RADIO 4 CURRENT AFFAIRS ANALYSIS REPUGNANT MARKETS TRANSCRIPT OF A RECORDED DOCUMENTARY Presenter: Tim Harford Producer: Richard Vadon Editor: Nicola Meyrick BBC White City 201 Wood Lane London W12 7TS 020 8752 7279 Broadcast Date: 12.07.07 2030-2100 Repeat Date: 15.07.07 2130-2200 CD Number: Duration: Taking part in order of appearance: Virginia Postrel Writer Al Roth Professor of Economics, Harvard University Dr Lee Rayfield Bishop of Swindon Dr Tom Shakespeare Research Fellow in Policy, Ethics and Life Sciences, University of Newcastle Prof Robin Hanson Economist, George Mason University Prof Naomi Pfeffer Sociologist & Historian, London Metropolitan University Prof Andrew Oswald Economist Warwick University HARFORD: Last month, 20-year old David Lomas donated over half his liver to save the life of his father, Stephen. Many others donate a kidney to friends or relatives. It’s an inspiring sacrifice. Yet there aren’t enough donors to go around and 400 people die each year in the UK while on the waiting list for an organ transplant. So what about a bit of basic economics here: if we want more live organ donors, shouldn’t we pay people for their trouble? To many, the very idea is offensive. And that raises an important question. Why do some markets disgust or outrage us? Why can I buy a loaf of bread but not your kidney? Why do we let people get jobs as coal miners or shop assistants – but protest if they want to work as prostitutes or human cannonballs? And if I can bet on the Grand National, why can’t I call a bookmaker and bet on something a bit more important? LADBROKES PHONECALL EMPLOYEE: How can I help you? HARFORD: Yeah, I wanted to place a bet that I, Tim Harford, was going to die in the next year. Could you give me odds on that? EMPLOYEE: Right. HARFORD: Can I take a bet on my own death? EMPLOYEE: Erm, I’m not too sure. Just hold the line a moment please. Thank you. (Music) HARFORD: Should we let our feelings of repugnance get in the way of the market? LADBROKES PHONECALL EMPLOYEE: Hello, Mr Harford? HARFORD: Hello. EMPLOYEE: Hello, sorry to keep you waiting there. Okay. No, basically we don’t bet on deaths because it’s a negative bet, you see. HARFORD: There’s a lesson in that. If you want to take a bet with a stranger that you’re going to die, don’t call a bookmaker – call a life insurance company. Virginia Postrel, an American writer, reminds us that our notions of what should be bought and sold have changed over time. POSTREL: When you think about it, life insurance is a really ghoulish thing. I mean you have insurance that’s going to pay your relatives if you die. That’s kind of disgusting. And it was considered disgusting until fairly late in history, until the early 20th century. There was a big shift where life insurance went from being considered immoral, ghoulish, to being considered something that a responsible person should buy. ROTH: There are things whose repugnance has changed over time - so, for instance, it used to be repugnant to charge interest for loans in much of Christendom. It used to not be so repugnant to sell slaves, but it now is. So I think actually it’s a little hard to predict on first principles which things will be repugnant and which not because they’re different in different times and places. HARFORD: That was Al Roth, a professor of economics from Harvard who has been designing markets for many years – for example, to help allocate school places. Professor Roth has recently been asking the question, why do we find some markets repugnant? Are our notions of what is acceptable just arbitrary? ROTH: As economists we have to understand that there are repugnant transactions and we have to work hard to understand how repugnance works in the world, but I don’t think there’s going to be a simple principle. One thing that sometimes adds repugnance to some kinds of transactions is adding money. It’s against the law in Britain and the US to buy a kidney, but it’s not against the law to give away a kidney - right? Lots of kidney transplants these days are from live donors. It’s a wonderful thing - you know the gift of life. So sometimes something that isn’t repugnant in itself - a transaction - becomes repugnant when money is added. HARFORD: But why is it that money turns a beautiful act into an ugly one? Dr Lee Rayfield has a PhD in transplantation immunology and is a member of both the British and International Transplantation Societies; he is also the Bishop of Swindon. RAYFIELD: Although Christians hold a very high value, an enormous value of the human body and it’s immensely precious because we believe that God himself came as a human being, there are those occasions when it is right to give your body for others. When we’re talking about offering a transplant, a vital organ like a kidney, that is a gift which is meant to enrich and bless the life of another person for no reward for the person who is doing it save the act of giving. As soon as you introduce a transaction into giving a kidney, you have changed the whole basis of what’s going on. The kidney itself has become a commodity and it’s very difficult then to sort of look at the altruistic sacrificial side of something as separate from the whole event. HARFORD: It’s not enough to object to a trade in kidneys on the grounds that it commodifies the human body. “Commodity” is just another word for something that is bought and sold – merely a re-description in more pejorative language. But the thrust of the Bishop’s argument is clear and widely held: some things, such as a kidney or sex, are meant to be given in the context of a loving relationship. A cash transaction corrupts that relationship. But that is not the only reason to object to repugnant transactions. Dr Tom Shakespeare is a research fellow in policy, ethics and life sciences at the University of Newcastle. SHAKESPEARE: Many people are concerned that once we start having a trade in body parts, whether it’s kidneys or sperm or eggs or anything else, arguably this is leading to exploitation of poor people, people who have less choices, particularly people in non-Western countries. HARFORD: This question of exploitation is a tricky one, though. If somebody is in a vulnerable enough position to sell their kidney, their body, or their dignity, that vulnerability doesn’t go away just because the trade is banned. Just ask Manuel Wackenheim – a self-proclaimed “professional human missile” and a person of restricted growth. To be blunt, Mr Wackenheim was a dwarf whose career consisted of being hurled around for public entertainment. A French municipal government banned him from plying his trade and Mr Wackenheim pursued the case through the courts. Harvard economist Al Roth takes up the story. ROTH: He finally went to the UN Commission on Human Rights and argued that France was depriving him of his right to employment. And the French dwarf has a very moving statement in his part of the case record. He says you know France says that this is a violation of human dignity, but there aren’t any jobs for dwarves in France and the essence of human dignity is having a job and this is my job. And I remember when I read that, I thought you know the little guy wins. You know this is a great argument. But in fact he didn’t win. The UN found in favour of France and basically they argued that it’s such a repugnant thing for him to sell the right to throw him that human dignity is compromised; that you and I become less human every time he makes this transaction. HARFORD: In other words, they weren’t that worried about the dwarf’s dignity. They were worried about everybody else’s dignity? ROTH: I think so. I mean this was what I thought was a pure case of repugnance. You know it didn’t involve these complicated questions about kidneys or prostitution. This seemed like a pure case of repugnance. The UN collectively said yuck, you know … you know he shouldn’t be allowed to do that. HARFORD: Medical ethicist Tom Shakespeare has a more personal perspective on the case: he’s a person of restricted growth himself. Dr Shakespeare certainly sees the repugnance, but that‘s not his only objection. SHAKESPEARE: I think one thing we have to ask is what if we remove the word ‘dwarf’ from the phrase ‘dwarf throwing’ and put in ‘Jew’ or ‘gay’ or indeed any other minority? Immediately we feel very, very uncomfortable about such a situation. This is using a human being as a missile. It’s by definition objectifying. I think there are … It’s not as if there aren’t other ways for this person or these people to make money. And I think that if they consent to this, it has harms not just to themselves because people with restricted growth have got spinal and joint problems, but also potential harms to other people, other restricted growth people both in terms of being demeaning and offending people’s self esteem, but also making people more vulnerable to violence. So if somebody’s watched dwarf throwing in a pub or wherever it’s performed and then sees me walking down the street and they’ve had one drink too many, maybe they’d think it would be fun to throw me into a bush or across the road. So I think that I would draw the line at dwarf throwing . HARFORD: Now this is an argument that even an economist like me can understand. HANSON: I guess the best way I could reconstruct that repugnance is as an externality, so the standard economic lingo for something that affects somebody else who’s not part of the transaction. HARFORD: Professor Robin Hanson is an economist at George Mason University. HANSON: If this dwarf makes a deal with the bar to let him be tossed around, he benefits by the cash they pay him, the bar benefits by more customers and the customers have fun, but there could be third parties who are hurt like other dwarves. So if other dwarves think this demeans them and puts them down and makes them you know less respected by their peers, then they may be upset that he lets himself be tossed around. HARFORD: That suggests to me that there’s almost a stronger economic argument against dwarf tossing than there is against say trading organs. HANSON: Sure. There’s not really that many other parties who could claim to be hurt by trading organs. HARFORD: But trading organs is illegal and tossing dwarves in many countries is still legal. HANSON: That’s right. HARFORD: So we’ve got it the wrong way round? HANSON: I would think so. HARFORD: But it’s not a question of either/or here. We could ban all of these distasteful activities, or we could allow all of them. Dwarf tossing is appalling. Selling kidneys might seem disgusting. Why should we allow any of these repugnant markets to exist? The answer is that markets can do a lot of good. If you think about our historical prohibitions on lending money or writing life insurance, you realise they blinded us to opportunities to make life better – much better, in fact. Life insurance is a wonderful product, providing financial support to the bereaved and peace of mind to the rest of us. And it’s no exaggeration to say that one of the essential features of the healthy, wealthy countries of North America, Europe and the pacific rim is a banking system that works. Of course, it’s hard to claim that the wealth of western civilisation is based on a liberal attitude to dwarf tossing. But perhaps the wealth of the professional human missile Manuel Wackenheim is. Whenever two people decide to get together and trade, there has to be a presumption that they know what they’re doing and will only be harmed by banning that trade. That’s not to say that anything goes – just that before we let our disgust get the better of us, we should be sure that we know what problem we think we’re solving. Professor Robin Hanson has personal experience of being on the wrong end of a rush to judgement. HANSON: So on Monday morning two senators you know denounced the project and the very next morning the Secretary of Defence announced the project was cancelled. There was basically no sort of consultation with us who were running the project. This was perceived as crossing a very simple moral boundary. It’s not about the details, it’s not about the consequences; it’s just about there’s a line and you don’t cross it. HARFORD: The project that was so hastily cancelled was a proposal from the Pentagon’s research arm, on which Robin Hanson was an advisor. His idea was to improve intelligence analysis of the middle east by offering analysts from the CIA, the Pentagon and the State Department an opportunity to reveal what they really thought. How? By inviting them to bet anonymously on political events. In presidential elections, people now pay as much attention to the betting market as to the polls. Economists have discovered that if you want to predict the chance of something happening, the betting odds give you a very good idea. But just how far were Hanson and his colleagues planning to go? The headlines said they were taking bets on coups, assassinations and terrorist attacks. HANSON: We were not planning to bet on the details of individual terrorist attacks. We had on our sample web page that went up a faint background screen and that showed various sort of things that might have been in the real market. And in one of those small corners was a miscellaneous section because we weren’t sure we could cover everything with our standard set of questions and some sample miscellaneous questions included Arafat assassination and North Korea missile strike. And unfortunately those were the basis for the claim that we were setting up a market on terrorist attacks. HARFORD: So the controversy was based on something fairly flimsy, but I mean in principle would you be opposed to taking a bet that a foreign leader might be assassinated? HANSON: Not on the kind of markets we were going to set up because you could make only a few tens of dollars on our markets, so it’s not like somebody’s going to go assassinate Arafat in order to win twenty dollars in our market. HARFORD: But still some people might think that the idea is disgusting. HANSON: Well and they might, but you know we do all sorts of disgusting things in intelligence. That’s the nature of intelligence. HARFORD: So you’re not saying that this is something we should be proud of. Simply that it might actually work, it might deliver results? HANSON: Right. If you’re willing to do other sorts of intelligence, if you’re willing to have spies or look into distasteful things that might happen, this is another way you should do that, you should consider doing that. HARFORD: Could this futures market have worked? Perhaps. Imagine that US government agents and analysts had been able to take anonymous bets about the number of American soldiers killed in Iraq, month by month –my example, not Robin Hanson’s. You see both how disturbing the idea is but also how useful it might if the betting market actually produced a warning of trouble ahead. Yet what struck me about my conversation with Robin Hanson was that he judged the idea only on its results: would it work? Could it be abused? My impression was that what really mattered was not whether it was disturbing or offensive, but whether it would lead to better decision making. Not everyone thinks that results should be the benchmark for judging a market. In the end, the idea of using futures markets to analyse political risk was sunk by bad publicity. And some repugnant markets thrive by avoiding such publicity whenever possible – for example, the trade in human tissue such as bones, skin and blood, often from dead bodies, occasionally from living ones. Professor Naomi Pfeffer, a sociologist and historian at London Metropolitan University, has been studying the little-known trade for years. PFEFFER: Mrs Bloggs might agree to her head of femur being used by the hospital when she has her hip replacement operation and then unbeknown to her it’ll be handed over to one of the big commercial organisations which are processing bone and that company will then process it. And they’ve got catalogues you know showing the different size bones and you can buy it in powder form or pellet form or whatever. And they’re doing that for money. Now the point at which it becomes a market, I mean that’s arguable. HARFORD: But the market is concealed from ordinary people? PFEFFER: Yes. HARFORD: The person who actually donates the bone or other tissue never receives a penny? PFEFFER: No. And also the people in whom that tissue will be implanted often don’t realise it’s happening. HARFORD: So is our disgust counterproductive, by driving these markets underground? PFEFFER: I don’t think it drives things underground. It is underground because we are disgusted by it and it’s very difficult for us to think about it. I mean I’ve given up eating meat working in this area. I’m constantly in a state of being disgusted and it seems to me to be a very fundamental feeling about it. HARFORD: Our disgust might be inevitable, but it’s not at all clear that it helps us make better decisions. We go to extraordinary lengths to avoid facing up to the fact that the human body is enormously valuable. Professor Pfeffer’s research suggests that a corpse is worth about £110,000, or $220,000 – more than many people in poor countries earn in a lifetime. HARFORD: So you’re worth more dead than you are alive? PFEFFER: Oh yes, much more. HARFORD: Just break it down for me. How can a body be worth $220,000? PFEFFER: Well probably the most valuable body part is the bone and there is a huge industry processing bones for dentists, for cosmetic surgeons, and also for very serious conditions. The next biggest is probably skin. Skin is ostensibly collected for use in very major burns. It’s used as a dressing. When someone’s had a you know horrible burn, they dress the burn with cadaver skin. But - and this was the reason for a huge scandal in the States - they also process it for cosmetic surgery, so that women who have their lips puffed up and men who want penis enlargements, it’s often carried out with some product that’s been made out of cadaver skin. HARFORD: So I might think that my loved one’s body parts after they die are going to some wonderful therapeutic cause, but in fact they’re being used in penis enlargements? PFEFFER: Yes. HARFORD: And that might upset quite a few people. PFEFFER: It certainly did in the States when it came out. I must say that in this country the blood service, which is the major source of cadaver skin, it does not sell it for cosmetic purposes. KIDNEY ADVERTISEMENT (Music) Providing immediate transplants, both cadaver and live, in countries concerned with providing safe and legal procedures is our primary goal. The cost for a kidney or pancreas is 140,000 US dollars. The cost for a heart, lung or liver is 290,000 US dollars. These costs include travel and all hospital fees. There are no additional costs. HARFORD: The text of our little advertisement comes from a genuine website, based in California, selling organs for transplant overseas. And frankly, it all sounds disgusting. Yet distasteful or not, there is a serious problem to be solved. Four hundred people die each year on the UK waiting list for an organ, and about 3,500 die waiting for a kidney in the US. Writer Virginia Postrel has been campaigning for a change in the law. POSTREL: In the US there are 70,000 plus people waiting for kidney donations. And there are not nearly enough cadaver organs, deceased donors to provide for all those people, so that increasingly people turn to live donors - primarily family members, sometimes friends. But not everybody has family members, not everybody has healthy family members or compatible family members, so there is a question of how do you find somebody if your loved ones are not an option. I believe that as part of the same way that the transplant surgeon gets paid and the nurses get paid and the drugs get paid for and all these things get paid for that the donors should also be paid for the valuable and essential thing that they’re providing, which is the kidney. HARFORD: If you pay people for kidneys, you could certainly solve the kidney shortage. But wouldn’t the offer lead to the exploitation of the poor and the desperate? POSTREL: If you’re really concerned that the donors would be poor, we can rig a system where only rich people would have the incentive to donate. We could have a one year tax exemption where you pay no income taxes for the year in which you donate an organ - so this is the special you know zillionaire kidney transaction where all the rich people, you know they have this big monetary incentive to donate a kidney and then they brag about it to their friends. If your primary objection is the egalitarian objection, then I would say let’s start with something where payment is biased toward the rich, only rich people can make money selling their kidneys. HARFORD: But would that really resolve Bishop Rayfield’s concerns about exploiting the vulnerable? RAYFIELD: If somebody is really looking to make money out of it, I think it muddies the whole thing so much that it does take us back into the kind of issues that I’m thinking of. And I have a feeling that the selling of organs and the proposed kind of markets that people are wanting to put in place for this again are problematic for human dignity and dehumanised society. HARFORD: Fundamentally, the disagreement here is about whether we are worried about the process and the motive behind it, or about the results. Virginia Postrel and Robin Hanson believe that the motive behind a market is far less important than the results. The positive results are obvious and they believe the negative consequences can be addressed. The NHS could pay a regulated minimum price for kidneys; donors could be vetted for informed consent; we could even insist that donors were British. But for Bishop Rayfield, the results are secondary to the dehumanising process and the mercenary motive. Some economists are trying to satisfy the desire both for results and for a purer motive. Professor Andrew Oswald of Warwick University is one of them. OSWALD: I’ve suggested that people could be given a tiny tax break, a break on their tax forms if they agreed to donate their kidneys if they were tragically killed. And I think of that as stimulating a kind of gift between me and the state; and, second, I think that this box on a tax form would be useful in alerting people to the tremendous shortage of kidneys and alerting them to the importance of this problem. HARFORD: This is interesting. You are simultaneously trying to create a sort of price for volunteering to maybe be a kidney donor, and at the same time you’re talking about gifts. How do you reconcile the two? OSWALD: I’m trying to find a middle ground in-between the hard hearted market and the pure altruistic case where there are no incentives. I think we could exploit that ground. I know it’s an unfamiliar thing to do in Western society, but somehow have partly a gift and partly a purer incentive. HARFORD: You’re an economist. Why do you describe the market transaction as “hard hearted”? OSWALD: Because there are some areas of life where I think even economists like me understand that it’s going to be hard to run, and perhaps even undesirable to run a pure market. Some people have suggested that we could have a market with prices for kidneys and other parts of the body even. And perhaps in fifty years time or a hundred years time something like that will operate. HARFORD: That might just work, although there are a couple of objections. One is that it leaves patients waiting around for others to die from a head injury. Another is that organs from dead donors don’t work as well as organs from live ones. You might say that this is both repugnant and inefficient. But Professor Oswald’s incentive scheme isn’t the only way to soften the edge of a market transaction. Al Roth, the Harvard economist who matches students with school places, realised that there was an opportunity to do a different kind of match with kidneys. ROTH: Not everyone who is healthy enough to give a kidney can give it to the person they want to because if you wanted to give me a kidney, say, I might have a blood type that doesn’t allow me to take a kidney from someone of your blood type, or there can be other kinds of immunological barriers. So there’s about a 50% chance that you - not knowing anything about you - that you could take my kidney, but there’s only about a 30% chance that my wife could take my kidney because we’re parents and in the course of childbirth her immune system may have been exposed to and developed antibodies to some of the proteins that our children have that come from me. And if that’s the case, then her immune system would be ready to attack my kidney, so I might want to give her a kidney but I can’t. And you might want to give someone a kidney, but you can’t. But what kidney exchange is is I could give a kidney to your patient and you could give a kidney to my patient. So no money changes hands. HARFORD: Professor Roth and his colleagues – both surgeons and economists – have already made 22 transplants possible in New England using their kidney exchange program. The NHS division, UK Transplant, is making plans for a similar exchange in the UK. But isn’t this a sort of sleight-of-hand, a market based on barter rather than cash? For people such as Bishop Rayfield, the essential difference between a market and a kidney exchange is that the exchange preserves an altruistic motive. But is it really true that the gift relationship is better than a straightforward commercial transaction? Sometimes gifts can produce far more onerous obligations than price-tags. And loving relationships are rarely as simple as they seem. Virginia Postrel thinks we make far too much fuss about what is, after all, only a spare kidney. POSTREL: People get to think oh how heroic it is, these people donating their kidneys! Isn’t that wonderful? I get a happy glow from it! And they want to keep it as a heroic, uncompensated act because it makes them feel good. Never mind that you know tens of thousands of people are dying for your right to feel good about other people’s heroic acts. HARFORD: Belittling the heroism of kidney donors sounds cynical. But perhaps Virginia Postrel isn’t the cynic she seems to be. HARFORD: Now you did give a kidney to someone you didn’t know terribly well. Are you crazy? Why did you do it? POSTREL: (Laughs) Well I do think that, yeah, a lot of my interest in this issue came out of my own experience of donating a kidney to a friend - not a close friend, but someone that I did like a lot who had no family. And she was somebody who was only going to get a living donation from you know someone like me. She didn’t ask. I heard about it from a mutual friend that she needed one. And my experience with that was that the reaction is completely disproportionate to the actual risks involved. People do act like you’re completely nuts. HARFORD: You don’t feel in a way that you’ve almost delivered the perfect counterpoint to your own argument? I mean if your friend had offered you money, would you have been more likely to do it or less likely? POSTREL: Well knowing my particular friend, she would have really liked to do an arm’s length transaction with a stranger where she paid somebody she didn’t know because there can be a great deal of emotional entanglement when there is a gift. It happens to be that I’m not the kind of person to think that she owes me anything, but especially in families there are all kinds of psychodramas that go on with requiring this to be a gift. It’s not some kind of horrible exploitation. It’s a perfectly normal, safe procedure and we should allow people to be compensated for it. HARFORD: This argument is really whether we care more about motives, or more about results. Either way, there seems to be a strong case for banning the human missile, Mr Wackenheim, from plying his trade. The negative repercussions – especially on other people of restricted growth – are all too obvious. But as Robin Hanson pointed out, it’s hard to see who else is hurt when money changes hands for an organ. Perhaps Mr Wackenheim should be able to make some money by selling a kidney instead; it might still make us queasy, but rather than providing a tacky night out, he could save somebody’s life.