0:33 Intro. [Recording date: July 6, 2017.] Russ Roberts: Sally Satel recently wrote an article with Alan Viard entitled "The Kindest (Tax) Cut: A Federal Tax Credit for Organ Donations," and that's going to be our topic for today.... So, you bring a special perspective to kidney donations. Talk about your personal story. Sally Satel: Yeah. I got a kidney in 2006; and then I got another kidney a year ago, almost a year ago today. And, when I got my first one it was sort of a surprise. A lot of people who know that they're going to need a kidney--well, by definition, they know that they're going to need a kidney. What I meant is that they have certain illnesses--they are either diabetic, or they've got lupus, severe hypertension that's been poorly managed for a while, high blood pressure. People know they are at risk for this, for kidney failure. But my case was sort of a surprise. I just went to the doctor for a regular checkup. This is the part of the story that scares everyone, because I felt completely fine. And during a routine blood draw, found out that I had--well, that I had kidney failure. Which is rather easy to diagnose. It's a test called a creatinine level. But when you go for a regular blood draw, a routine blood draw, that's one of the indexes they measure. So, they tested it again, and that was the same. So, the clock was ticking for me, because I knew from my medical training that if you have kidney failure, you need a new kidney, or you will languish on dialysis for years. And no matter how long you are on dialysis, your life will be prematurely shortened. I mean, people have lived for 20 years, even a little longer, on dialysis. Some people tolerate it better than others. That's a process where your blood is cleansed of toxins about 3 times a week for about 4 hours at a time; you go to a clinic. Most people feel very debilitated by it. The average person on dialysis can't hold a job. But some do. And, some people--it isn't as psychologically devastating to some folks. But others find it so distressing, they are actually--suicide is not that unusual. So, the idea of being tethered to that machine, while, granted, it would keep me alive. Now, if my liver had failed and I didn't get a transplant, that would be it. So, kidney dialysis does keep people alive for awhile. But it just seemed like a really, really half a life. So, I knew I needed a kidney, but I didn't know exactly when I would need dialysis. So, as I said, the clock started ticking. And it turned out I had a good year before the function got to the point where I really was becoming physically debilitated. But it was very hard finding a donor. And that's what kind of galvanized me, this whole issue of the shortage. But, just in terms of finding a donor, as I say, it was extremely difficult. It's not like every day you ask people for a body part. And I didn't have--I have a very tiny family. And, to make a long story short, none of them--I didn't feel I could ask any of them. And in fact I never really asked anyone. I would do it all differently if, heaven forbid, there is yet a third time I have to go through this--see, I'm very nice to my interns. But I would just talk about it with folks and wasn't even being coy. I just sort of thought magically, 'Oh, well some people will think of being a donor, and it will work out.' But it became pretty clear that it wasn't working out. And a lot of people actually said they would do it; and I appreciate that in that I know they wanted to be--I know they felt empathy for my situation; but in the end, basically, a lot of them got cold feet and backed out. And then you're in this terribly awkward position, because you really can't be angry. I mean it's an enormous thing to ask, and it would be incredibly presumptuous to have the expectation that they owed you anything. So, I was really getting very demoralized and about to get ready to go on dialysis. And, Virginia Postrel, who I knew, not very well, had been at a cocktail reception somewhere--this was in November of 2005--and she ran into a mutual friend and asked that friend how I was. And the friend said, 'Not so hot. She needs a kidney.' And, Virginia went--I think the next went to her computer--I remember the subject line; I still have a printout of her email--it said, 'Serious Offer.' And she said, 'So-and-so told me you needed a kidney, and if I match, I will do it.' And I think she followed up a few minutes later with another email: 'I won't back out.' And, so, she went through with it. This was March of 2006. And I'm almost as grateful to Steve, her husband, as to her, because that was one of the reasons that two of my friends, other of my friends who had seriously considered donating did not go through with it--because their spouse basically said, 'It's the kidney or a divorce.' So, you kind of underestimate how important family buy-in is, in something like this. But, you know, God bless both of them. So she did it. And clearly I got a lot smarter. And Virginia did very well and she wrote some, I think very powerful articles about the importance of donating organs. And I suspect she influenced a few people. I know an article I wrote about the whole experience back in 2007--for about 2 years afterwards, I got emails from people. It was the most gratifying thing that's ever happened to me in my life: People saying, 'I read your article and I decided to donate to a stranger.' So I feel my work is done. Anyway, so that had a happy ending. Then I took on, in addition to my various interests, at AEI (American Enterprise Institute), I also took on the interest of how to expand the organ supply.

7:53 Russ Roberts: Virginia Postrel was a guest on EconTalk, and we talked about that. It is an incredible gift, kindness, an amazing thing. I want to talk about your second donor in a second. But first I want to stick with Virginia. And you are psychiatrist--so you are somewhat, at least, if not very self-aware of the emotional component to this. How did that, the receiving of that organ, affect you? You made a joke, 'I got a lot smarter.' I think that was an allusion to the fact that you have Virginia Postrel's kidney. Sally Satel: Yes-- Russ Roberts: But how did it affect you psychologically? And how do you think it affected her? And have you and she talked about it? Sally Satel: Oh, of course. You're certainly not the first person to ask me that. But I always find that a curious question. Some people have actually said, 'Do you still see Virginia?' My goodness! Yes, I see Virginia. And she's remained magnificent. You know, as she wrote about it, and as she acted the entire time--you know, we were planning to do this, because there's quite a bit of a workup medically, and to some extent psychologically for the donor--which is done by the medical center; and you know, and rightly so. So, she acted the whole time like, 'Well, let's just get this thing over.' And, in fact--and she's written about it. She said, her attitude--these are her words: I was 'very instrumental about it.' You know: 'I had something she needed, and I knew she had no one else to give it to her, and clearly, it truly was a life and death, or at least a quality-of-life-and-death solution'--I mean, 'situation.' And she did. And I mean, while, on the one hand of course I'm just speechless with gratitude--and I would actually, occasionally feel tearful in that first year, and a few years after with what I think of what she did for me. But, it was sort of [?]--I kind of shared her sense and hoped that I would feel the same way if the tables were turned and someone I knew needed one. But, you know, the sense of--I didn't feel--of course, I kid when I said my IQ went up: I could only wish. But, people do talk about--they kind of romanticize the whole process. I felt, and especially with hearts, as you can imagine--heart transplants--but they actually feel like a sort of piece of the person, almost spiritually, you know, inside them, or they feel a little change in their personality. And both of us were sort of, 'You know, I think, listen, we just exchanged organs'--or rather, she gave me one. And again, thank God. I wish I were wealthy: I would endow a wing wherever she wanted. But, I just feel like she's--of course, I mean a bond with her that I'm sure you don't feel with even your closest friend. It has a quality that's different and almost primitive in some way. But in a charming way.

10:59 Russ Roberts: But that kidney didn't work out completely. Sally Satel: Yeah. It should have lasted about 15 to 20 years. Living kidneys last about 15 to 20 years. And ones you get from deceased people, cadaver kidneys, about 10 to 12. So, hers should have lasted longer. Also, because I wasn't on dialysis first. And that tends to also detract from the longevity of the kidney of like, a deceased or living kidney, if you've already been on dialysis for quite a while. So, I was an ideal candidate to have her kidney last, you know, quite a while. But, just make a long story short: I ended up getting pneumonia--possibly from the immunosuppressant--because you know you have to be on immunosuppressive drugs forever, so that your own immune system doesn't attack the new organ. But anyway, so I got a fairly serious pneumonia. So, then, it becomes very difficult, because in order to fight off the pneumonia, your immune system needs to be unleashed. But if it's unleashed, it's also going to attack the kidney. So it's a very delicate balance. Which I lost. Although, again, it was a gradual matter. It took about 3 years for Virginia's kidney to really, you know, for all the mileage, basically to run out. And so I knew about 2 years even before, it was probably going to fail completely, that I needed to start looking for another one. Russ Roberts: So that's rather incredible; but I just have to ask a medical question first. So, your body, 8 or 9 years after getting this kidney--which looked something quite similar to your original kidney that you were born with. It's a kidney. It's not a repurposed Lego toy or a repurposed liver: It's a kidney. And 8 or 10 years later, your body still is angry at it and would reject it if you were not on immunosuppressant drugs? Sally Satel: Oh, yeah. Russ Roberts: That's so interesting to me. I didn't realize that. Sally Satel: Oh, yes. That's true of all organs, and all transplants. And some organs are--some organs are--I think the word is 'immunogenic' than others. Which--kidneys are, bone marrow is, actually livers are--any organ will be rejected if there is no immunosuppression. But apparently people who have liver transplants need to take fewer--a smaller dose--of immunosuppressants. For some reason it's more resistant to rejection. Russ Roberts: What's the rejection --what happens? What would have happened if you didn't take immunosuppression drugs, say, a few years after? Sally Satel: Well, in two weeks, if you stop--if you stop taking immunosuppressant drugs completely, then within two weeks, 2-4 weeks, your organ just starts to fail. So, your complete metabolic milieu just goes out of balance. And if your kidney shuts down, basically--you don't, there's no way for fluid to leave your body. So, at its worst, you know, it would back up into your lungs and impede breathing. Although, by the time it gets to that part, you've been, such metabolic derangement[?] you are already somewhat delusional, or delirious, I should say. But, yeah, it happens. You know, people stop dialysis, for example, which is effectively the same thing: that's your external kidney, you could argue. Russ Roberts: Right. Sure. Sally Satel: And within about 2 weeks, if you have zero kidney function--some people always have a little residual kidney function--but if you truly have none, few people will last more than about a month. And that's called uremic poisoning--just a quaint term for it. Russ Roberts: But you got a second kidney, from--this was a stranger? Sally Satel: No. No. This is another earthbound saint. This woman is named Kim Hendrickson. And she was a kind of a witness to all this trauma during, before I met--well, as I said, I knew Virginia slightly, but before Virginia agreed to do this for me back in 2005. And Kim was a research assistant for Michael Greva [? Michael Greve?--Econlib Ed.]--I'm sure many folks probably know. He's a Constitutional lawyer who was a scholar who was at AEI at the time. And she was his assistant, and my friend. And she saw all this happening. And she thought: 'Wow, if you need another one, I'm keeping mine warm.' At the time, she couldn't do it because she was--just got married, wanted to have children; and understandably wanted to have her kids first, before she subjected herself to--it's a fairly small risk--but, you know, didn't want to complicate things for her future family. I understand completely. Also, at the time, she was--well, she still is--Blood Type B. And, at the time, you had to have the same Blood Type as your donor. But again, the science of immunology has made such progress that now you can get a kidney from a donor who doesn't even have your blood type. And, you do a little more preparation than last time. So, I had to go into the hospital a few days earlier, and then, what is called plasmapheresis: but basically they take out--they filter out some of the cells that would otherwise attack the new organ at the--right when it's introduced. And so, they were able to do that. And her kidney is working fine; and she did it; and that time around, the stress level was next to zero. Because, what made the experience of the transplant so difficult was not the surgery. You know, to tell you the truth, it's over. Right? I left the hospital in 5 days, 6 days. And I'm not that stoic, but actually all I needed was Tylenol. Not that it didn't hurt--but I mean--and then you recover. The scary parts are whether it's going to be rejected--in other words, whether your immune system will still overpower the efforts to suppress it; or whether you get an infection--because, again, you are immuno-suppressed, and they really do industrial strength immunosuppression at the time of the surgery. And that makes you very prone to infection--you are not supposed to go on a train or a crowded place or a plane for about 6 months. And I actually did get an infection and I had to go back, but only for 4 days; and the antibiotics were incredibly effective. And then I came home. And that was that. So, again, the difficult part, for me, was finding that donor; and Kim took that anxiety, just completely removed it. So, I'm so grateful.

18:21 Russ Roberts: Let's talk about the policy implications, or policy environment--which to review, which people have forgotten from our past episodes on this, which I'll put a link up to. So, let's say you were talking to me when you needed that second kidney and I'd said, 'You know, Sally, you are a nice person, but this is just a real hardship for me. But I'd do it $10,000.' Now, that's not a legal transaction, right? I cannot sell you my kidney. Can I give--I can donate a kidney to a stranger--and evidently I can donate a kidney to a particular stranger. So, there's a waiting list right now that's frighteningly long of people who are on dialysis who would like a kidney. They get one when someone just donates to the list. But Kim didn't donate to the list. She donated to you. Explain how that worked. Sally Satel: Sure. So, among living donation--and then we'll get to deceased donation--but among living donation, which accounted for--I have the numbers here somewhere--but which accounted for a little under--well, there were 18,000 kidney transplants last year, and about 5600 of them came from living people. The remainder came from, obviously from deceased; but not 18,000-5600, because you can get more than one kidney-- Russ Roberts: 18,000, because you can get two from a-- Sally Satel: Yeah. In any case, a living donor either comes from a friend or a relative. And that's the typical scenario. There are some amazing souls, called good-Samaritan donors, who just listen to EconTalk and think, 'Wow, the shortage is just terrible.' Twelve people every day die because nobody is able to give them a kidney, or they could not survive the list--which now has 98,000 people on it. So, someone listens to this, goes to a GW (?) and says, 'I just want to be an anonymous kidney donor.' So, that's called Nondirected Donation. When someone gives to someone they know, a friend or a relative, that's Directed. Another form of Directed could be--and I don't imagine this happens very much, is, if I heard that your uncle needed a kidney, and I really just didn't want to deal with it--I just wanted to give him the kidney, and I could just literally go to the hospital and say, 'Please give my kidney to Russ's uncle.' But I think that's more common in the Deceased scenario, where your neighbor is on dialysis, and heaven forbid your kid is in a terrible accident and ultimately dies and you could say, 'Please give my son's kidney to Russ's uncle.' And, so that would be a Directed Deceased. But most Deceased kidneys, which come from people who are mainly brain dead, although there are some other mechanisms, but it's mainly brain dead individuals, those kidneys, right, go to the next person on the list, which pretty much is a first-come, first-serve as far as the kidney queue. Russ Roberts: 98,000 people are on the list-- Sally Satel: Oh, Russ, it went down-- Russ Roberts: and 18,000 are available. So, that means there's 80,000 disappointed people who are going to have to wait till next year. And some of them of course don't make it. They die.

22:11 Russ Roberts: So, the first question--I'm sure someone's asked you this. It's not a comfortable question. I think it comes to mind. It's not my way of looking at the world; but there are people who look at the world this way. They would say, 'You had no right to two kidneys when there were 98,000 people on that list. You should have donated Kim's kidney--you should have asked Kim to give to the next person on that waiting list.' What's your response to that? Sally Satel: If somebody said that to me, I would ask them-- Russ Roberts: Sally, I'm really glad you are here. Right? Sally Satel: Thanks. Russ Roberts: I don't know your work as well as I could or should. But, I'm glad you are alive. But it's an interesting question of, when there's a shortage like this, of who should get this precious thing. And-- Sally Satel: Yeah. Right. Right. Well, there are two answers to that. And I would truly ask the person who asked me that question: Why don't they consider donating? My other question to them is, would you please join our effort to change, frankly, the law--the ban--against rewarding people who would like to save someone's life? Let's be able to do that. Russ Roberts: I mean, my view is: Kim is allowed to give her kidney to whoever she wants, and if it happens to be you, that's her choice. So, I have no problem with it. But I am sure there are many people who don't think she should have that choice, and who would resent or judge--that's the system for that aspect of it. Sally Satel: Yeah. If they did though, the reality is, Kim would say, 'Well, tough. Now, I'm keeping it.' Russ Roberts: Right.

23:48 Russ Roberts: The other question I had, and I don't know if you know about this, so you can certainly say you don't know. But, my understanding is that if you are a person of means and you don't want to wait on that list, you can go to certain countries in the world. We talked about--I think it's Iran--is it Iran that has--? Sally Satel: Iran, but you couldn't go there. But, yes. This is a-- Russ Roberts: This is a separate issue. But a person could; or they could go somewhere else, where an Iranian kidney could be transferred to you, or it could be Turkey. Who knows where. But I would think that, given how valuable this is, you'd think it would be difficult to keep people from, stopping people from making the transaction. I guess the barrier is the medical system, because if I say to you--well, I don't know why. But let's say it this way. You come to me. I'm at the cocktail party. I hear you need a kidney. And I say to you, 'You know, Sally, I'd really like to give you a kidney, but it seems to me that it's a big pain--I was going to say in the neck--but a big pain in the side. I don't want to give it up. But, you know, if you made it worth my while, I think we could work something out.' And so, I quote, direct my kidney to you, but then you buy me a Ferrari six months afterwards--is anybody keeping an eye on that? I hope they're not; but-- Sally Satel: Nah. I don't think they are. And I'm sure this kind of thing goes on. And I would be happy to engage in that myself, if, you know, if that happened, and it was someone I could trust. Because you really do--it's uncomfortable. Well, let me back up. I didn't talk about MatchingDonors.com, which is a website, kind of like a Jdate thing except it's Kdate--you are looking for someone to give you a kidney. And it's totally legal. You can go on it right now, MatchingDonors.com, and it is, again, no money is exchanged; and there's a big warning sign that it's illegal to exchange any money. But that's a mechanism that I did try at first, before the guy backed out. And that's when Virginia came along. But that's relevant to what you just asked me, because there are people on that website who are looking for green cards--I mean, they are looking for something, in exchange. And, I've also gotten a lot of letters from people who say, 'I wish this was during the Recession.' I got so many letters from people saying, 'I wish I could sell my kidney, and get out of foreclosure'--or, one woman had ICU (Intensive Care Unit) bills to pay; another man lost his business. And every one of those letters--every person said, 'And I would be saving someone.' So, I grant you, even if they didn't have that, even if there wasn't that humane dimension to it, I still think it would be legitimate for people to be able to be rewarded for saving someone's life. But, the fact is that both the financial and the humanitarian dimensions intermingle. All the people who wrote to me--it was really kind of moving, and you wish they could have been able to do that. Russ Roberts: Yeah. I often emphasize--I think it's a really important point--that money certainly motivates people; it's not the only thing that motivates people. There are many, many, many intrinsic rewards that we receive, or punishments for the things that we do. And financial incentives, both positive and negative are not the only things that motivate us. They can motivate us, though. And they can certainly co-exist with those other motives. So, certainly if I sold you a kidney for $25,000, or a new car, or whatever it was, I hope I'd still also, in addition to that, the satisfaction of knowing that a person whose health was impaired was now healthy and had a better chance of living a good and healthy life. So, I think that's a really important point. So, I have--in theory; maybe we'll get to this in a little bit--but I have in theory no problem with a market for kidneys where people buy and sell. I assume they would also get the satisfaction from helping people, not just the money. I don't see any reason why those things are exclusive, and I think it's a terrible mistake to think that they are.

28:13 Russ Roberts: Now let's move to your proposal. You have suggested in this article that the Federal government incentivize kidney donors with a tax credit. So, explain how that might work. Sally Satel: A tax credit would just be one option. And I'll locate it in a larger context, and then I'll tell you what our plan was. But, the general idea--and, I think people have been talking about this since--I once found a paper from 1968. The first kidney transplant was in 1953. And soon, within a decade, people already realized that there was going to be a shortage, even though we officially didn't set up The List until 1984 in this country. But the idea is--well, think about, I guess, first, what you don't want to happen. You don't want someone to rush into this kind of thing and then regret it. Now, maybe you are going to say, 'Well, that happens all the time in human transactions.' And that's probably true. But in this case, if you were to design an ideal system--this is a transaction, kind of unlike other things. There are some analogies and we could talk about that. But, it's a momentous kind of engagement for a person to donate. So, you want to make sure they are not rushing into something that they regret. And so, this is why a free market, a classic free market, is not something that has ever seriously been considered, in terms of proposals. So, the general idea is that, there is a third party--and it could be the government; it could be a government-appointed charity; or even this could be at the state level--that is the provider of the benefit. And the benefit is not immediate cash. Because, again, you want to prevent a scenario where a desperately poor person is rushing to do this and then going to regret it. So, you don't offer what desperately poor people want, which is immediate cash. So, the kinds of rewards that people have talked about are [?] tax credits; or, a contribution to someone's 401k; loan forgiveness; or they could, for example, forward the benefit to a charity of their choice. But you get the idea. And, as I said, a third party would administer this. And there would probably be a waiting period built in, about 6 months to a year, again, for a cooling-off kind of aspect to it. And, the funding for this could come from dialysis, which is--payments for dialysis from Medicare, which is the largest payer of dialysis are 7%--seven percent--of the entire Medicare budget. So, it's about $90,000 a year for each person. So that could easily underwrite the value of the benefit. Which most people have pegged around $50,000, but it's just really almost an intuitive amount. So, the tax credit, if that were the route that was taken--it would be a refundable tax credit; so, people who didn't pay tax at all would be able to benefit. And they would get $5000 a year, either as a refunded benefit or off your taxes if you paid taxes. But that wouldn't kick in--we put in a lot of protections, and it's quite paternalistic--but it wouldn't kick in for a year. And then, again, it would be $5000 a year. And if it were refundable, it would be $5000 a year for 10 years. And if it were, if a person were paying taxes, I think we said they could have the $25,000 after 5 years. But the idea is to, again, dampen the magnitude of the incentive. And I can tell you why we are twisting ourselves in a pretzel to do this kind of thing. The answer, very quickly, is because of the intense opposition to this idea that has been mounted by much of the transplant community. Although, to the credit of the transplant surgeons, they are more receptive to it, and have become more receptive to it over the years. Russ Roberts: I think they would be. They have a financial incentive. I want to interrupt, because I find it utterly fascinating. Obviously, there's a pragmatic aspect to what you are proposing, which I respect; I have no problem with it. I don't agree with the outlines of it, though. And I just want to make the case against it, and you can either say, 'Well, it's pragmatic,' or you can disagree with me, whatever you want. It's remarkable to me--first of all, of course, the doctor--the surgeon--is not expected to do this life-saving surgery, life-transforming surgery as a charitable act. No one says to the surgeon, 'We'll give you a $50,000 tax credit for every one of these you do,' or a $5000--whatever it is. We're not--I don't want you to get paid for it, of course, because that would be immoral and it might make you think that the human body is like, oh, I don't know, a slag mine, some kind of coal mine. So, we're not going to pay you directly, and we're not going to pay you right away, because I want you to do it for the good of the patient. So, obviously, the surgeon is somehow managed to live a decent life and survive being paid directly a full, semi-market--it's not a market amount, of course, because it's all messed up--but they get cash. They get what's called cash. And yet, you are going to make a poor person who wants to transform the life of their child, for example, wait 5 years to get their money. You are going to make them wait-- Sally Satel: Well, it's [?] a year, but-- Russ Roberts: No, but they are only going to get $5000 the first year. Sally Satel: Oh, okay. All of it. Russ Roberts: Yeah. To get all of it is going to be over a few years. And then, the idea that they might want to help their kid now: 'Too bad. We're going to make you wait 6 months so you can be sure you are not going to regret it.' Um, I find it interesting that--of course, I'm a messed up person; I'm an economist--but I find it interesting that anyone would object to this. So, the people--I'm fascinated-- Sally Satel: Welcome to [?] Russ Roberts: What? Oh: Welcome to your world. So, who would--I mean, I think there are different ways to think about it. If you did a survey and said, 'Are you in favor of letting people buy and sell their kidneys?' I think the number would be 98% to 2% against. But if you said, 'If a poor person is really desperate and they can save someone's life, should they be allowed to sell their kidney and thereby get their child a college education?' I think the number would be very different than 98-to-2. And I'm curious how politically you think that works out. Why is it--a better way to say it: Is there a vested interest here that I'm not thinking about yet, when I work on it, who would be harmed by this? I mean, that the people who run the list, they are very important now, and they get a lot of attention, and they have a purpose in life that might be hurt by the fact that this market would work better if we had these incentives even though they are roundabout. Who would be against this? Who is against this? Sally Satel: Well, start with the National Kidney Foundation. They have been the most vociferous opponent. And they actually did actively try to sabotage--I know I'm not supposed to talk about specific legislation, but efforts, years ago, that were made to try to rethink the National Organ Transplant Act, which is the legislation that forbids any kind of exchange. But-- Russ Roberts: Why are they against it? Why would the National Kidney Foundation, which is supposedly in favor of people being helped who are struggling with kidney issues--why wouldn't they be thrilled that, say, I don't know, 75,000 would get kidneys than now? Sally Satel: Well, I'm baffled, as well. But I can tell you what they say. Russ Roberts: Yeah: what do they say? Sally Satel: Well, they say a few things. They start using the language of 'commodification'--in other words, you are treating people like spare fenders in a junk yard. They are afraid you are--'it will taint the process,' I've heard. It will devalue human life. It will--and then they say something that's actually something one could measure, because it's an empirical matter--that it will crowd out altruistic giving. And, worse, that it will just crowd out giving in general. But that's testable. I've actually looked into--go ahead.

37:54 Russ Roberts: That's possible. Right? I was going to say that--it's possible that if you don't--and this is an argument made for blood donation, as well: If you are not going to get the moral satisfaction of helping someone, and now it becomes something you can just buy and sell, you won't donate, because it's tawdry. Which just means that, as an economist, it just means you better set the price a little higher than you thought you might have needed to, to overcome--you might lose the, what is it, the 5000 people who donate right now, willingly, out of an incredible human kindness? And so, now you are going to get as many people as you want to donate out of mercenary motives. And-- Sally Satel: Exactly. Exactly. I see your point exactly. Russ Roberts: I know you do. Sally Satel: To the extent that anyone would be dissuaded, I would, as a psychiatrist, say, 'Well, gee, are we talking about altruism or narcissism? What was really motivating you--was social signaling motivating you?' But in any case, maybe it was. And then we know that is powerful for some people. But, well, okay, then I'm sorry that you won't be able to save someone. But here are 10 other people in line who would love to do it. So, that gets into the question of motivation, which is also held very dearly by the National Kidney Foundation, other opponents, which is: it has to be done for the right reasons. But this is what we hear from the National Kidney Foundation, what you hear from some particularly vocal transplant surgeons and nephrologists. Although, as I said, as a group, the transplant surgeons are--they did a poll of their organization in 2009, and the vast majority, 75%, were in favor of at least testing this idea. So, I do give them credit. But I have to tell you, I've looked at all the polls that have been done on this. And, the public is much more open-minded than the experts. And then we bring in the bio-ethicists-- Russ Roberts: Well, that's because the public--there are many of us who have relatives who have kidney problems. We want to help them. I just have to go back to the National Kidney Foundation for a second. I don't know anyone in the National Kidney Foundation. I know nothing about the NKF (National Kidney Foundation) or whatever it's called. But, it's not like a, um, it's not like the AARP (American Association of Retired Persons), the American Association of retired people which has millions of members. The National Kidney Foundation is a nonprofit--I assume. Its headquarters, I assume, are in Washington, D.C. Correct me if I'm wrong. Sally Satel: No, I think they are. Russ Roberts: And they have some number of people in that building in Washington, D.C.--maybe 100. I doubt they have a thousand. What does it mean to say they are against it? Why do they matter? And, politically, why does anyone care what the National Kidney Foundation thinks? Sally Satel: Yeah, they matter a lot. To my deep chagrin. Because they are the first organization that Congress, Congressional offices think of. They always say, 'Well, what does the NKF think?' It's kind of like a cancer issue: What does the NCI (National Cancer Institute), what does the American Cancer Society think they have? They have disproportionate influence. And they have a PAC (Political Action Committee) as well. But it is unfortunate-- Russ Roberts: Who would donate money to that PAC? Sally Satel: Oh, anyone who is--see people who get, people who, people who have gotten deceased kidneys, and people who--they actually have-- Russ Roberts: I get it. It's okay. I get it. Obviously there's some sense of gratitude there, because they are the coordinators of the list, and they make a donation, or whatever. But I'm not giving them another penny until they change their view on monetary incentives. And I don't give them a penny now, so it's not much of a threat. But, it's a fascinating issue.

41:47 Russ Roberts: Let's take one of their arguments more seriously--we're picking on them, and of course it's not of course just them. They are not alone. It's not like they are the only people against this. There are a lot of people who are troubled or uneasy about monetary incentives. And I understand that. Would it--let's take the commodification idea seriously. Is there something immoral--or, we have taboos about it--but if we think about it rationally a little bit, is there something immoral about sharing a body part for money? I mean, that's really what it comes down to. What I think is fascinating--and the reason I bring up the surgeon thing--it wasn't my idea, forget who wrote about it first where I read it, but--it's fascinating: That's not commodification, that the surgeon's hands are used to make money to rip out somebody's kidney and shove it into somebody else's body. We don't consider that person somehow morally troubled. And yet, somehow--and they make money, real cash. And yet, somehow, if we are to do it, who don't have their--what, high priest status? I don't know what's the--I mean, I'm in an ornery mood, hearing your plight. It's just interesting that this idea--'commodification' is an interesting word, right? It sounds awful. I don't know really what it means when I push it. Sally Satel: Well, it's one of the three words that are used to, frankly--I don't want to sound melodramatic but [?] folks like me, and I'm not the only one, heaven knows--Richard Epstein, a lot of us, Virginia, are vocal about changing the law. But commodification, exploitation, and coercion are the holy trinity that's supposed to end the discussion. But, you are exactly right. The one person who takes the risk and gives the thing of value gets nothing. Commodification, from what I can--becomes pretty clear from people who brandish that word in a menacing way. What they really are concerned about is having respect for the donor, and treating him or her well. And of course, that is essential. That is the basis of an ethically sound system. In fact, I would say there are at least four elements. One is respect for the person's capacity to make a decision about something that might be in his own best interest. Then of course, informed consent. These are all the things that are not, of course, in a black market. Yet, folks who have debated the others say, 'Well, if we do this here we'll have a black market.' You want to say, 'What?' We have a black market. Frankly, we have a thriving global black market in organs--because we don't have a transparent system. But, anyway: Respect for the person's autonomy, informed consent; protecting their help--which of course doesn't happen in a black market at all. And in fact, even in our current system, if you don't have health insurance and you have a complication a few months after you've donated--granted, probably most hospitals will help you out. But they don't have to. In fact, in our plan there would be health insurance for at least two years, so that if there were complications, a person would be guaranteed to be taken care of. Russ Roberts: You know what that reminds me of? It reminds of--I think if you are in the Baseball Hall of Fame, you get a lifetime pass to any park in America. It kind of should be. This is not a serious comment. But there is something emotionally satisfying about the idea that if you have crossed into a hospital to voluntarily help save a life with one of your organs, you should be able to walk into a hospital for the rest of your life and say, 'I need this. Give it to me,' and they should just say-- Sally Satel: At least a gift shop-- Russ Roberts: Yeah. And they should just say, 'Yeah, you are one of those? You're in. It's all taken care of. It's free. Here's your free pass.' But that's a little extreme. Sally Satel: Well, I was just going through my internal list, the conditions that need to be satisfied to allay the fact that someone is not being respected. So, you reward them amply. Obviously, if you gave them a buck, now that would be exploitation. But you reward them in a generous way. Gratitude is expressed. And that's really all that needs to happen. And none of it happens in a black market, of course. But it can easily happen here. And it happens already, except there's no money attached to it. But in this case, there would be a reward for people who would like, again, to benefit while they save someone's life.

46:25 Russ Roberts: You spoke loosely a minute ago--you said the one person who doesn't get anything out of it is the donor. But, of course, the donor does get the emotional satisfaction-- Sally Satel: Oh, definitely. Russ Roberts: which is enormous. I know you meant that. It just was a figure of speech. Sally Satel: Thank you. Russ Roberts: But, it's an interesting question: I'm now going to take the critics of our perspective a little more seriously. Interesting question: Let's suppose, just hypothetically, that the market price--whether we're a literal market, which I understand, I agree is unlikely; no one proposes seriously except maybe me, and three other people. But let's say we went to some system where we allowed this sort of arm's length, third party compensation via the tax system or something else, that you'd like to encourage. And let's say that number got to be a million dollars. Okay? That's what it took. And someone, maybe a foundation steps forward and says, 'I don't just want to save the 98,000 people on the list. I want to save the x-hundred thousand, 500,000, whatever it is, who are at risk. And rather than wait till they go on dialysis, they should just get a new kidney. And I'm going to pick a large enough number, compensating them, that the donors, enough will step forward.' And that turns out to be worth a million dollars. Now, I'm going to say something really tacky here, which is--but it's mildly amusing for EconTalk listeners. Somebody who has been listening to EconTalk since 2010 has heard about Bitcoin. And I have a friend who mocks me because I knew about Bitcoin in 2010 and missed the boat. Of course, he wasn't an EconTalk listener then, so he missed the boat, too. So, it's kind of a mutual make-fun-of-each-other thing. But it would be an interesting thing to think about--you have two people in your life who did something unbelievably generous--what this system that you are encouraging would do would put a monetary value in some dimension on their kindness. And it also in a way would suggest what they gave up to give you a kidney. That, it's one thing to say, 'Well, they risked their life'--which they did. It's one thing to say that they went through surgery, which is painful and scary, which they did. They also had recovery that they endured, which they did. And now you are telling them, 'And by the way, you could have made a million dollars. You gave away that precious thing.' Now, my view on that is: That makes it even sweeter to them, that they did something--in a way, it enhances their generosity. But perhaps some people would say it creates bitterness; it takes the emotion out of it. I don't know. What are your thoughts on that? Sally Satel: You know, Russ, I'm sorry, but I actually think I missed the offer that people would--did you say they would be offered a million dollars if they'd give a kidney? Russ Roberts: No: I'm saying: Suppose after the system and you and I--you and I would like a different system than the current system, which relies only on altruism. Sally Satel: Right. Russ Roberts: And let's suppose that, either because there's a free market in kidneys or because some kind of encouragement step comes forward in the form of a tax credit or payment of house mode or whatever it is, by a third party, whether it's the government through the tax system or a foundation. And it turns out that that price gets set not at $50,000, but at a million. Sally Satel: [?] Russ Roberts: So, that tells Virginia and Kim, your two angels, that they did something--that they gave up an enormous sum of money, and gave you something. Does it change their feeling about it? Would it change the level of gratitude, would you feel? It's just that it adds something to it. We have to be fair to the "commodification" people. It puts a price tag on something that right now is unpriced. Sally Satel: Well, I guess we have to realize that--there are things--I guess we have some models for it, where, you know, there may be a law passed that now you can take a huge tax credit for something that you couldn't have before. And then there's some regret. I think there's always regret built into any kind of transaction, that conditions can change. But I'll tell you--there's just so much latitude that you can have; and now I have to be relentlessly practical on this issue. Which is: The MDs [Medical Doctors] are always the intermediary. And they won't do--right now, we can't even frankly make enough headway to get them to even, as a group, seriously consider this. To even study this, to be honest. But let's say the price went up to a million. They would talk about--this is where they would talk about undue inducement. In other words, an offer that's too good to refuse. And I'm telling you, an IRB [Institutional Review Board] would never get the same--would never go past-- Russ Roberts: Explain. What's an IRB? Sally Satel: Oh, Institutional Review Board. I mean, it would be considered just unethical. And they would never do it.

51:19 Russ Roberts: You know what this reminds me of? It reminds me of Nick Saban. Nick Saban is the coach of the Alabama football team. He is part of a cartel called the National Collegiate Athletic Association, that makes it illegal to pay athletes who perform at the University of Alabama anything other than tuition. The market value of those athletes, a handful of them, is tens, a hundred of thousands, maybe millions of dollars for the amount of money that they generate for the University of Alabama and other similar football programs. And it is considered demeaning to them that they would be paid for their toil in the trenches of the football stadium. But, somehow, Nick Saban can make millions of dollars a year. And he will tell you, with a straight face--and I've heard other coaches--I've never heard Nick say this, but other coaches say this: 'It wouldn't be good for the educational aspects of football in the university system for those athletes to be paid.' But somehow it's okay for the coaches to make millions of dollars off the free labor of these people. So, these surgeons and doctors, who you are defending right now, they make hundreds of thousands, and sometimes millions of dollars transplanting kidneys that--the few that are available. And would be offended if somehow people made as much money as they did. Doesn't sound so good. Sally Satel: Oh, actually, well, for what it's worth--they are actually not offended[?]--they don't begrudge I think any of these people making money. I'm sure if their stocks, you know, split 7 times they'd be thrilled for their patients. But, yeah. A lot of them--you are right--do find this troubling. But again, I have to shout out to all the surgeons I have been working with over the years, and all the ones that have come around to at least testing this. But, unfortunately, their organization, the American Society of Transplant Surgeons, will not officially make a statement that we should study this. But, you know, I mean one thing that comes up--and if you don't want to go in this direction you don't have to--but, is--you know, the language that's used in these debates--and I almost put debates in quotes because some of the moral reasoning is so shoddy. But, as I said before, you hear words like 'exploit'--you hear words that no one ever defines. Well, like 'commodification' is one of them. Russ Roberts: They are scary words-- Sally Satel: and [?]. Yeah. Arguably the doctor is right, who do the surgery, who have commodified their service. And the procurement service--which is performed by OPOs--Organ Procurement Organizations--are paid by, I believe Medicare and Medicaid. Or they are paid from the Federal government--it could be through the United Network for Organ Sharing. But in any case, it's $50,000 to take an organ and transfer it, you know, from a deceased person in an Emergency Room to a operating room somewhere else. So, there's a lot money floating around. But, exploitation, for example, is a word you will hear. And, that makes sense in the black market, where these poor folks are offered a pittance. Now, granted, even in their world, $2000 means, could mean, a hell of a lot. But they don't get that $2000. It's rare that they get what they're promised. There are no contracts, of course, they can't go on, informed consent. Those people are exploited. Then you year about coercion. And that is a word--in fact, Alan Wertheimer was a wonderful philosopher, I believe political philosopher. Unfortunately, he passed away recently. But he actually did a survey of bio-ethicists and asked them about the definitions of words like 'coercion,' 'exploitation.' And actually, most of them got 'coercion' wrong. It means two things. Basically, I kidnap you--you know, in the most physical sense: I have imposed my physical will on you; I'm not going to let you leave my house. I kidnapped you, whatever. You strong-arm someone in the most literal sense. Or, you present a choice where either option leaves you worse off. Like, 'Your money or your life.' If I am given the opportunity to sell my kidney, that's not coercion. Because, if I don't do it, I'm not any worse off. Yet, that's a word they frequently use. And, what they really mean undue inducement. As opposed to inducement. Inducement is when we are walking down the street and we see an ad, a big ad in Saks [Saks Fifth Avenue, NYC-area store] that says '50% Off.' You know, it's something you wouldn't have done ordinarily. You wouldn't have shopped at Saks ordinarily. Well, maybe you would. But sadly, I don't. Russ Roberts: Yeah, I don't. Sally Satel: But if there's a good sale, I'll really think about it. I'll do something I might not have otherwise done. But that's--you know, that's just an inducement. It becomes an undue inducement--and this is where the too-good-to-refuse dimension comes in--when the temptation is so strong that it actually interferes with my capacity to rationally weigh the costs and benefits. Russ Roberts: Of course, that's very hard to measure. We had an episode with Mike Munger on what he calls 'Euvoluntary Exchange,' which relates to some of these issues. I encourage people to listen to that.