation of rents. By setting the price above the marginal cost, rents would be
created, and, as is to be expected in the political process, such rents would be dissipated to the benefit of the
political class, as individuals engaged in rent-seeking activities in pursuit of those rents.
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376 ✦WILLIAM BARNETT II, MICHAEL SALIBA, AND DEBORAH WALKER
Our analysis is illustrated in figures 1 and 2. Figure 1 illustrates the situation in
which the purchase and sale of kidneys are legally prohibited. The demand curve for
kidneys when there is a third-party payer-of-last-resort is D2. At QMAX, the maximum
number of kidneys medically needed, that demand curve is truncated (that is, the
demand becomes perfectly inelastic) at a price greater than zero. The demand curve
for kidneys when there is no third-party payer-of-last-resort is D1. Because some indi-
viduals who need kidneys are very poor, that curve meets the quantity axis at a price
of zero, indicating that the marginal demander of a kidney would not be able to pay
any price.6The supply curve for kidneys (SK) is truncated at the maximum quantity of
donated kidneys; that is, it is perfectly elastic at the price of zero up to the maximum
quantity donated, at which point it becomes perfectly inelastic. At the price of zero,
there is both economic and medical shortage of kidneys equal to the difference between
the maximum number of kidneys needed and the number donated (QMAX –– QP=0).
Finally, at the quantity of kidneys donated, the demand price exceeds the supply price,
indicating the existence of rent and hence attendant rent-seeking behavior.
The reality today is that the demand for kidneys is subsidized because the federal
government acts as a third-party payer-of-last-resort. Figure 2 illustrates the situation
of a free market for kidneys in the presence of a such a third-party payer-of-last-resort.
The demand curve (D2) is the same, as in the case of the legally prohibited market for
kidneys. However, the supply curve is different. It would no longer be truncated at
the quantity of donated kidneys;7rather, from that point on, the quantity supplied
would increase in response to offers of higher prices. The market would “clear” in the
sense that the quantity supplied would equal the quantity demanded at QMAX.
However, at that quantity, the demand price would exceed the supply price, indicat-
ing the existence of rent and attendant rent-seeking behavior. However, because the
market would clear at QMAX, there would be neither economic shortage nor medical
shortage. Every person who needed a kidney could get one.
Figure 2 also illustrates the situation of a free market for kidneys in the absence
of a third-Party payer-of-last-resort. The demand curve (D1) is the same as in the
case of the legally prohibited market for kidneys. And, again, the supply curve is
different, as previously described. In this case, the market would clear where the
quantity demanded equaled the quantity supplied (PMC, QMC), and no economic
shortage would exist. At the market-clearing quantity, the demand price would equal
6. The demand curve for kidneys without a third-party payer-of-last-resort (D1) must lie below the demand
curve for kidneys with a third-party payer-of-last-resort (D2), at least at the maximum number of kidneys
needed (QMAX). There would be no need for government to act as the third-party payer-of-last-resort if
private charity were sufficient to assist poor and uninsured people who needed a kidney transplant.
7. The free-market supply curve for kidneys (SKin figure 2) is drawn as though the number of donated
kidneys would not change with the advent of a free market for kidneys. In reality, the number of donated
kidneys might increase, decrease, or remain the same. See note 16.
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A FREE MARKET IN KIDNEYS: EFFICIENT AND EQUITABLE ✦377
P
PDD2
D1
D2
SK
D1
SK
QMAX
QMAX Q
QMC
PS = 0 QP=0
0Q
Amount of Medical Shortage =
Amount of Economic Shortage at PS = 0
Figure 1
Regulated Market for Kidneys
Figure 2
Unregulated Market for KidneysP
PD
PS
PMC
0
D1 = demand for transplantable kidneys without a third-party payer-of-last-resort
D2 = demand for transplantable kidneys with a third-party payer-of-last-resort
SK = supply of transplantable kidneys
QP=0 = number of transplantable kidneys donated when purchases and
sales of kidneys are prohibited
QMAX = maximum number of transplantable kidneys needed
PD = demand price for kidneys at the relevant quantity
PS = supply price of transplantable kidneys at the relevant quantity
PMC = market clearing price of kidneys with a free market in kidneys and
without a third-party payer-of-last-resort
QMC = market clearing number of kidneys with a free market
in kidneys and without a third-party payer-of-last-resort
Legend
Amount of Medical Shortage at PMC
TIR_Wntr'00b_Artcls_(325-428) 1/2/01 9:48 Page 377
THE INDEPENDENT REVIEW
378 ✦WILLIAM BARNETT II, MICHAEL SALIBA, AND DEBORAH WALKER
the supply price (PMC), indicating that neither rent nor rent-seeking behavior would
exist. However, as the market would clear at a quantity (QMC) less than the quantity
medically needed (QMAX), there would still be a medical shortage equal to that dif-
ference (QMAX – QMC). Note, however, that even in this case the medical shortage
would be smaller than that experienced in a regulated market.
Two additional points are relevant. First, the nonprice rationing system necessi-
tated and mandated by current policy of allocating the relatively few donated kidneys
is necessarily, at least in part, arbitrary and coercive and thus inequitable (Carlstrom
and Rollow 1997; Blair and Kaserman 1991; Hansmann 1989).8The literature indi-
cates that certain groups in society are currently underrepresented among those
receiving kidneys. These groups include the elderly, people with physical disabilities,
people with mental disabilities, and minorities (Kifner 1988; Kjellstrand 1988; Held
et al. 1988; Jonasson 1989). However, as A. L. Caplan (1992) has pointed out, “In
order to know whether the distribution of organs for transplants in the United States
is fair and equitable, it is not sufficient to look at data on who did and did not get
transplanted [sic] in any given year. . . . All that any pattern of distribution proves is
that there may be reason for concern about inequity. . . . [T]he real issues in thinking
about fairness with respect to organ transplants are what reasons govern the policies
that exist, whose values they reflect, and what means exist for challenging the policies
and for holding those who enforce them to account” (162–63).
We have already demonstrated that in a free market for kidneys, all individuals—
regardless of race, age, and so forth—would be able to receive one. Therefore, if the
current system is discriminating unfairly, a market for kidneys would correct this injustice.
Second, a free market for kidneys, in addition to supplying all that are needed,
would increase the quality of the kidneys transplanted, as others have argued (Barnett,
Blair, and Kaserman 1992; Blair and Kaserman 1991), as well as the quality of the
entire transplant process.
In sum, the literature maintains that a free market for kidneys would increase the
quantity of kidneys available for transplant, eliminate the economic shortage, and
decrease but not eliminate the medical shortage. Therefore, an insufficiency of trans-
plantable kidneys would remain, necessitating nonprice rationing. Moreover, the use
of price as the rationing mechanism is seen as the source of inequity, the poor being
priced out of the market. This conclusion is incorrect, as our analysis has shown. A
free market for kidneys, combined with the current system in which government is the
third-party payer-of-last-resort, would eliminate the medical shortage as well as the
economic shortage, thereby totally eliminating the need to ration kidneys. Because
8. The economic shortage created by the current system requires a non-price rationing mechanism in order
to allocate each donated kidney to a specific recipient. Even if the criteria by which the kidneys are rationed
were applied in a completely objective fashion, by their very nature the criteria themselves must be subjec-
tive and therefore to that extent arbitrary and inequitable.
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A FREE MARKET IN KIDNEYS: EFFICIENT AND EQUITABLE ✦379
everyone, poor as well as rich, who needs a kidney would get one, a free market for
kidneys would be more equitable than the current system.
The Supply of Kidneys: Equity Considerations
As mentioned earlier, some contributors to the literature have called for a restriction on
the sale of kidneys for ethical reasons, based on the plight of the poor in particular. We
have already explained why a poor person would be able to receive a kidney if it were
legal to buy and sell them, given today’s reality of government as payer-of-last-resort.
But there are other equity considerations to explore concerning a market for kidneys.
Human and Nonhuman Capital
The more human and nonhuman capital one inherits, and the more one develops
such capital, the higher is one’s potential material standard of living. Human capital
consists of intellectual capital and physical capital. Although all three forms of capital
(physical and intellectual human capital and nonhuman capital) are heritable, they are
not all equally so.
Human capital can, to some extent, be passed on to one’s family, friends, col-
leagues, and acquaintances, genetically and through personal example, education, and
training.9Such capital is, in some ways, very fragile and can be destroyed in an instant
by physical or mental incapacitation or by sudden death. And, inevitably, it is annihi-
lated upon one’s death. At present, we know so little about the gene pool and how to
manage it that the transfer of genes to one’s descendants is beyond control. More-
over, personal example, education, and training are far from perfect guarantors of a
successful transfer of intellectual capital, as most anyone with children can attest.
Nonhuman capital also can, to some extent, be passed on to one’s family, friends,
colleagues, and acquaintances.10 Nonhuman capital can also be destroyed (for exam-
ple, by fire), or it can lose value by depreciating, in the case of real capital goods, or
by a decline in market value, in the case of financial or real capital. Nevertheless, it
would seem that, usually, it is easier to pass on nonhuman wealth than human wealth
to one’s heirs.
As the income one earns from one’s human capital increases, it becomes possible
to make substantial additions to one’s nonhuman wealth and therefore to earn even
greater income, of which an ever larger proportion would be attributable to non-
human capital. Thus, in effect, one converts some human capital, particularly intel-
lectual capital, into more durable and ipso facto less risky and more valuable capital.
9. It can also be passed on, to some extent, to total strangers through one’s writing and speeches.
10. It can also be passed on, to some extent, to total strangers through gifts.
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380 ✦WILLIAM BARNETT II, MICHAEL SALIBA, AND DEBORAH WALKER
This conversion increases one’s ability to make intergenerational transfers of capital.
Moreover, income earned from human capital can be used to make intergenerational
transfers in the form of payments for education, training, and health care for one’s
family members. Such processes are normal for the rich, increasingly common for the
middle class, and rare for the poor. Therefore, the rich and the middle class are in a
better position to convert human capital to nonhuman capital and hence to give their
children a head start with respect to material standards of living.
The poor, by definition, have little capital, especially nonhuman capital and intel-
lectual human capital. A relatively large part of their meager capital takes the form of
physical human capital. It is quite likely that some poor people would avail themselves
of an opportunity to convert some nonessential part of their least scarce and most
fragile form of capital—physical human capital—into a more durable or more valuable
form of wealth. However, the prohibition against the purchase and sale of kidneys
forecloses that option to them, insofar as it involves the sale of a kidney. It effectively
prevents them from making choices that they believe would increase their well-being
(Blair and Kaserman 1991).11 The current prohibition is paternalistic, and as such it
is dehumanizing. Adults, because they are poor, are treated as if they are incapable of
making decisions in their own best interest. Rather, government officials make one-
size-fits-all decisions for them, with no knowledge whatsoever—much less personal
knowledge—of them as individuals or of their individual situations and values.
Equity and the Current System
Of course, as with virtually all governmental interventions into the free market process,
so also does intervention in the market for kidneys have a negative impact. And, just as
such negative impacts are almost always felt most heavily by the poor—they of all
members of society being the least able to protect themselves from the predations of gov-
ernment—so also in this case we would expect the poor to bear the brunt of the prohibi-
tion against the sale of kidneys.12 That is, we would expect the poor, as a group, to par-
ticipate relatively more than other groups as sellers in a free market for kidneys.13 Thus,
the prohibition against the sale of kidneys may be depriving the poor of one of their more
valuable opportunities to enhance their well-being and that of their families (Barnett,
Beard, and Kaserman 1993; Blair and Kaserman 1991; Carlstrom and Rollow 1997).
11. We are not suggesting that an individual be allowed to sell organs essential to life, health, or normal
functioning. However, current law permits the sale of some nonessential body parts—hair and fingernails—
and even one essential body component, blood—though blood, of course, can be regenerated. Because
only one functioning kidney is essential to a normal life, an individual with two healthy kidneys incurs only
a minor risk to life and health from the removal of one kidney, whether for sale or for donation.
12. Those who need a kidney but cannot get one under the current law bear the brunt of the prohibition
against the purchase of kidneys.
13. There is no reason to suppose that only poor people would sell kidneys. The decision to do so would
be very subjective.
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A FREE MARKET IN KIDNEYS: EFFICIENT AND EQUITABLE ✦381
14. For example, for some if not all of those who do receive kidney transplants under current policies, the
quality of the transplant is suboptimal because they are prohibited from acquiring through the market a
kidney that would be a better match than the donated one they actually receive.
15. Vining and Schwindt (1988) state that “Handicapped Honduran children are allegedly being adopted
for use in an international ‘body parts’ trade” (706). They cite “Babies Sold for Spares,” Vancouver Sun,
January 3, 1987, A4, as their source.
16. What effect a market for kidneys might have on donations is unclear. The reduced risk resulting from
the existence of such a market might induce some to become donors who otherwise would not have
donated. However, the availability of remuneration might cause some who otherwise would have become
donors to become sellers instead.
As we have shown, the thinking that underlies current kidney transplant policies
is erroneous. Moreover, as others have shown, many of those who support the current
policies do so because the policies benefit them, albeit at the expense both of those
needing a kidney transplant but prevented from receiving one and of those willing to
sell a kidney but prohibited from so doing, as well as of others.14
Finally, it should be noted that the current system also leads to such ethical hor-
rors as the harvesting of body parts from unwilling providers, especially children.15
Kidneys and Risk
For most potential sellers of kidneys, the most significant cost would be the risk to life
and health from having to live with only one functioning kidney. However, as
explained earlier, the very existence of a free market for kidneys, in conjunction with
a third-party payer-of-last-resort, would virtually eliminate such risk, thereby greatly
reducing the cost of selling a kidney.16 Therefore, even if there is some truth to the
argument that because “paid organ donors will always be relatively poor, and may be
underprivileged and undereducated, the donor’s full understanding of [the] risks
cannot be guaranteed” (Sells 1993, 2983–84), the argument becomes moot when
the risks are negligible for everyone who donates or sells a kidney.
To put this issue in perspective, consider that the state does not prohibit people,
rich or poor, from voluntarily risking their lives and health in unremunerated endeavors
such as sky diving, scuba diving, mountain climbing, or bungee jumping. In fact, some
people are lauded for excelling at such endeavors. “If the rich who take risks for pleas-
ure or danger money are not misguided, it is difficult to see why the poor, who propose
to take risks for higher return, should be regarded as so manifestly irrational as to need
saving from themselves. You might think . . . that the poorer you were the more rational
it would be to risk selling a kidney” (Richards 1996, 386). Moreover, in some cases, the
state not only allows people to place their lives and health at risk but actively encourages
them to do so and then, in conjunction with the broader society, remunerates them
financially or with approbation for risking their lives and health (for example, race car
drivers, fire fighters, and police officers). In some cases, the state actually requires,
under pain of severe penalties for noncompliance, that certain people place their lives
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382 ✦WILLIAM BARNETT II, MICHAEL SALIBA, AND DEBORAH WALKER
in great risk of extreme harm or even death and often at a significant financial cost to
the individuals concerned. This requirement is imposed, of course, when the state
itself expects to benefit. We have in mind conscripts, especially those in the infantry
and other high-risk military jobs, especially in wartime. In the light of the foregoing
observations, it is difficult to understand why it is objectionable for an individual to
incur a negligible health risk17 through the sale of a kidney in order to earn income
and, in the process, prevent a premature death and improve the life and health of a fel-
low human being. Certainly, in such a case the purpose served by the risky act of giv-
ing up a kidney is as noble as the purposes served by any of the aforementioned other
risky actions.
Potential Problems
Surely there are potentially significant problems with a free market for kidneys, and
therefore certain regulations may be appropriate. One potential problem would be
the harvesting of kidneys from the bodies of unwilling people—which, of course, is
much more likely to be a problem under the current system. At present, a wealthy
person in desperate need of a transplant but unlikely to receive one because of a low
ranking on the waiting list may be tempted to acquire a kidney illegally by theft from
an unwilling “donor.” In a free-market situation, such a temptation would not arise.
Nevertheless, even in the free market, some evil people might acquire kidneys by
theft from unwilling donors and then sell such ill-gotten kidneys to unsuspecting
buyers. It would, however, be easy enough to design and operate a tracking system
that, combined with a relatively low price for kidneys legally exchanged and with
relatively high criminal penalties for such crimes, would eliminate this possibility as a
source of concern.
Another potentially significant problem has to do with truly informed consent.
Again, it would be easy to design and implement a system with built-in safeguards.
Currently there are strict rules concerning informed consent to certain medical
procedures. Such rules could be made applicable to the sale of a kidney. Further, a rea-
sonable waiting period could be mandated.18 Such a system, when combined with the
potential for malpractice suits, would provide protection against uninformed deci-
sions and might well prove to be virtually foolproof.
17. If the sole remaining kidney became impaired after an individual had sold a kidney, that individual could
simply enter the market, financed if necessary by the payer-of-last-resort, and acquire a suitable replace-
ment, save in the case that the impairment occurred so suddenly and was so serious that the seller died
before a transplant operation could be performed, a most unlikely case.
18. The well-established contract law dealing with one’s capacity to enter into a valid contract could be
applied directly, or it could be modified as deemed desirable before application—likewise for consumer-
protection laws, the relevant parts of which could be applied to such sales. Obviously, such safeguards could
and should be designed to prevent, inter alia, such decisions from being made under duress.
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Allowing a legal market for kidneys might also create an increased moral hazard
because current law, besides prohibiting purchases and sales of kidneys, makes the
state the third-party payer-of-last-resort. Some people might be less concerned with
the wear and tear of the kidney(s) they currently possess and therefore engage in
behavior that would increase the risk of impairing their kidney(s), thereby increasing
the likelihood that a transplant would be required, because they would know that if a
transplant were to become necessary, the combination of the state as third-party
payer-of-last-resort and a free market for kidneys would ensure that they would
receive the needed transplant. Such moral hazard is insignificant currently because of
the shortage of kidneys. However, it seems doubtful that this type of moral hazard
would rise to such a significant level that we would be better off with the current sys-
tem and with the unnecessary suffering and premature death it makes inevitable.
Conclusion
Current law that prohibits the purchase and sale of kidneys has inefficient and
inequitable consequences. A free market for kidneys, in conjunction with third-party
payers, would eliminate the negative effects of the current system. The economic and
medical shortage of kidneys would be eliminated, and everyone who could benefit
physically from a kidney transplant would receive one. No longer would more than a
thousand people die prematurely each year for want of kidney transplants. No longer
would tens of thousands of people suffer while waiting, many of them in vain, for a
suitable kidney to become available by donation. No longer would necessarily arbitrary
life-or-death decisions have to be made to determine the allocation of artificially scarce
kidneys. And no longer would society’s scarce resources be squandered in the political
competition to gain control of artificially scarce kidneys and their attendant rents.
Moreover, a free market for kidneys would create positive effects. It would elim-
inate the current risk that those who provide a kidney for someone else might them-
selves later need a kidney transplant and because of the shortage of kidneys be unable
to receive one. In addition to eliminating both the economic and medical shortages
of kidneys, it would also give rise to market competition that would increase the qual-
ity of transplants, in every dimension imaginable, and of the transplant process, and
increase the quantity of kidneys available for transplantation. (In addition to the kid-
neys becoming available in the market, it is quite possible that the existence of the
market for kidneys would increase the quantity of donated kidneys by reducing the
donators’ risk.) People would be able to convert a nonessential part of their physical
human capital into more valuable forms of wealth, both human and nonhuman.
The elimination of the negative effects of the constrained market and the creation
of the positive effects of a free market for kidneys increase efficiency and enhance equity,
suggesting that the current law is extremely detrimental to the well-being of our society
and should be changed to permit a free market in kidneys. Sad to say, it is the current sys-
tem of kidney procurement that is immoral, not the proposed free market for kidneys.
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THE INDEPENDENT REVIEW
384 ✦WILLIAM BARNETT II, MICHAEL SALIBA, AND DEBORAH WALKER
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