0:33 Intro. [Recording date: September 11, 2015.] Russ: This episode is a follow-up of sorts to the interview I did this summer with Alvin Roth. In that interview we talked about some of the creative ways that Roth and others have helped encourage kidney donation. And at one point in that episode Roth mentioned in passing that there's only one country in the world where it's legal to buy and sell kidneys. That country, being Iran. And I almost asked Roth about that, what he knew about it. But I missed the chance. The interview moved along. And that was that. And then, as fate would have it, a few weeks later Tina Rosenberg, author and writer at the New York Times, wrote a piece in the NY Times on the Iranian kidney market and the possible implications, in a second piece that she wrote for the United States. And she is our guest today. Tina, welcome to EconTalk. Guest: It's a pleasure to be here. Thanks. Russ: So, here in the United States, there are a lot more people who want a kidney transplant than there are kidneys available. And this is true in most countries in the world. What happens to those folks generally who are desperately in need of a kidney because their kidneys aren't working? Guest: Well, some of them have relatives or friends who can donate a kidney, and therefore, they can have that transplant done. Kidney matching is fairly easy to do. There's a lot of leeway. It's not anywhere near as difficult as trying to find, for example, a match for a bone marrow transplant. So, in a lot of cases that does happen. The people who don't have, that, however, have to go on a waiting list. And in the United States that waiting list varies a lot by region but in some places it can be as long as 10 years. And in the meantime, they are on dialysis. And a lot of people don't survive that long. Russ: And dialysis I think is about $80,000 a year, is that correct? Guest: I think that is right. Yes. Which is paid for, by the way--this is the one kind of treatment that Medicare pays for no matter how old the patient is. Russ: Yeah, it was a strange thing. If I got this number correct, I think 28% of Medicare's budget is dealing with kidney problems. Which is rather surprisingly large, at least to me. Guest: Wow. Wow. I did not know that. That is amazing. Russ: I hope it's a true statement. I think it is. I've got a few other facts here, just at this stage. It says there are currently 123,000 or so people waiting for transplants in the United States, of any kind; 101,000 are waiting for kidneys. That's as of April of this year. So, think of 100,000 people. In 2014, there were 17,000 transplants. That's a huge number. It's wonderful; not when there are 100,000 people waiting. And of those 17,000, 5,000 or so came from living donors and about twice that many came from people who had died in a car accident or other ways that allowed them to donate their kidney. Guest: Right. We forgot about that. That's very important. Deceased donors are very important. And obviously they can give two kidneys instead of one; they can save two lives. Russ: And a few last facts: Over 3000 new patients are added to the kidney waiting list each month. Tragically 12 people die each day--twelve--waiting for a kidney transplant. And in 2014, that was 4,270 people who passed away; and another 3,617 became too sick while waiting to be able to receive a transplant. So, this is a terrible, terrible problem. And my understanding is it's getting worse, as diabetes is growing. Guest: Yeah. So, obesity is a big problem; that is causing diabetes, and diabetes causes kidney failure. So, with rising obesity and diabetes rates, people needing kidney transplants, that number has been rising and rising.

4:48 Russ: So, what happens in Iran that's different? The only country that allows--there's a lot of black market activity in kidneys around the world. But in Iran, it's legal. So, what happens there. Guest: Well, when I first heard that Iran pays kidney donors, I thought: that's a big black market right there. But that is actually not the case. It is not a black market. In some ways it's a response to a black market. Because if you can buy a kidney legally then you don't have to do one under the table, which leads to all sorts of abuses. Iran, out of necessity, after the Revolution--well, let me just back up. After the Revolution in 1979, Iran was broke. Their assets were frozen overseas. And so they decided they couldn't support people on dialysis, because people on dialysis is actually much more expensive than providing a kidney transplant, because a kidney transplant you could do once, and dialysis you do forever. So they started sending Iranians who needed kidney transplants overseas, mainly to Britain, to get them, all expenses paid. And that, then, became unsustainable for them. So, they said, 'We are going to start a program where we pay kidney donors.' And the state set up a price. There was a system that was run by kidney patients, essentially. There was a lot of testing done: medical testing, psychological testing, and financial counseling, for people who were coming forward to try and sell their kidneys. And very important: The rule that you had to be the same nationality as your donor. Which meant that people could not come from overseas and get kidneys from Iranians. Only Iranians could get kidneys from Iranians. And Afghan refugees had to have donors who were also Afghan refugees. So, they started the system where they eliminated essentially their kidney waiting list. People could get matched instantly. In fact, it was the donors who were on a waiting list. 'I want to donate my kidney; I've gone through some testing; and now I'm just waiting for the right patient to come up.' And that worked quite well for a while. It works considerably less well today, largely because of budget issues. But it is the donor system that is still in place in Iran, and still has essentially removed from the equation the long wait to sign a kidney donor.

7:34 Russ: So, let's talk a little bit about the financial, the monetary part of this. There are costs to doing the operation, the transplanting, the removal of the kidney and then the transplanting of the kidney into the recipient, obviously. There's costs associated with testing, counseling pre-/post-op, etc. And in addition there's the payment for the kidney itself. So, try to describe how that fits together. Guest: Right. Well, the medical costs are paid by the government. That is something that is not a burden for the patient. However, in the beginning, it was also the government that paid the kidney donor. There was a regulated system where the government paid a donor the equivalent of about $3,500, which was-- Russ: A lot of money-- Guest: A lot more than it does now. And it wasn't called a 'payment.' It was called a 'gift' for your altruism. And also you could--the donor could negotiate with the patient for more money--the patient could also provide an extra gift for altruism. And that negotiation was conducted in private, so nobody knew what happened. If the donor was being extortionist, then the patient could complain and would instantly be assigned another donor. So, donors didn't have a huge amount of leverage in that situation. So, that was really the cost to the patient. Over time, however, the government payment has eroded. And now, essentially, it is the patient who is paying the donor. And that has created lots of problems, because poor patients can't do it. There is a lot of charity to help poor patients pay donors, but in some regions of the country they are particularly poor--like in the Kermanshah region, that charity runs out about halfway through the year. And so essentially their kidney donor system has broken down as of July. Or, halfway through the fiscal year in Iran. But that's how it's supposed to work, now. Mainly the payment now comes from the patient. Russ: And there's presumably some culturally or market-based combination of both, priced, I assume well established there. I assume it's not--the prices aren't all over the map, except by region. They are all over the map because they-- Guest: They are not. In fact the government-- Russ: Because it's not a national market, it's a regional market. Guest: That's right. Russ: Go ahead. Guest: The government has set a price, actually. It's just about--it's over $5000. And the government pays $350 of that. So, all the rest is on the patient. Russ: And as you say, there are some charities that help with that. They may not do so well in some settings, some parts of the country, some types of patients who are so poor they struggle to pay that. But overall, it works pretty well. There are some other problems with the system, though, that people complain about-- Guest: I'm not sure I would say that it works pretty well. The money is a big problem. Russ: Why? Guest: I mean, the interesting thing about the Iran system is that, to me, this is a fairly poor country that is doing it. And the problems it has run into are poor country problems. They are not problems that are inherent in the idea of paying kidney donors. Rich countries could adopt this system and do a much better job with it, and not have these issues--like, for example, running out of money halfway through the year. That's why I was interested in writing about Iran. But for them, the huge budget cuts in the system have been a very big issue that really means its--you know, basically if you can pay for a kidney you can get one; and if you can't, in a lot of places, you have to wait a long time.

11:27 Russ: But there are other issues that people worry about. One of the things you wrote about was the post-op experience: there's not a lot of follow-up. Some of the patients deliberately, either find it costly or they don't want to be dealing with the system after they've made the donation, gotten the money. So, talk about what some of those issues are. Guest: That's right. Yeah. They've found it very difficult to make sure that after the operation the kidney donors get adequate medical follow-up. And they are supposed to get a year of health insurance, although now I think everyone in Iran gets free health insurance. But a lot of people didn't come in again, and they found that the donors had given the transplant organizations fake telephone numbers. Now, why would they want to do that? One reason is because donors are paid, it's a bit stigmatized. People assume, 'Oh, if you are donating your kidney, you are a drug addict and you want money for drugs.' In fact, that's almost never the case because those people are screened out. There is even financial counseling, so organizations won't allow kidney donors to donate a kidney unless they feel that the money they are going to get is actually going to solve their financial problems. If it's only going to make a small dent in it, these people sometimes get turned down. So, it is stigmatized. But I just read a very interesting study that said even with related donors--people's friends and family--those donors are often loath[?lost?] to follow up after the surgery. Russ: Maybe they don't trust-- Guest: I'm not sure what that means. Or if they don't feel like they need it. It's a perfectly safe operation. We don't need a kidney; your chances of survival with one kidney are essentially the same as with two, because if you are going to get an infection, you are going to get it in both kidneys anyway. So, there's not always a lot of need for medical care afterwards. Russ: Well, I understand the idea that you don't want to go into a doctor's office if you feel okay, because they might want to take something else out. Guest: Which they won't pay you for. Russ: Right. There's a certain unease, I'm sure--this is a natural human thing about coming back into the facility. I would think, unless you have some serious problems, you probably just say, 'I think that's done.' There might be some psychological related issues that we're going to come back to. Guest: Exactly. Yeah. Some people really don't want to meet with their--donor and recipient meetings, which used to be in person, are now in some places not in person, because it's uncomfortable. Psychologically uncomfortable. Some people want to meet their patient or their donor, but a lot of people don't. Russ: And the same I assume is true about the recipient. They want to meet the [donor] or they don't. Guest: Exactly. Russ: I was thinking about Maimonides, the 13th century Jewish scholar: when he ranks charities. He has a ranking of charity. And the highest level of charity is to help someone get off of charity--to give them a job or teach them a skill. But once you are giving somebody money--and we've been talking about charity a little bit lately on EconTalk; it's a nice connection--you are giving people money or resources, he emphasizes the importance of anonymity. And he mentions that it's a high level for the donor not to know the recipient and the recipient not to know the donor. And in a way you think, wouldn't it be great if they knew each other? But in fact, in these situations, many times there's a deep unease because the debt is either too large to be repaid; or the person who has made that gift feels that made they are owed something that can't be paid. I don't know--I can imagine there are issues there. Guest: Yeah. It's very complicated.

15:21 Russ: So, talk about the charity that's evolved in this--you called it a middleman in your piece. This is a nongovernmental agency, as I understood it. It's a private organization that helps make this market work. Tell us about it. Guest: Yeah. It's really important to not have a middleman who makes a profit, because otherwise they would have incentives to make matches and create transplants where they would be medically inappropriate. So you don't want somebody who has a financial incentive in make transplants happen. So, there are associations in every region of Iran that are dialysis and kidney transplant associations. So it's often the patients themselves and their families. And they run these non-governmental organizations that are the places that donors come in to, to say, 'Hi, I want to give my kidney.' And then they handle all the paperwork; they send them to a place to get their medical test; etc. And they also are places that maintain funds to help people who can't pay kidney donors to get the money to do that. So that's a very important part of the process. You don't want brokers in the middle who are going to take a cut or who have a financial incentive. Russ: Well, I'm not so sure about that. We don't have an experience with such brokers, but often in markets-- Guest: Well, that's how the black market works. Right? Russ: Well, but the black market is-- Guest: That's classic. You have the rich person coming from the West, North America or Europe or Israel, and they go to some poor country and they contact their broker and they pay $150,000 and the broker gets $145,000 of it, and the poor donor gets $5000. That's not what you want. Russ: Well, it depends. It depends on the quality. When you are doing an illegal transaction it's much harder for brand name and reputation to help improve those situations. Right? So, I started to say, we don't have a lot of experience with how a for-profit broker would work in a legal market. Right? So, for example, you might argue that if it's a for profit market, groceries wouldn't have incentive to provide healthy food because they could save money on oversight. But then they lose their reputation and they go out of business. If there's an open market. On the other hand, with a black market, with, say, drugs, in the United States, say, where drugs--we are talking about recreational drugs now--it's hard to have quality. Because my brand name might be difficult to establish because it's an illegal, under-the-table activity already. So I just want to put that out there. I don't disagree with you that a nonprofit can do a wonderful job. But sometimes a for-profit is better. And I don't think we have a very good understanding of that. Certainly in the situation you are talking about, for-profit can be exploitive, especially for illegal markets; and that's--so I agree with you on that. Is there more than one of these non-profit charities that does the coordination. Is there a national one? Is there one in each region? Do you know? Guest: There's one in each region. And each region's policies are a bit different. For example, in the Shiraz region, they don't use a paid donor system. Shiraz was the first region to develop a deceased donor program. And they've been doing a really good job with that. In part they've been able to do that because of the infrastructure that was set up by the paid donor system: You need doctors who know how to do these transplants; you need hospitals that can do them; you need testing facilities. And now, Shiraz has moved into this deceased donor model; and it works well in part because if you need a kidney in Shiraz and you wait for a deceased donor, if you don't get one in 6 months, then you can go elsewhere and get a paid donor. Russ: Outside of the region. Guest: Exactly. You have that safety valve. And people don't have to wait that long for deceased donors because there is the paid donor system. So, they complement each other. There is some controversy. Some people say the establishment of the paid donor system has precluded Iran from doing the deceased donors. But, there's a lot of people in Iran who disagree with that and they feel like it's been helpful. But the good news is that deceased-donor is increasing in Iran, and that's very important. Russ: I was--I think a medical fact, which I was surprised to read; and there could be selectivity bias, selection bias here in the data, but this evidently is the raw data--that your probability, your life expectancy--I was going to say your probability of surviving--but your life expectancy when you are on dialysis versus receiving a kidney from a deceased donor versus receiving a kidney from a live donor, are very, very different. So, dialysis doesn't--tragically, you can't stay on it forever, or very long, even. It doesn't--a few years, I think, is the life expectancy. But a live-donor kidney works better in your body than a deceased-donor kidney. So, something--again, assuming there's no selection bias, in the kidney, there's something that happens, not surprisingly perhaps, in that wait, in keeping that kidney functioning in some dimension. Once the person has passed away, versus a live kidney transplant. So, live-kidney transplants are "higher quality." Guest: Yeah, that's right. Deceased-donor transplants, very often the kidney doesn't start working right away, and you have to be on dialysis for a day or two before the kidney sort of gets jump started. It is slightly different. Although, as you say, both of them are far superior to dialysis. It doesn't clean your blood very well. Most dialysis cleans about 15% as well as your kidneys do, and the toxins kill you. Russ: A live--a donation of a live kidney, the average is, I think is up to 20 years. Not the average. But it's up to 20 years survival. Which is--I don't know whether you die from kidney problems--I don't know what it means to say your life expectancy is 20 years. But that's pretty good. Guest: And you can then get another one afterwards. Russ: Yeah, I wonder if they are working on a 3-D printed kidney. Guest: That would solve a lot of problems. Russ: I can't help but think of it. And the other thought, that I'm embarrassed comes to mind, is: This is the ultimate example of the sharing economy. I mean, you have your car sitting in the driveway, or your house when you are on vacation--better example--and you are not there. So, why not rent it out? Your car at the parking lot--you can rent out somebody else's car in the parking lot now while they are on their trip. Well, that second kidney is just sitting there. So this is really the [?] of medicine, at least in Iran. Guest: I hadn't thought of it that way. Russ: I hadn't either. It just came to me, as I was reading your work. If you listened more to EconTalk, Tina, you'd think of it that way, because we talk a lot about the sharing economy. Something to look forward to.

22:58 Russ: Let's see--I want to ask you--oh, the other thing I wanted to ask you about Iran before we move on to some issues of reform: You described it as "a safe operation." It's relatively safe. It's still--I guess it's a joke: Minor surgery is something that happens to someone else. Guest: Right. Russ: A safe operation is one that's done on someone else, too, I guess. Do you know anything about how dangerous it is to be a donor in Iran, versus other countries of similar, say, income level? Or versus the United States, where we do live transplants, too--just not through an open market? Guest: Not paid. I don't. My guess would be that there is a higher death rate in Iran of donors, although probably still extremely low. But it's not because the medical care is worse. It's because when you pay donors, the people who are going to be donating their kidney are very poor people. And very poor people tend to come in sicker than middle class people. So you are dealing with a patient base that's going to have more underlying problems. Although obviously they are screened, and if people come in with obvious underlying medical issues they are not accepted as donors. So, I think there is the possibility of complication or death, and it's probably slightly higher than systems that don't have paid donors. But it isn't very high. It is still a very safe operation. I do want to say something that's important, though, which is: It's not the case in Iran that because you have a paid donor, you get your kidney two weeks after you need one. Although, I've talked to somebody whose friend got a kidney two weeks after he decided he needed one. You wait. For many reasons. They are just not reasons of finding a donor. For example, even once you've been matched with a donor, you have to go through medical tests. Your donor will go through more specific medical tests. You have price negotiations. If that donor is found not to be a match or pulls out for another reason, then you start that process again. There's also many reasons that--there are other reasons that people wait. So, there is a waiting list in Iran. And there's a lot of people on dialysis who just choose not to get a kidney transplant. Which is--the Head of the Iran Renal and Tissue Bank said that there's a lot of people who don't want kidney transplants in Iran. It's not as--I guess it's not seen as acceptable as much as it is in the United States. Where here, it's just the clear preference. Russ: Well, it's a little bit of weird thing. Right? Guest: So there are people in Iran who are on dialysis. There's lots of them. There are people in Iran who are waiting for a kidney. But the key is that in most places, except for these exceptions in Shiraz where they do the deceased donors, and in Kermanshah where they run out of money, and in other places where the budget problems have caused a problem in the system, they are not waiting for a donor; and the wait for a donor is the significant wait in I'd say every other country in the world that does transplants. Russ: Thinking about the cultural issues and joking about the sharing economy--but when you rent a house on Airbnb and you walk into a stranger's house, it's a little weird. It's a little weird to be in their house with their stuff. It's not a hotel. And it must be weird for the people renting the house to have strangers in the house. For some people, I suppose, taking someone else's kidney is just weird. There's something slightly macabre or creepy or eerie about it. I don't know. Guest: I have an, actually, a donor ligament in my body. Which is nothing like having a kidney, but it is a piece of someone else's body that's in mine, and never produced a second thought in my case. But yeah, I can imagine for some people it would be. Russ: And we should also mention: Dialysis is not pleasant. So, it's not like you just go in and, you know, you take a pill. So, people who are turning down this, either out of fear of surgery or for cultural reasons or emotional, psychological reasons--it's not an easy thing to be on dialysis. So, it's an interesting phenomenon. Guest: Definitely not. Definitely not.

27:20 Russ: So, you wrote a couple of articles that of course we'll put links up to those, at The NY Times. And they are very well written; they are extremely interesting. Which is why we're talking. Guest: Thank you. Russ: You're welcome. But I suppose there are other things that came to mind that didn't fit into those articles. And I just want to ask you: You talked to a lot of doctors in Iran; you talked to Iranians who are here in the United States; you read some books. And you purported a lot of facts; and we absorbed them as the reader. I'm wondering if you had some other less tangible impressions: Are they proud of their system? Are they uneasy about it? Are they--are there any things you could tell us about, just the impression you got in talking to people who are inside this market? Guest: It varies. In general, I think they are proud of their system. They feel that without it they would have been in very deep trouble for a long time and still would be. But they recognize, everyone who is involved with the system in Iran recognizes it has deep, deep problems. Mostly financially related. But they do feel that this is a model that other countries can learn from. The other issue with Iran, and I'm sure we'll get into this now talking about the applicability for other countries, is that they are under a lot of criticism. There is a lot of ideological objection to the idea of paying someone to donate a body part to you. Issues of exploitation. In my opinion, if you break those down and you really think through them, they don't hold up. That's my opinion. Russ: Yup; we're going to get to that. I agree with you. Guest: And so the Iranians really do have to fend off a lot of pressure from outside to abandon the system. Russ: Say that again? Guest: Pressure from outside to abandon the system. Russ: Meaning? Guest: Meaning that, for example, a lot of global transplantation societies constantly condemn this and say, you know, 'We should not be paying kidney donors.' Russ: And, so, Iran is trying to hold onto that, keep their system the way it is, you'd think. Guest: I think they are probably pretty accustomed to dealing with global pressure in many ways by now. But, yes: they are trying to hold onto that. Russ: Yeah. I'm not a big fan of Iran. But I'm happy to import something useful. This would be one of the things I would be happy to take. So, it's--I think it's wonderful that we have essentially a laboratory. We have some data, some experience--of course, as you say, if we did it in the United States we would do it differently for a hundred reasons. And the outcomes would be different for a hundred reasons. But the idea that it would obviously be an evil thing that would exploit the poor isn't generally happening. There are issues with that, obviously. But as you point out, it doesn't have to be that way. Guest: That's right. I think that's the important point. Russ: But going back to this issue of just sort of the impressions you got: So, they are under some pressure. Do they seem satisfied with it? Do they feel--do they have guilt about it, because of this--not because it's--I'm serious. Is there some embarrassment in that they pay people for their kidneys? Forget the pressure part. I'm just--for example, let's take the opposite example. People in Canada, many people are very proud that they have free health care and that the system works the way it does. It's a source of national pride for some Canadians. Some don't like it, obviously. But a lot of people, it's a psychological benefit to them that they have this system. Did you feel anything like that in Iran? Or the opposite? Guest: I don't know. I'm not really in a position to delve deeply into the Iranian psyche. But I don't feel--I did not sense any embarrassment whatsoever. I felt that people, the doctors and the economists that I talked to all felt this was a really creative solution that the world can learn from. And, yes, it's got a lot of problems. But there's nothing to be ashamed of. Russ: Just one other thing I want to emphasize. Obviously this is, the Iranian system, is a mixture of what I would call private and public. The public is going through their national health system. The private--and by 'private' I don't mean for-profit necessarily. People often assume private means for-profit, run like a business. But I think it's important to remember that there's a third leg of that system, which is, it's voluntary--in that sense it's private--it's non-profit. In this case it's working with the public to have it happen. But obviously when you say you don't want the government to do x, y, or z, it doesn't necessarily mean you want it to be all run for profit or through a business. And the middleman role that the charities play in Iran is an example of how civil society can help solve these problems in possibly ways that are much better than either for profit or purely public. Guest: Okay. And I agree with that. Russ: That's just my little soap box. Because I find it frustrating--for example, when I say things like 'I want to privatize the American school system,' they say, 'Well that would be awful. Businesses may be good at producing wheat or shirts or electronic devices, but they are terrible at schooling because they'll just hire--they'll just enroll the best students and charge them the most money.' And that could be true in a for-profit system. But we have lots of private schools that--some do that anyway; and some don't do it. They are devoted to trying to help people who are very poor and want to finance their activities through donations or other means. So I just think it's really crucial when we think about social issues that we keep that third option out there. And that's a voluntary private option that's not the government doing it.

33:33 Russ: Let's move to the United States. So, you talked to these folks in Iran and talked to a lot of doctors, and some patients it sounds like. And as you said a few minutes ago, it seems there's nothing really immoral about it. Did you have that feeling coming into this? And how if anything did your feelings change through these conversations? Guest: Oh, they changed a lot. I came in, I had two assumptions that I think I no longer hold. And one of them is that paying donors is necessarily exploitative. And the second one is: There are serious moral and ethical reasons not to pay donors. I no longer believe either of those things. Russ: So, try to put yourself back in your old shoes, or in the shoes of many people who still feel that way. What's the argument on their side? What's the exploitive argument, and what's the immoral argument? Guest: Well, the exploitive argument is: Look at what's going on around the world. You have what I described earlier, which is this wealthy tourists who go to poor countries, where they meet brokers who mistreat and exploit very poor desperate people and don't give them adequate medical care. May make, have their operation in some tent; somebody's back yard or the middle of the jungle or something. And that puts very poor people, their health, at risk. And they are forced to--they are not forced, but they are fooled into selling a kidney for far, far less than the patient is actually paying. Now, what I learned was, you do have that system in many, many poor countries. But you don't have it in Iran. Precisely because they have this regulated, paid, official system. That they are paying donors, without those issues. So that was one thing I learned. Russ: Keep going. Guest: Yeah. Then there's the moral and ethical questions. Russ: Well, let's put that--let me just comment on the first thing first; and then we'll get to the moral issues, and one of my favorite words, the 'commodification' of things. Which concerns some people; and others less so. But I understand the issue. But going back to the exploitation part: It's interesting. I don't like the operation in the tent any more than you do. But the broker collects $150,000 and gives $5000 to the poor person--that person's getting about that same amount in Iran right now. It's just that the person who is getting the kidney isn't a rich tourist who is being exploited by the brokers. In a way, ironically, it isn't clear who is being exploited. Guest: I chose that number, I chose that number arbitrarily-- Russ: You are right. It's probably more like $15,000. Guest: Who knows what it is. Russ: Good point. Fair enough. But there is an issue. Which I think is hard to keep in mind. Which is the market price or market value of a kidney in a world where it's illegal, versus where it's legal and encouraged, is going to be different because the number of donors is going to change. And the number of recipients is going to change. Because they are going to feel more comfortable using such a system. Right? To me, the idea of flying to a poor country, it's very unappealing. But I guess if my life were at stake, if I were on dialysis, I might think about spending all that money. But certainly on the donor's side, a lot more people are going to donate kidneys if they feel it's safer; if they are going to be paid. And so the market price, whatever that price is going to be, in a rich or poor country, and fits a global market--there might be something closer to a world price--it's hard to know really what that would be. So, in the United States, where a kidney operation, a kidney transplant, the operation part is very expensive, there is no cost out of pocket for anybody for the kidney. It's donated out of pure altruism or, either alive or dead. No one is getting compensated directly in cash. If we allow people to be compensated in cash, the amount that would be is very hard to know, what that would end up being in a market. Guest: Well, some economists have tried to put a figure on that. Russ: They would. They would. Yeah, go ahead. Guest: $15,000 was one that--let me see who this was--have come up with as a figure that takes into account pain and suffering, the risks, etc. Gary Becker, from the U. of Chicago--who no doubt you know well. Russ: He was my Ph.D. advisor, as it turns out. Guest: Is that right? Russ: Yeah. Guest: And Julio Elias, an Argentine economist, did a study and came up with the $15,000 figure. Now, if you translate that into Iran and you divide it by cost of living, that's about what Iran is paying-- Russ: Purchasing power-- Guest: what a person [?] patients would pay, anyway. Russ: Interesting. There's no way of knowing. It's a good starting place.

38:57 Russ: Let's get to the moral issues. Why do people object to the morality of it? What is the moral objection? Guest: Several reasons. First of all there's the idea that this is your body, and we're going to pay you to sell me a part of your body. That's a big one. And the answer to that in a sense is, 'Well, we do that in some ways.' People get paid for donating plasma in the United States, and in fact because of that we provide plasma to the world. We get paid for donating sperm; we get paid for donating eggs. So, that train has left the station, in a way. And in some ways the ethical and moral issues involved with egg donation are far more fraught than this should be about a kidney, because you are not producing another human being. Then there's the issue of, well, you know, this is really dangerous work and you are exploiting the poor by taking advantage of their poverty to lure them into doing this for money. And some people go so far as to say we shouldn't allow poor people to donate kidneys. We should only allow middle class people to donate kidneys. And the response I think to that is people do dangerous things for money all the time. There's a lot of jobs that are pretty dangerous, and people wouldn't take them unless they felt the money was worth it. Donating a kidney is far less dangerous than many other jobs. So, what's wrong with that? Russ: Just as an aside--it's always hard to remember this. When the draft in the United States was replaced with a volunteer army, a similar argument was made-- Guest: Exactly. Russ: --we're only going to get poor people. Guest: Yeah. Russ: Forgetting the fact that, well, there are some poor people. That's fine-- Guest: Isn't that true? Russ: Yeah, well it's not totally true, though. There are a lot of people who go into the army today, "not for the money." They are happy; they are perfectly happy to be paid. But there is a mix of motives. Just as I assume people would donate kidneys for a mix of motives. Poor or rich, there would be the money. That's pleasant. But they also would like the honor and glory and wondrousness of saving a person's life. And I think that's just as true for everybody. In the world of commerce, I think it's a shame that we assume that everybody in the world of commerce is "motivated by money." Money has incentive effects. It can alter behavior. It can encourage people to do something they might not otherwise do. But to suggest that's "the reason" is I think very misleading. Guest: Yes. Russ: Why did you-- Guest: I think the army, the military issue, is in some ways a bigger problem, because you have the issue of: if only poor people serve in the military, you don't have the political pressure from their families that you might have, that were, for example, very important in ending the Vietnam War. Taking away the college deferment, during the Draft in Vietnam was extremely important. Because it created a class of powerful people who had their kids serving. But that's not an issue of kidney donation. Russ: Yeah. The flip side of that--people make that argument. I think it's true. The flip side of that, of course, is that if you have to pay people to get them to risk their lives, if you go run around risking people's lives through adventurous public/foreign policy that's ineffective, you have to pay them a lot more to come into the army. No matter how, what their motivation or poverty. And so that market signal also plays a role in deterring adventurism--I would call it--or probably there are other names. But you get what I mean.

42:31 Russ: But anyway, going back to the kidneys, so, as you point out, these moral issues, to a large extent, at least for you are not decisive any longer. But for many people they are. It's just awful--to encourage people to cut themselves open for money is disgusting. It's bad especially for poor people. Your body is a special, holy, sacred thing. And therefore it's just off the table. And I think that's true, by the way, for people whether they are religious or not. A lot of people feel that way. Now that you feel differently, do you find yourself in conversations with doctors and medical folks--which we'll talk about from your article--but they haven't seen the world the way you see it. And how is that--what's it like for you to deal with that? Guest: Well, I just want to add one more piece of this. Which is that, yes, if your body is a sacred temple, then let's spare some thought to the thousands of people who die waiting for a kidney. I mean, yes, it might be: let's stipulate that it's okay; it's morally repugnant to pay someone for donating a kidney. It is certainly more morally repugnant to let someone die because they don't have one. Russ: I couldn't agree with you more. But we are in the minority right now, I think in the United States. Guest: It's changing, actually. There's some studies that show that it's not actually that much of a minority position. Russ: Well, I guess--that leads me to my less-than-attractive thought. Which is, I suspect some of the people who are putting up a stop sign for this kind of innovation in the United States either have, might have some not-so-attractive reasons for holding their views. Does that cross your mind? Guest: What do you mean? Russ: Well, let's say I'm in the kidney transplant business. And one of the ironies about this--I think you talk about this--it's a pretty obvious thought, is that the donor is not allowed to make any money, but the doctor is. Guest: Yeah. Russ: The doctor isn't expected to volunteer. Guest: Yeah. The doctor is the only person who can profit in this system. Russ: The hospital makes money. Guest: But I don't see why that would lead people to oppose paid donors. Russ: Well, because--here's my thought. I think there's two issues here. One is, by one number I saw--might not be up to date but it's within the last 5 years; this is a roughly a $42 billion--kidney dialysis is a $42 billion dollar market. Guest: Ah. Yeah. Russ: So, I could understand how it might be easy for people involved in that market, and there are a lot of people--not just the people who make dialysis machines but experts in that market--they kind of have a natural bias toward the status quo and are going to find these moral arguments more compelling. Guest: Uhhh--you make a good point. Although, frankly, there are so many people who need kidneys, and that list is going to be growing, that I don't think there is going to be any shortage of people who need dialysis. But I think, I have not yet talked to anyone who opposes this idea on what I feel are immoral grounds. People have genuine concerns. I mean, I agree with them, but they are genuine. And they are genuinely held. And one big one is: the United States sometimes sets an example for other countries. And we might be able to design a system that adopts the good parts of the Iranian model and fixes the bad ones. But then other countries--we will have essentially liberated the idea of 'it's okay to pay kidney donors.' And then you'll have lots of countries doing it who won't be able to assure that it's done without exploitation. So, that's one concern. Russ: Well, I wouldn't question anyone's motives, but I wouldn't put aside the possibility that their own self-interest colors their views, even though-- Guest: Kidney doctors don't have that interest of the dialysis companies. Russ: I'm afraid--I think they do, actually.

47:09 Russ: So that was my next point. Guest: All right. Russ: Sorry. That seems like a legitimate point, but I'm not sure it's true. So, here's the counterpart. If you ask--and this, I always find this fascinating--if you ask a college football coach what he thinks about the idea of paying players--which is an idea that has come up in the last 5-10 years as a somewhat serious proposal. It's drifted from an economist blogging about it to serious. And the NCAA (National Collegiate Athletic Association) has vigorously opposed this. And occasionally I hear a football or basketball coach interviewed where they'll say, 'Oh, it's a ridiculous idea.' And they'll laugh it off as if it's absurd. And of course they mean it. I think I heard Roy Williams react that way--Roy Williams, the coach at U. of North Carolina. I was an undergraduate there. I like the basketball team. They've got a few embarrassing scandals right now. But on the surface, Roy Williams appears to be a really fine, wonderful human being. He may not be--I have no idea. But he comes across that way. Which is of course part of his job. But when he reacts that way, you know, my first thought is: Well, he would. Because right now, college sport is exceedingly profitable. And it's an extremely competitive business. And normally that competition would encourage the payment of large sums of money to the best college athletes, and some nice sums of money to the pretty very good ones. And some of them wouldn't get paid at all, if they do it for fun. And that would be with the hopes that they get looked at, maybe have a chance to make the pros. But that would probably mean smaller sums of money for the coach. Because that's where the competitive pressure now is released. The schools that compete, instead of competing by paying the athletes, the best athletes, the highest amounts, they compete by paying the best coaches. And so I wonder if in the kidney market, the salaries to doctors would be the same in a world where donors are paid-- Guest: Where there were more kidney transplants? Russ: Well-- Guest: You think their salaries would go down if there were more kidney transplants? Russ: That's a good point. But I'm thinking of the fact that--I'd say it's an ambiguous question. That part would tend to have them paid more, because there'd be a higher demand for their services. There would be more operations done. But the amount they might get per operation might go down. It might go down dramatically. Now, of course we don't have a free market in surgical procedures. But there would be budgetary pressure. Of a different kind. Guest: I disagree. We're going to agree to disagree on this. Russ: That's fine. Guest: I do not think that is what's motivating people. Russ: Well, I don't think--again, if you asked them, they'd say no. And I would just say--let me say it in a more polite way. I don't think they are sitting around rubbing their hands together saying, 'I'm making a lot of money; this is fantastic; and I don't care that there's x-thousand people dying a year from kidney failure.' No. But the status quo is very good to them. That's maybe a more attractive way to say it. And so change is intimidating. Guest: Doctors do not like watching their patients die because they cannot get kidneys. That is not something doctors like-- Russ: So why aren't they on the forefront of this movement, why aren't they on the barricades, like you and me? Guest: They are. Let's get to that. Let's get to that. Russ: Okay, go ahead. Guest: There is a very strong movement now in the United States--in fact, I would be very surprised if it doesn't prevail, and very soon, that at least, if not compensating donors, removes the financial barriers to donating a kidney. Now, the problem is, in the United States, you can either get a kidney from someone who has died, or you can get a kidney from a friend or relative. But that friend or relative has to go through a lot to give you a kidney. They have to take a month off from work-- Russ: Yup-- Guest: to get better. They may have to travel, because they live in San Francisco and you live in Charlottesville. And they have to come for testing. They have to come for the operation. It's financially a very large burden for them. There are cases where people who are perfect matches don't donate because they can't afford anyone[?] take care of their kids one month, and they don't know if their job is going to be waiting for them. This is not an activity for poor people. And that's a very large problem in the United States. Our system is discriminatory because poor people do not have the same access to live, related donors that wealthier people do. So, there is a movement, now, to remove those disincentives. To allow compensation for lost time at work, to provide people in some cases with health insurance. People have opposed giving them health insurance for life, because who knows? You might have a complication 20 years from now from donating a kidney. And the line between compensating donors and removing disincentives is a very fuzzy one. But there is definitely almost unanimous political will for removing disincentives. Russ: Yeah--and again, to keep up the sports analogy, athletes, college athletes, some people will say, 'Well, they do get paid. They get free tuition. They get room and board.' And that's true. But it's not, I suspect, the market price. It's interesting how people will accept that. But to go a little bit farther across that line into the 'and here's a little extra'-- Guest: Right-- Russ: or a lot extra.

52:55 Russ: So to come back to your earlier disagreement a minute ago, disagreement: I think for some people it's just a philosophical disagreement that economists are much happier being on one side of than non-economists. So, your comment that some people are worried this might become a role model for other countries, who might not do it as well--My thought is: That would be glorious. That would be great. I'd love to see other countries do it, even not as well. Because it might be better conceivably than what they have. Guest: That's a good point. Russ: But it doesn't--I think for a lot of people that doesn't carry much weight. Because they just don't like the intrusion of a decentralized, possibly profit-driven market system. And I get that. I don't agree with it, but I get that. I think that is another piece of this that I think ties into the commodification issue--you are selling part of your body. People are uneasy with market forces encouraging things that they don't like. Guest: I'm thinking of what somebody told me. I was talking about a proposal that would compensate the families of people who have died for donating their relative's kidney. And the man I was talking to said, 'Oh, you don't want that, because then you would have the specter of the family fighting over who is going to get the money.' And I was thinking, 'Yeah, this is the first time the family will have fought over who gets the money of a deceased person.' Russ: Yeah. That's not a good argument. Guest: We have a time-honored tradition of that in the United States. Russ: I think all of the world. Guest: Expand it a little bit more. Russ: But, there is an issue we haven't talked about: the so-called 'slippery slope' issue. Guest: Yeah. Russ: I think the more worrisome thing is: Let's not take care of the relative because when the relative passes away we get this big windfall from the kidney donation. I think that, or the general--there's a hideous scene in a Monty Python movie of, we only take--it's a live transplant, the doctor moving a kidney from a patient, and he says, 'But I'm not dead.' And he says, 'Oh, you will be when we're done.' And of course that's some really dark humor. But of course the joke there--not the joke, the serious issue is: Will people be less if we commodify, again, some of these things? Allow relatives to be compensated. Will they be less careful about preserving life, etc.? Guest: And anyone who stands possibly to inherit money from somebody has those same financial pressures on them. Russ: It's true. Guest: Which we hope they will overcome. But it's not something--what we're talking about isn't something new, to add that extra financial pressure. Russ: Yeah, for sure. Guest: And the other problem is that very, very few people who die are medically qualified to donate their kidneys. You have to die in a certain way. You have to be brain dead and yet the rest of your organs are still working. So, that is the situation where relatives are asked to make decisions. And so what you are talking about may come into play. I think it can be an issue in that case.

56:14 Russ: The other issue I guess is budgetary at the governmental level. As our population ages, we're going to face an issue; and as we get larger, we are not just getting more numerous. I think ultimately we are going to get larger because we are going to, as you say, be more obese. We are going to be more likely to have diabetes or more likely to have kidney problems. The budgetary pressure on that dialysis payment is, I suspect going to be a part of what pushes the political system to allowing some of these innovations. Do you agree? Guest: Yes. And it's a terrible pressure. I was just reporting a story in Mexico, which is somewhat related. And they don't cover--their health system doesn't cover dialysis. So, you either pay for it yourself or you die. The reason they don't cover dialysis is, if they cover dialysis they would not be able to do anything else. Russ: Yeah. Guest: Anything. So there is that. But just as an example of how irrational Medicare can be: Medicare will only pay for 3 years of anti-rejection medicine for people who have a new kidney. Which is absurd. Because that means they are likely to lose their kidney and therefore need another one or go on dialysis. That is such an incredible false economy. But yet that's the way it works. And people throw up their hands and say this is ridiculous. But it's still the system. So-- Russ: It's very expensive. I think it's $14,000 a year for that medicine. So that's part of it. Guest: It is. Russ: But it doesn't make sense because the dialysis and everything else is even more expensive. Guest: Exactly.