Kidney transplants and the shortage of donors: is a market the answer?
As of September 10, 2004, there were 86,460 people on a waiting list to receive an organ. (1) The majority of these people, 59,625, were awaiting a kidney transplant. Between January 1995 and June 2004, over 52,000 people died while waiting for an organ. And in 2003 alone, 6,256 people died waiting for an organ and another 1,603 people were removed from a waiting list because they had become too sick to receive a transplant.
Table 1 shows more specific information over time on the number of transplants and the demand for kidneys, the organ in greatest demand and the focus of this article. As can be seen from Table 1, the number of kidney transplants performed has increased steadily between 1988 and 2003, from less than 9,000 kidney transplants in 1988 to more than 15,000 by 2003. The change in the waiting list, the difference between the additions and removals, could be considered the excess demand for kidneys and is shown in the fifth column of Table 1. Between 1995, the first year this information is readily available, and 2003, the excess demand for kidneys has been relatively stable. However, this figure does not take into account the reasons for people being removed from the waiting list. Most of the people were removed from the waiting list because they received a transplant. However, others were removed from the waiting list because of death or because they became too sick to receive a transplant. To get a sense of an upper bound on the excess demand for kidneys over time, in column six of Table 1 we show the difference between those added to the waiting list and those who were removed from the waiting list because they received a kidney transplant. This calculation of the excess demand includes people who were part of the demand for a kidney during the year but were removed from the waiting list due to death or because they became too sick for a transplant. Using this upper bound for the excess demand for kidneys, we see it grew over this 8-year period by more than 3,000.
This information all leads to one very sad conclusion. People are dying and/or living a lower quality of life because of a lack of available organs for transplant. The question is what can we do about this?
To reduce the excess demand for organs (holding total demand constant), our only option is to increase the number of organs available from live and/or cadaveric individuals. This article focuses on the impact of allowing a market for cadaveric kidneys as a possible solution. We consider only a market for cadaveric kidneys primarily due to our belief that, given the strong objections of many in the United States including the American Medical Association (AMA, 1995), the United States will not consider a market for live donations any time in the near future. Furthermore, there are clearly issues involved with living donors not present with cadaveric donors. For instance, there is a question of the potential health risks incurred by the living donor and time missed from work. Some believe that living donors, particularly family members, may be "coerced" into donating. Perhaps most importantly, there is concern about how living donations affect the allocation of organs. In October 2004, doctors transplanted the first kidney from an unrelated living donor found over the Web at http://www.matchingdonors.com/life/index.cfm. To obtain access to this Web site and post one's profile, the individual pays a membership fee. This fee varies depending on the plan chosen, but ranges from $99 for a 7-day trial period to almost $600 to keep your profile listed for as long as the Web site exists. Participating and being successful in obtaining a donor in this manner takes money, a certain amount of familiarity with the Internet, and an ability to write a persuasive profile. These are very different criteria than those used by the United Network for Organ Sharing (UNOS) to allocate organs, which focus on medical compatibility, length of time on the waiting list, and the proximity of the donor to the potential recipient. For these reasons, we may prefer to focus our efforts on increasing the availability of cadaveric organs for transplant. Nevertheless, we need to be aware of the level of live donations as it will impact the equilibrium price of a cadaveric organ. As can be seen from Table 1, there has been an increase over time in the use of living donors.
In a study by Kaserman and Barnett (2002) (K & B), (2) the authors estimate that the equilibrium price in 1996 for a cadaveric kidney would have been $562 per kidney assuming cadaver kidneys replaced living donations, and only $50 per kidney if they include live donations! However, their estimates rely on survey responses of 391 Auburn undergraduates--clearly not a representative sample of the U.S. population. To the best of our knowledge, K & B's study is the only one that estimates a market equilibrium price for kidneys based on survey data. This article focuses on the possibility and value of allowing a market for cadaveric organs by examining the robustness of K & B's 1996 estimated equilibrium price. In order to test how sensitive K & B's estimates may have been to their sample, we replicate K & B's analysis as closely as possible, but use a different, more representative sample.
Using data from our survey responses, we estimate that the equilibrium price would have been prohibitive if deceased donors' kidneys replaced live donors' kidneys, and almost $150,000 when including live donations. We believe these results highlight that one should not rely on survey data to examine the question of a market for organs, as well as the importance of obtaining experimental data. Furthermore, until more conclusive evidence to support a market for organs exists, we believe the United States should adopt other alternatives aimed at increasing the supply of organs for transplant.
In Section II we briefly discuss the background of the U.S. policy prohibiting organ markets and present a simple conceptual framework to consider issues that would affect a market for cadaveric kidneys. Section III gives an overview of other approaches toward organ procurement and some of their advantages and disadvantages. Section IV focuses on the viability of having a market for organ collection by testing the robustness of K & B's estimates. In this section we will summarize and present K & B's methodology and findings and compare them to our own findings replicating their work, but with a different and, we believe, more representative sample of the U.S. population. Section V reexamines the more promising approaches to organ procurement given our findings and offers our opinions for the best strategies to increase the supply of organs for transplants in the United States.
II. MARKET FOR ORGANS IN THE UNITED STATES
The National Organ Transplant Act of 1984, and reiterated in the Uniform Anatomical Gift Act of 1987, explicitly prohibits payment for organs, making any type of financial compensation or market for organs in the United States illegal. (3) The difference between financial compensation versus a market for organs is that a policy of financial compensation would set a price for an organ, which would not fluctuate with market forces. If a market for organs was allowed, like any other type of competitive market, the equilibrium price would be determined by supply and demand and therefore would fluctuate if either the demand for or supply of organs changed. Because we believe a law allowing a market for organs from live donors is much less likely to be passed in the United States, our discussion focuses on a market for cadaveric organs.
It is important to note that proponents of a market for organs typically only advocate a market to determine the price offered for the procurement of an organ, not for the allocation of the organ. We envision that Organ Procurement Organizations (OPOs) might be the entities that are permitted to offer a financial payment to the relatives of deceased individuals, but UNOS would still be responsible for organ allocation, based on the criteria it currently uses to allocate donated organs. The "price" of a transplant would increase to incorporate the additional cost of paying for organs. However, we expect this price to continue to be paid through insurance and government assistance. The recipient of an organ would not be involved in the transaction to "purchase" an organ, and consequently, an individual's willingness to pay (WTP) for an organ would be irrelevant.
Between insurance, government assistance, and the fact that the good is a necessity, we can assume that the demand for an organ is perfectly inelastic at any point in time. However, over time, many factors could alter the demand, such as an aging population, overall health habits, and even changes in technology, which could make a transplant possible for people who in earlier years may have been considered unsuitable for a transplant. Although we limit the market to include only organs from deceased individuals, the demand for these organs will also depend on the number of donations by live donors.
The supply for organs will depend on how many organs are donated at a price of zero (the "X" intercept) and how responsive people are to financial incentives (the supply elasticity). Since donations are legal, many studies have focused on what factors are important in determining the quantity supplied at a price of $0. Section III, which focuses on nonmarket approaches to organ procurement, discusses some of these factors. However, here we note that some believe that introducing a market for organs may offend some potential donors and shift the supply intercept to the left. In our empirical analysis, we address this possibility. Clearly, any policy changes (for instance broadening the range of "acceptable" organs for transplant), cultural changes (perhaps due to increased educational efforts), or technological changes will affect supply and therefore its market price. (4)
Since financial compensation for organs is illegal in the United States, it is difficult to estimate how responsive individuals would be to prices above $0. One could try to estimate the supply for organs by examining the effect of recent state legislation that attempts to encourage live organ donation by either (1) allowing individuals to take up to a $10,000 tax deduction for costs incurred because of the donation or (2) allowing government employees to take up to 30 days of paid leave for donating an organ. Although not technically paying individuals for live donations, these laws do provide some financial compensation for live donors. These programs clearly can reduce the costs of donation, but it is a stretch to assume that they would have the same impact as a direct financial compensation to the family of a deceased person. (5)
Becker and Elias (2004) estimate the equilibrium price for a kidney by developing a model that allows for live donations based on assumptions on the value of a life, the probability of death, lost earnings, and a quality of life adjustment. Given their model, they estimate the equilibrium price for a kidney to be about $15,000, which they argue is driven by the large supply of potential live donors, making the supply elasticity very elastic. Without live donations, they expect the equilibrium price to be much higher. (6) However, their model does not give us much insight into what the equilibrium price might be if the market is limited to organs from deceased individuals.
Another approach to estimate the price of a kidney would be to use information on international organ sales. A World Health Organization (2004) bulletin suggests that the "most vulnerable" may sell a kidney for as little as $1,000, but more often around $5,000. On the other hand, brokers who arrange for the transplant for wealthy customers may receive as much as $200,000 for their services. Nancy Scheper-Hughes, a Professor of Medical Anthropology at The University of California, Berkeley, who has worked and written extensively on the topic, suggests that organs from executed prisoners in China have been sold to foreigners for as much as $30,000 (Scheper-Hughes, 2000). However, given that international activity on organ sales is underground, data are sketchy and often unreliable. Although the availability of organs from other countries would affect the market price for cadaveric organs in the United States, we do not believe these prices are a reliable indication of what the market price for cadaveric organs in the United States might be.
Instead, one can estimate the supply elasticity for cadaveric organs from survey data, as K & B do in their study, and combine that information with data on the demand for organs in the United States to arrive at an equilibrium price. Using this approach, K & B estimate the equilibrium price for a kidney to be less than $1,000. This figure is substantially lower than the estimate by Becker and Elias for kidneys obtained from live donors and even low compared to reports on international sales of kidneys.
There is much disagreement by experts (including those from the medical community, ethicists, and economists) on whether financial compensation or a market for organs is "ethical." (For examples of opinions against paying for organs, see Caplan, 1988, 2001; Clark, 2003; Dougherty, 1987; Pellegrino, 1991; Rothman, 2002. For examples of others who support some kind of financial compensation, see AMA, 1995; Childress, 1989; Cherry, 2005; and Blair and Kaserman, 1991). For some, supporting the use of some kind of financial compensation may depend on the amount of money necessary to elicit a significant increase in the supply of kidneys for donation.
Our analysis will not focus on what the equilibrium price for a kidney may be, but rather we estimate what it would have been based on K + B's and our survey responses in 1996 and 2003. Clearly, changes in demand or supply would affect these equilibrium prices. However, our focus is to determine, given known data on the demand for kidneys and the number of kidneys donated, and using an estimated supply curve based on survey responses, whether these estimated market prices support K & B's recommendation of establishing a market for cadaveric kidneys.
III. OTHER APPROACHES TO ORGAN COLLECTION
In addition to examining the possibility of a market for cadaveric kidneys, our hope is to offer recommendations on the most promising ways to increase organ procurement in the United States. Therefore, in this section we briefly review other options. We consider numerous approaches or aspects to organ procurement, including altruism, routine request, required referral, the use of state or national registries, mandated choice, presumed consent, and "first-person consent laws."
A. Altruism Options
The United States has employed a number of policies that rely on altruism, including informed consent, routine request, required referral, and the use of registries. Informed consent, or express donation, relies simply on people's willingness to donate an organ. The Uniform Anatomical Gift Act of 1968 allows individuals to indicate their desire to donate their organs upon death. Today, in many states, a person can indicate their willingness to be an organ donor when she/he obtains or renews a driver's license. In some states, this information will be recorded in a registry. Although it is hard for anyone to object to expressed donation, historically it has not been successful in bringing in nearly enough organs to meet the demand.
Routine request, which was promoted as part of the Uniform Anatomical Gift Act of 1987, went a step further by requiring hospitals to routinely ask patients if they are willing to be an organ donor and if they have filled out a donor card. Again, it is easy to support this policy on ethical grounds, but as pointed out in the introduction, it still has not been able to increase the supply of organs to meet the demand.
Required referral was widely adopted in 1998, when the Health Care Financing Administration required all hospitals receiving federal funds, including Medicare and Medicaid, to notify their local OPO of the imminent death of any patient. Required referral is widely supported on ethical grounds too, and when a trained person from an OPO approaches family members, it appears to increase the chances of organ donation. (For more information on what affects consent rates, see Beasley et al., 1997; DeJong et al., 1998; Gortmaker et al., 1998; Siminoff, Lawrence, and Arnold, 2003; Siminoff et al., 2001).
B. Mandated Choice and Presumed Consent
Two options that have not been tried in the United States are mandated choice and presumed consent. Presumed consent, assuming the individual would donate unless he had registered his desire to "opt out," exists in numerous countries, including most of continental Europe. The study of Abadie and Gay (2004), which estimates the impact of presumed consent on organ donations, concludes that presumed consent increases organ donation by as much as 25%-30%, controlling for other factors. Politically, there is some opposition to implementing a policy of presumed consent in the United States. The AMA believes that if the individual did not indicate a willingness to donate, family members should be asked (AMA, 1994). Becker and Elias (2004) also feel it is unethical to assume a person is willing to donate his organs and compare it to giving all your assets to the government upon death unless there is a will indicating otherwise. On the other hand, Abadie and Gay, K & B, and our own findings find that there is widespread support among professionals and the general public for a policy of presumed consent.
Mandated choice would require individuals on a regular basis to indicate whether they are willing to donate or not. For instance, it could be included on tax forms or when a person renews a driver's license. The difference between this and what many states currently do is that now an individual may not check that she wants to be an organ donor, but that does not imply that she would not be willing to be an organ donor. So families of individuals who did not check to be an organ donor may still be asked to donate their relative's organs. Assuming an individual might be willing to donate even though she did not indicate her willingness on a driver's license seems justified given the findings of a 1993 Gallup poll (Gallup Inc., 1993). This poll found that 85% of those surveyed support organ donation, and 69% would like to donate their organs after death. Yet only 28% indicated that they had filled in their driver's license to grant organ donation, and 36% of the respondents indicated that, "thinking about your own death makes you uncomfortable." If a policy of mandated choice required people to make a choice, perhaps we would find that closer to 85% that support organ donation would indicate their willingness to donate. A policy of mandated choice also has the backing of the AMA (1994), and does not raise some of the ethical objections that presumed consent does.
C. Other Important Factors
Two other factors that are important to increase the supply of organs for transplant are the following: making the person's wishes final, rather than ultimately depending on the consent of the next of kin, and having some kind of written or official verification indicating the deceased person's wish to donate. Although the Uniform Anatomical Gift Act of 1968 gives individuals the legal right to choose to donate their organs upon their death, historically OPOs will not honor the deceased person's wishes if they cannot obtain approval by the next of kin. Even in countries with presumed consent, many still regularly ask the next of kin for permission (Abadie and Gay, 2004). Even if the United States were to adopt presumed consent or mandated choice or increase the use of organ registries, to the extent that family members go against the wishes of the donor, donation rates can increase by enforcing the rights of donors already granted by the Uniform Anatomical Gift Act of 1968. Recently, states have introduced first-person consent laws, which would use the individual's wishes to consent as the only necessary requirement, rather than the next of kin's consent. Numerous organizations involved in organ transplantation strongly support the passage of first-person consent laws and donor rights legislation (see OPTN/SRTR, 2003).
Although first-person consent laws can help, even without them the problem appears to be that family members may not know the wishes of their relative. Overall consent rates from family members are around 50% in the United States (Abadie and Gay, 2004; OPTN/SRTR, 2004, Chapter III; Sheehy et al., 2003). Yet, when family members know their relative wished to donate, consent rates approach 95%-100%, according to the Organ Procurement and Transplantation Network (OPTN) 2003 Annual Report. In a study by the Department of Health and Human Services (2002), they found that the consent rate of family members whose relative had registered in an organ donor registry was 100% at one OPO and 76% at another. This suggests that national organ registries, mandated choice, and communicating one's wishes to relatives prior to death may have a significant impact on donation rates.
A reasonable question to ask is whether the potential supply from cadavers could meet the demand. The yearly additions to the kidney waiting list in recent years have been approximately 24,000 people. On average, a cadaveric donation can supply 1.5 kidneys. Therefore, in order to meet the yearly demand for organ transplants, around 16,000 cadaveric donations are required. Although estimates vary, it seems quite reasonable to believe that there may be at least 15,000 potential cadaveric donors available per year. (7) Therefore, if the potential supply from cadavers could not meet the entire demand, it appears that it could come quite close. Given the hesitation of many to pursue live donations and the fact that most, if not all, of the demand could be met through cadaveric donations, we have focused on approaches that would increase the donations from deceased individuals. However, when we estimate the market equilibrium price for a kidney, we consider two scenarios: replacing kidneys from live donors with those from cadavers and not trying to replace live donations.
IV. VIABILITY OF A MARKET FOR ORGANS
Given the excess demand for kidneys, it is worthwhile to consider any alternative that could substantially increase the supply or even eliminate the excess demand. Of all the alternatives discussed in the previous sections, only the market alternative should naturally lead to eliminating the excess demand for kidneys. If K & B's estimate of an equilibrium price for a kidney is even close to what the actual market price would be, it seems that a market for kidneys could eliminate the shortage at a relatively low cost. The authors write, "Using the traditional tools of market analysis, we show that the organ market proposal clearly dominates all other alternative policies on social welfare grounds" (K & B, 42). Furthermore, their surprisingly low equilibrium price for a kidney (actually only $562) and their belief that their findings, "are such that even a large alteration in the estimates would not affect the resulting policy conclusions," (K & B, 102) could be expected to encourage support for a market system beyond social welfare reasons--it solves the shortage problem at a low cost. In this section we present the approach and findings of K & B's study and compare it to our own, which closely replicates their work using a different sample.
As mentioned in Section II, without legal market transactions, we must employ another method to estimate the supply of organs. For some time now environmental economists have been using the contingent valuation method (CVM) to determine the demand for nonmarket goods. They use CVM because, like the market for organs, in many cases there is not a market to value environmental benefits to society such as clean air. The CVM method utilizes respondents' answers to questions concerning their WTP and willingness to accept (WTA) to determine a demand curve for a nonmarket good. WTP is the amount that a person is willing to pay for the availability, or increase, in a nonmarket good, while the WTA is the amount of compensation that they are willing to accept to have it taken away. Like K & B, we will be using a contingent valuation survey to estimate the supply of organs.
Although the advantage of using a contingent valuation survey allows one to estimate the demand (or in our case, supply) of a nonmarket good, there are also known problems with contingent valuation surveys. Three of the biases perhaps most relevant in this case are hypothetical bias, mental account bias, and anchoring bias. Hypothetical bias is a bias that occurs because the market is hypothetical. Since it is a hypothetical market, a person is able to say she/he would pay or accept a certain amount, yet in an actual market she/he would react differently. Another type of bias is mental account bias. In our case, this may occur if a person responds that she would be willing to accept $5,000 to give up a kidney, but really means that she would accept $5,000 to allow all her organs be used for transplant (Hanley and Spash, 1993).
Another potential bias is anchoring bias. Literature on anchoring bias indicates that the values offered in a survey to respondents can affect their replies. For instance, when respondents were asked about how much money they had in savings, they responded with lower values on average, the lower the initial value suggested to them was (Hurd et al., 1998) (see Hurd, 1999 for other examples). In this survey, the prices offered might provide a cue to the respondent as to what are "reasonable" values. Although we recognize these potential sources of bias, given we administer nearly the identical survey as did K & B, we have no reason to believe our results will be any more or less biased than theirs.
To obtain data for their study, K & B surveyed 392 Auburn University students, in eight different courses, with the majority coming from a core curriculum course in Political Economy. Their 20-question survey not only asked standard demographic information but also asked the respondents questions about their knowledge of organ donation, the respondents' willingness to donate an organ or supply one at different prices, and their attitudes toward a market for organs and other types of organ procurement possibilities--including presumed consent. (8) Of the 392 surveys administered, 391 could be used. In addition to typical criticisms one can make of survey data of this type, K & B's sample of Auburn University students was clearly not a representative sample of the U.S. population.
To examine how sensitive K & B's results may have been to their unusual sample, we asked nearly the identical questions to a wider group of people to obtain a different sample. The only changes made to the original survey were to include more religious categories and a wider range of prices the respondents could choose from in terms of willingness to supply an organ. Of the three price questions asked, the analysis focuses on the answers to Question 6, which was as follows: "What is the SMALLEST amount that you would be willing to take from an OPO to participate in a program that paid people to sign their organ donation form?" (9)
We chose to alter the price choices on the survey due to our concern mentioned above about the problem of anchoring bias. We believed the original questions provided too limited and too low a range of prices to choose from and may have biased the equilibrium price downward. Therefore, we conducted a pilot study that included the survey questions and provided three alternative price schedules (sometimes referred to as a "payment card" in the literature) from which the respondents could choose. Of the 28 participants polled, only three thought the best selection of prices offered were those in the original survey. The remaining participants chose an alternative with higher price options, with the majority choosing the alternative that included "over $10,000" for the highest price. Table 2 shows the prices available for the respondents to choose from in K & B's and our surveys for the three price questions. Respondents were asked to choose only one category from the list of prices offered. In this table and all subsequent tables, we refer to ourselves (Wellington and Whitmore) as W & W.
Unlike K & B's survey, we sent out paper copies of our survey and also made it available on the Web. To minimize costs and because of a need for a quick response, the paper version was sent, at random, to 1,000 people in the Dayton, OH, metropolitan area. (10) The online survey was dispersed by e-mail to the College of Wooster campus, alumni, and friends and family of the college community. We chose to use two methods of distribution because of the relatively low response rates and high costs associated with mail surveys. In addition to the mail survey, the Internet survey was chosen as an alternative method because it is inexpensive and is easily dispersed to many people. It was initially distributed through an on-campus e-mail announcement system, and by e-mail to various listservs, friends, family, and coworkers. Those receiving the e-mail survey were encouraged to inform others of the survey. In total, there were 423 observations after eliminating those not answering necessary questions. Of these 423 responses, 313 were submitted via the online survey, while the other 110 were returned from the mail surveys. A total of 20 surveys were eliminated due to missing information.
Although this sample selection is not ideal either, we believed that it would lead to a more representative sample of the U.S. than K & B's sample. Table 3 compares some basic descriptive statistics from K & B's sample, our sample, and national statistics. Since the characteristics of the respondents to our mail survey and online surveys were often significantly different, we also show the descriptive statistics for these subsamples; however, the following discussion will focus on the statistics for our entire sample.
For many of the categories, K & B's and our sample statistics are significantly different than the national figures. However, in most cases our sample statistics are closer to the national averages. In terms of age, percent married, and percent with children, our sample is more similar than K & B's to the national figures. Also, our representation on religious affiliations more closely resembles that of the entire United States. Since K & B only sampled Auburn undergraduates, almost by definition our sample is more representative of the U.S. educational distribution, although our sample is clearly more educated than we would expect of the U.S. population overall. Finally, in terms of the distribution of the population by income levels, our sample also does somewhat better reflecting the national estimates. We show income categories for both 1996 and 2003 because these percentages change significantly over the time period and our figures are closer in magnitude to the national estimates in all but one income category. And in three of the five categories (the first, third, and fourth) our percentages are not significantly different than the U.S. percentages.
On the other hand, in terms of race and gender, K & B's sample was closer to the national proportions. However, our regression estimates found that "whether female" and "white" had a significant negative impact on one's reservation price--Question 6. This suggests that, if anything, our sample would bias the equilibrium price downward. (11)
K & B estimate the equilibrium price for a kidney using two methods. The first is to construct a supply schedule by simply summarizing the respondents' answers from Question 6 of the survey, to determine the price that would procure a sufficient number of kidneys to satisfy the entire demand. Their second method regresses the quantity supplied on the natural log of price (with an intercept) and solves for the price where quantity demanded equals quantity supplied.
Due to the concern that some people who may have donated an organ in the absence of a market will be so offended by the idea of a market for organs that they will refuse to donate or supply the organ at a positive price, there is the possibility that there would be a shift in the supply intercept (a decrease in the quantity supplied at a price of zero). This would suggest adjusting the supply schedule to take this shift into account. However, of their 391 respondents, K & B found that only 14 individuals who answered they were offended by the idea of a market would not donate or sell their relative's kidney. If we assume all these individuals would have donated without the presence of a market, the supply at $0 would be about 96% of the quantity supplied without a market. Our findings were similar. Of our 423 respondents, 25 people who answered they were offended by the idea of a market also said they would not supply their relative's kidneys at any price. This suggests a reduction of at most 6% from the quantity supplied at a price of zero without a market. If there is a supply shift with the introduction of a market, we believe it would be fairly small, and therefore, we focus our discussion based on the assumption of no supply shift. If anything, this underestimates the equilibrium price.
Table 4 shows the implied supply schedules for 1996 based on K & B's survey responses and ours. Using national figures based on data obtained from OPTN in September 2004 (12)--which are somewhat different than the values K & B used in their work--the third column shows the national supply schedule for 1996 given the responses from K & B's survey. The number of kidney transplants performed using cadaveric kidneys in the year determines the quantity supplied at $0. According to the OPTN Web site, 7,729 cadaveric kidneys were transplanted in 1996. At a price of $100, K & B find that the quantity supplied increased by approximately 60% (from 138 to 221). Therefore, the national supply at $100 is estimated to be 1.60 x 7,729 or approximately 12,378. Since our goal is to examine how sensitive the findings are to the different samples, we also estimate a 1996 national supply schedule shown in the last column, based on the replies we obtained from our respondents. Any difference between our estimates of the 1996 equilibrium price for kidneys would only be due to differences in the estimated supply and not due to demand or supply changes between 1996 and 2003. Since we did not include $10 or $25 as possible answers, we imputed those values assuming a linear trend between $0 and $50. Notice that at $100, we estimate that the total quantity supplied of cadaveric kidneys would have been only 8,963.
Similarly, Table 5 shows the estimated supply curves for 2003 based on K & B's survey responses and ours. In this case, given the different price ranges in the surveys, we assumed a linear increase in response rates to impute "missing" values in the supply schedule for K & B. In this case the national supply schedules are based on the fact that 8,666 cadaveric kidneys were transplanted in 2003. (13) A quick comparison between K & B's implied 2003 supply schedule and ours shows that our supply schedule is more inelastic.
To obtain an estimate of the equilibrium price for obtaining consent to use a deceased person's kidneys, the next step is to determine the yearly demand. K & B estimate the yearly demand for cadaveric kidneys as the total number of transplants performed (which includes those from live donors) plus the change to the waiting list. Their decision to include the number of kidneys by live donors in the yearly demand estimate reflects their belief that it would be preferable to replace all kidneys from live donors with kidneys from cadavers. Since the proportion of transplants from live donors has been growing and there are others who support live donations, we will consider the equilibrium price under two scenarios: one in which the yearly demand includes replacing kidneys from living donors with kidneys from cadavers and one in which the yearly demand only includes the total of cadaveric kidneys plus the addition to the waiting list. Note that this definition of the yearly demand does not include people who were removed from the waiting list because they became too sick or died. In that sense, this estimate underestimates the demand and again, if anything, biases our equilibrium price downward.
In 1996, the number of kidneys transplanted from cadaveric donors was 7,729, the number from living donors was 3,667, and the change in the waiting list was 3,769. This suggests that the total demand for kidneys in 1996, including replacing live donors, was 15,165 or 11,498 if one does not include replacing the kidneys from the live donors. Looking at Table 4, we see that according to K & B's national supply curve this suggests an equilibrium price between $500 and $1,000 even if we include replacing live donors, or only between $50 and $100 if one does not try to replace live donors. However, according to our estimated 1996 supply curve, even $5,000 would not be enough to satisfy either demand quantity.
In 2003, total demand for kidneys was 19,577 including replacing live donors, or 13,109 not including replacing live donors. Once again, we see that the supply curve based on K & B's survey responses would suggest an equilibrium price as low as $100, and perhaps a little over $5,000 if one replaced all kidneys from live donors. In contrast, the supply curve based on our survey responses suggests that even if people were offered $10,000, the total supply would not reach either of these estimates of the yearly demand.
A similar story is found when we use a simple regression to estimate a supply curve, set the yearly demand equal to the estimated supply curve, and solve for the equilibrium price. Table 6 shows supply regression results and the resulting equilibrium prices under the assumptions we do and do not replace live donors. The first four rows estimate the supply curve using K & B's survey results. The first row shows the results presented in K & B. In this case, the authors allowed for a supply intercept shift to account for a possible reduction of kidneys donated at $0 when a market is introduced. The second row replicates K & B's calculations using data for 1996 obtained from the OPTN Web site in 2004. Since we will not be allowing for an intercept shift in our 2003 estimates, row three replicates row 2, but without a supply shift. Row 4 shows the results when using K & B's survey responses, but using data on kidneys for 2003. As one can see from Table 6, using K & B's survey responses to estimate the national supply curve results in very reasonable equilibrium prices--a low of $18 (for 2003) to a high of $1,538 (for 1996).
Rows 5 and 6 of Table 6 show how sensitive these findings are to the particular survey responses. Using responses from our survey, our estimated equilibrium prices for both 1996 and 2003 would be prohibitively high if one tried to replace live donors--the smaller value is close to 4 billion dollars! If we do not attempt to replace live donations, the equilibrium price is a little under $150,000--perhaps not prohibitive, but not cheap, and almost 100 times greater than the highest equilibrium price estimated using K & B's survey responses.
Given our findings, a competitive market for organs does not appear to be realistic. However, we can use our estimates to consider the impact of some kind of financial compensation. Suppose individuals were offered $10,000 to allow a deceased person's kidney to be used for transplantation. Substituting $10,000 into our supply equation, we estimate the supply of kidneys would be approximately 12,028. If we include replacing living donors in our yearly demand, this would imply an excess demand for kidneys in 2003 of about 7,550, and less than 1,100 if we do not include replacing living donors. So although an equilibrium price for kidneys may not be realistic, even offering $10,000 per kidney could make an important difference.
V. REEXAMINING THE ALTERNATIVES AND CONCLUDING REMARKS
Our findings lead us to two important conclusions. First, the great discrepancy between our estimated equilibrium price and K & B's price highlights the importance of getting better information. Answers to survey questions on a topic like this cannot adequately substitute for data obtained from actual experiments. As we mentioned earlier, hypothetical bias can be a source of bias affecting our results. Although the causes of hypothetical bias and how to correct for it are not well understood, the evidence suggests that individuals tend to overstate their actual value of a good. (Murphy et al., 2005) Experiments are necessary to make well-informed decisions on the effect of offering financial compensation to increase the supply of organs for transplant.
Second, our survey results clearly put into question the viability of relying on a market for cadaveric kidneys to solve the problem of a shortage of kidneys for transplant. It appears that living donors would have to be allowed to enter the market in order to reach a reasonable equilibrium price. However, political resistance to compensating living donors makes it unlikely that this will be allowed in the near future. On the other hand, offering a nontrivial financial compensation to people to induce them to agree to let a deceased relative's organs to be used for transplant could go a significant way to reducing the excess demand and save lives. However, since this would still not eliminate the excess demand and would be much more costly than suggested by K & B's study, it seems worthwhile to reconsider some of the other alternatives.
Of the other policy options discussed in Section II, we feel the most promising for the United States would be to adopt either presumed consent or, at the least, mandated choice. Although some object on ethical grounds to presumed consent, our own survey and evidence from others suggest that a relatively small percentage of the population actually objects to the idea. In their article, Abadie and Gay point out, "In an international survey of transplant professionals, 75% of the respondents supported presumed consent legislation, and 39% identified this type of legislation as the most effective measure to increase donation rates, the highest percentage among all measures considered in the survey, followed by improved education with 18% (Oz et al., 2003)" (Abadie and Gay, 2004, 2-3). According to K & B's survey findings, only 18% of the respondents objected to the concept of presumed consent, and in our own survey about 22% objected. In our opinion, this minority opinion should not prevent the adoption of a policy that has the potential to save a significant amount of lives. However, adoption of presumed consent will not be effective if the next of kin can still override the law when the potential donor did not opt out. Our support of presumed consent legislation is based on the belief that in practice, only individuals who register to opt out will be considered as refusing consent to donate.
If the United States cannot pass effective presumed consent legislation (and without the support of the AMA it will be harder), we believe the United States should adopt mandated choice. Mandated choice has the support of the AMA, and we believe few people could object to it on ethical grounds. By requiring people to make a choice, we may find consent rates jump significantly, particularly since families are far more likely to agree to donation when they know it was their relative's wish, as pointed out in Section II.
In addition, there are other, somewhat less dramatic, changes that can be made both to and within the current U.S. system. For instance, we can continue to support donor registries and support and improve donor rights legislation. By expanding the use of donor registries, family members would have better knowledge of their relative's wishes. Improving donor rights legislation, which includes enforcing the current law that states that consent by the next of kin is not required if one has signed up to be a donor, will increase donations when family members go against the known wishes of the deceased. We can also continue to support educational programs on organ donation; however, a recent article by Beard, Kaserman, and Saba (2004) found insignificant effects of expenditures on education on organ donations, putting into question the effectiveness of this approach.
According to the 2003 and 2004 OPTN Annual Reports (see Chapter III), there are also a number of possible changes that focus on reducing the attrition between consent and actual transplants that would increase the number of transplants. For instance, allowing the use of "high-risk" donors, increasing the use of long-distance sharing, and developing more unified and less restrictive standards across the country for what are considered acceptable organs for transplant, all may increase the number of transplants. Also, consent rates differ dramatically by race and ethnicity, suggesting a need to focus on groups such as Asians and African-Americans to increase donation rates. But again, it is uncertain how well money spent targeting these groups will work to increase donation rates.
Most of these policies can be pursued simultaneously and together may result in a greater number of organs for transplant. Yet, we continue to believe that the best and most realistic approaches to increase the supply of organs for transplant in the United States include passing presumed consent legislation (under the conditions described above) or implementing mandated choice, supporting first-person consent laws, and offering financial compensation to families.
This study has focused on approaches to increase donation rates from deceased individuals. However, another obvious source of organs (particularly kidneys, although not exclusively) is through live donors. As mentioned earlier, recently, states have passed or are considering laws that attempt to encourage live organ donation. As of this writing, 12 states have passed one of these laws and 20 states are considering either one or both. Although not technically paying individuals for live donations, these laws do provide some financial compensation for live donors. It will be interesting to see if these laws are effective in significantly increasing the supply of organs for transplant.
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Whitmire, J. B. "Financial Incentives for Organs: An Investigation of Supply." Senior Independent Study Thesis, The College of Wooster, Wooster, OH, 2004.
ALISON J. WELLINGTON and JUSTIN B. WHITMIRE*
*This research is based on and extends Justin B. Whitmire's Senior Independent Study Thesis. Funding for this project was provided by the Henry J. Copeland Fund for Independent Study at The College of Wooster. The authors would like to thank David Kaserman, Andrew Gill, and two anonymous referees for their comments, as well as Mohammad Siddiqui and Mihika Chatterjee for research assistance.
Wellington: Associate Professor of Economics, Department of Economics, The College of Wooster, Wooster, OH, 44691. E-mail: email@example.com
Whitmire: BA, The College of Wooster, Wooster, OH. E-mail: firstname.lastname@example.org
1. The data for this section are based on OPTN data as of September 10, 2004, obtained from http://www.optn.org/latestData/rptData.asp.
2. Before K + B's book was published, an article by Adams, Barnett, and Kaserman (1999) summarized the major issues and findings of this study.
3. Interestingly, the impetus for passing the 1984 law seems to have been more in reaction to quickly changing circumstances due to changes in technology than a well-thought-out policy. See K & B for a discussion on the history of organ transplantation and the development of U.S. policy.
4. Although we have mentioned factors that will affect the supply and demand for organs, there are numerous specific issues we have not explored but are very important. For instance, both the demand and supply of organs differ by race and ethnicity. Yet, we have kept our discussion on the determinants for the demand and the supply of organs general for two reasons. First, we are interested in comparing our 1996 and 2003 estimates for the price for a kidney with K & B's estimates, given what we know about the demand for kidneys in those years and our estimates of supply. Since we are not trying to predict future prices, specific trends are interesting, but not central to our focus. Second, although a successful "match" between a donor and a recipient is more likely, the more similar the genetic background, we believe there would only be one "market" for kidneys, and not separate markets by race or ethnicity. Therefore, we focus on the total demand and supply. (See the UNOS Web site, http://www.unos.org, for specific information on organ demand and donations.)
5. Information on states that have passed this type of legislation or are considering similar legislation were obtained in March 2006 at the following Web sites, respectively: http://www.transplantliving.org/livingdonation/financialaspects/statetax.aspx and http://www.transplantliving.org/livingdonation/financialaspects/legislation.aspx.
6. Alternatively, one might argue that the market price for a cadaveric kidney would be less than the $15,000 Becker and Elias estimate for a kidney from a live donor since the opportunity cost of a cadaveric kidney would be much less. The authors thank David Kaserman for this insight.
7. K & B believe that somewhere between 13,000 and 29,000 deaths per year could lead to organ donations. Becker and Elias estimate that in 2000, there could have been 19,000-25,000 cadaveric kidneys available. The Department of Health and Human Services suggested that there might be 12,000-15,000 deaths that could result in donations. Sheehy et al. (2003) suggest figures between 10,000 and 15,000.
8. The complete questionnaire can be found in K & B's book, The Organ Procurement System; A Prescription for Reform.
9. In terms of typical contingent valuations surveys. Question 6 would be interpreted as one's WTA--the minimum value one is willing to accept to have their organs removed for transplant upon death. Question 7 on the survey, "If, upon your death, an OPO had the right to take your organ without your permission unless you (or your estate) paid to have your organs buried with you, how much is the LARGEST amount that you would be willing to pay (or have your estate pay) to have your organs buried with you?" captures one's WTP--the most a person would pay to keep their organs upon death. The answers to the way the question is posed are known to result in different estimates of the value of the good: typically higher prices if one is asked their WTA and lower values if asked their WTP. Our analysis uses the responses for Question 6, as did K & B; however, we should note that when we use the replies to Question 7, our estimated market equilibrium price turned out to be higher, not lower. Although more people answered a price of $0 for Question 7 than Question 6, they were much less responsive to a financial incentive, resulting in a much more inelastic supply curve.
10. We employed a firm to provide us with mailing labels for 1,000 randomly selected individuals in the Dayton area. These mail surveys included a dollar bill to encourage people to respond.
11. We ran several alternative specifications regressing Question 6 on the characteristics in Table 3 and consistently found significant negative effects of being White and female on one's reservation price or WTA. Interestingly, none of the other characteristics in Table 3, including education, were ever found to be significant. So even though our sample is biased toward more educated people, we have no evidence to suggest that this may have biased the supply responses. In addition, the F statistics ranged between 1.24 and 1.74 and the highest [R.sup.2] was .08. Given the weak explanatory power of our regression results, we do not focus on these findings, but rather follow K & B's methodology to arrive at an equilibrium price.
12. All our calculations are based on data collected from the OPTN Web site on September 3, 2004.
13. In our survey, an additional eight respondents indicated an amount greater than $10,000 and 78 respondents indicated that they were not interested at any price. We realized after administering the survey that some people may have answered, "not interested at any price" when they meant to indicate they would supply the organ at a price of zero. However, it is impossible for us, as it would have been for K & B, to know how many of these respondents meant to indicate a price of zero.
AMA: American Medical Association
CVM: Contingent Valuation Method
K & B: Kaserman and Barnett (2002)
OPO: Organ Procurement Organization
OPTN: Organ Procurement and Transplantation Network
UNOS: United Network for Organ Sharing
WTA: Willingness to Accept
WTP: Willingness to Pay
TABLE 1 Transplants and Excess Demand for Kidneys over Time Number of Kidney Transplants Excess Demand Deceased Additions-- Additions--Total Year Total Donors Live Donors Removals Transplants 1988 8,874 7,062 1,812 1989 8,656 6,753 1,903 1990 9,416 7,322 2,094 1991 9,677 7,281 2,396 1992 9,737 7,203 2,534 1993 10,359 7,508 2,851 1994 10,646 7,639 3,007 1995 11,075 7,691 3,384 3,698 6,201 1996 11,396 7,729 3,667 3,769 6,345 1997 11,699 7,773 3,926 3,781 6,742 1998 12,441 8,025 4,416 3,753 7,067 1999 12,751 8,040 4,711 4,642 9,138 2000 13,601 8,124 5,477 4,038 8,781 2001 14,263 8,228 6,035 3,622 8,263 2002 14,779 8,539 6,240 3,558 8,887 2003 15,134 8,666 6,468 4,443 9,579 TABLE 2 Comparison of Price Choices for Survey Questions 6-8 K & B's Price W & W's Category Range (in $) Price Range a 0-5 0-5 b 10 50 c 25 100 d 50 500 e 100 1,000 f 500 2,500 g 1,000 5,000 h 5,000 7,500 i Over 5,000 10,000 j Not interested at Over 10,000 any price k Not interested at any price TABLE 3 Comparisons of Descriptive Statistics W & W Characteristic K & B Total Mail Online National (a) Age Average 20 36 50 32 Median 34 49 26 35 Married (%) 4.6 45 60 40 54 With children (%) 3.6 46 75 36 68 Female (%) 51 63 45 69 51 Race (%) White 89 92 92 92 75 Black 7 4 7 2 12 Religious affiliation (%) Organized 88 74 73 74 80 Baptist, Methodist, and 57 28 28 28 26 Presbyterian Education categories (%) Some high school 1.4 2.7 <1 19 High school diploma 8 15 6 31 Some college 49 35 54 26 BA 25 30 23 16 Advanced degree 17 18 17 8 Income categories in $ (%) 1996 2003 Less than 10,000 9 3 5 3 12 6 10,000-29,999 9 7 14 4 31 20 30,000-49,999 10 15 19 14 23 20 50,000-79,999 20 29 33 27 20 24 80,000 and over 32 37 28 41 14 30 (a) Data on age, gender, and race were obtained from the Profile of General Demographic Characteristics: 2000, Table DP-1. Data on percent married were obtained from the 2000 Census Brief (C2KBR-30). Data for religious affiliations come from the Statistical Abstract of the United States: 2003, Table 79. Data for the percentage of adult population with children are from the authors' calculations using data from the Survey of Income and Program Participation. Estimates for the income and educational categories were obtained from the Current Population Survey. The income values for 1996 were obtained from Table H-1: Selected Characteristics of Households, by Total Money Income in 1996 (URL: http://pubdb3.census.gov/macro/031997/hhinc/1_100.htm). [Accessed December 12, 2006] The authors obtained the 2003 income and the education estimates directly from the 2004 CPS March Supplement. TABLE 4 1996 Estimated Supply Schedules Price K & B Survey K & B National W & W Survey W & W National (in $) Responses Supply Responses (a) Supply 0 138 7,729 238 7,729 10 149 8,345 243# 7,885 25 165 9,241 250# 8,119 50 183 10,249 262 8,508 100 221 12,378 276 8,963 500 249 13,946 286 9,288 1,000 299 16,746 306 9,937 5,000 311 17,418 325 10,554 (a) The numbers in italics were estimated assuming a linear response rate between known response values. Note: The numbers indicated with # were estimated assuming a linear response rate between known response values. TABLE 5 2003 Estimated Supply Schedules Price K & B Survey K & B National W & W Survey W & W National (in $) Responses (a) Supply Responses Supply 0 138 8,666 238 8,666 50 183 11,492 262 9,540 100 221 13,878 276 10,050 500 249 15,636 286 10,414 1,000 299 18,776 306 11,142 2,500 305# 19,153 313 11,397 5,000 311 19,530 325 11,834 7,500 318# 19,954 332 12,089 10,000 325# 20,378 337 12,271 (a) The numbers in italics were estimated assuming a linear response rate between known response values. Note: The numbers indicated with # were estimated assuming a linear response rate between known response values. TABLE 6 Supply Regression Results and Equilibrium Price Estimates Supply Equation Intercept Intercept Price Supply Schedule -- Year Shift? (t statistics) (t statistics) 1. K & B -- 1996 Yes 6,551 (7.4) 1,406 (8.2) original (a) 2. K & B -- 1996 Yes 5,889 (7.4) 1,264 (8.2) 3. K & B -- 1996 No 6,134 (7.4) 1,317 (8.2) 4. K & B -- 2003 No 6,293 (4.3) 2,357 (10.9) 5. W & W -- 1996 No 7,281 (35.0) 1,317 (8.8) 6. W & W -- 2003 No 8,296 (37.2) 405 (12.4) Equilibrium Price Equilibrium Price (in $) without (in $) with Supply Schedule -- Year Live Donors Live Donors 1. K & B -- 1996 562 50 original (a) 2. K & B -- 1996 1,538 85 3. K & B -- 1996 952 59 4. K & B -- 2003 280 18 5. W & W -- 1996 3.9 billion 135,242 6. W & W -- 2003 1.2 trillion 144,216 (a) K & B's original estimates are based on OPTN data obtained for 1996 by K & B. All other estimates for 1996 use OPTN data for 1996 collected by W & W in 2004.
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|Author:||Wellington, Alison J.; Whitmire, Justin B.|
|Publication:||Contemporary Economic Policy|
|Date:||Apr 1, 2007|
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