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Alvin Roth’s Kidney Market

All humans are born with two kidneys, but most of us only need one. Yet, until this last decade, it was almost impossible for people facing kidney failure to actually find a suitable donor. Waitlists typically included hundreds of thousands of names, and minimum wait times were at least five years. Sadly, many of the people on the waitlist passed away before a suitable match was ever found.

I know what you’re thinking. This sounds like a problem for the World Health Organization to solve, or perhaps some genius surgeon. But, it turns out, the person for the problem was a person who had never worked a day in the medical field.

Alvin E. Roth.By Bengt Nyman, is licensed under CC-BY

That man was an economist named Alvin Roth. Despite his lack of medical knowledge, Roth designed a system whereby people in need of a kidney were matched with a suitable donor. The result was tens of thousands of lives saved across the world. Today, we’re going to explore just how Alvin Roth became one of the medical field’s greatest modern heroes.

The Problem

Economists are unusual creatures. Where most people see complex, unsolvable issues, they work to break those problems down and find simple explanations and solutions. That was the case with Alvin Roth, a Stanford economist who noticed massive inefficiency in the market for human organs, especially kidneys.

Roth saw a few key problems. First, the demand for kidneys was sky-high throughout the world, as millions of people suffered from kidney failures, requiring expensive, time-consuming treatments. But the supply of good kidneys was far too low to meet the demand. This wasn’t an issue of willing donors, though. It was an issue of finding the right match. Leading to the second problem.

The market for human body parts was not typical. In common markets, there are two factors: supply and demand. Supply and demand influence the price, and sellers trade their goods and services with any buyer willing to pay that price. These are called commodities markets. 

The market for kidneys includes another factor, though: finding the right match. Successful kidney transplants require that the donor and recipient share twelve common health factors, namely, blood and tissue types. So, while supply and demand still play a role in the market, the most crucial determinant of a successful transaction is whether or not the kidney is an ideal match.

kidney anatomy
Kidney Anatomy.By BruceBlaus, is licensed under CC-BY

These are called matching markets, and they happened to be one of Alvin Roth’s specialities. Typically, these markets reach equilibrium because would-be buyers can simply name a price they’re willing to pay for a match, and willing sellers come forward. 

But, in the market for kidneys, willing buyers and sellers are not legally allowed to transact because it’s considered a repugnant transaction. 

A repugnant transaction is an exchange that some people or governments don’t want anyone to engage in. Perhaps the most common example is prostitution. Most societies have no problem with allowing two willing people to have sex with each other. But, when one participant pays another, it becomes illegal, based mainly on moral grounds.

Similarly, most of the world sees organ transplantation as a beautiful way to save human lives, but it becomes morally questionable when money is brought into the equation. Even though humans only need one kidney, governments don’t want to incentivize poor people to sell body parts just to pay the rent. As a result, selling a kidney is illegal in every country worldwide except for Iran.

Altogether, this meant that people who needed kidneys were unable to get them. In the United States alone, the waitlist for a new kidney regularly sat around 100,000 people. Some of those people eventually received an organ from a recently deceased donor, but, for many, a suitable match was never found. 

The Solution

Decades before the first kidney exchange ever took place, Roth devoted much of his career to studying matching markets and how to design those markets to work better. Early on, he applied his studies to improving admissions processes for American schools. But, in 2000, while Roth was teaching at Harvard, a nearby hospital performed the first-ever kidney exchange, and Roth had an “aha moment.”

See, as we discussed earlier, a massive portion of kidney donors are not suitable matches for the recipients. Typically, when this happened, the donor would simply keep both their kidneys, and the recipient was placed on the waitlist.

In that first kidney exchange, the hospital realized that, while each donor’s kidney wasn’t a match for their preferred recipient, they were conveniently suitable for the other pair’s recipients. So, the two pairs were brought together, and the exchange was completed.

But while it’s highly unlikely that two kidney donors are available at the same hospital simultaneously, there is almost always a willing donor match somewhere in the United States. Roth’s idea was to create this nationwide market. After all, finding a suitable match from a pool of two donors doubled the chances. But what if that pool included hundreds of willing donors?

Better yet, what if the exchange allowed willing donors to step forward regardless of whether they knew someone who needed a kidney. This could create a chain of generous donors finding a single matching recipient, and the ripple effect could save thousands of lives across the country.

Creating the Market

Roth’s solution was shockingly simple. The inefficiency could be explained by a lack of shared information. There were no groundbreaking technological innovations or complex operations. Instead, a database tracked the donor kidneys’ traits and the patients who needed them, and when a match was found, surgery was set up.

Compatibility simulations of kidney Market.

Of course, even the most straightforward ideas will face issues in practice. First, the idea was seen as somewhat radical in the traditionally conservative medical community. Setting up an exchange would require donors and recipients to consent to sharing medical information that was typically kept under lock and key.

Second, most exchanges were done in pairs, requiring that the surgeries were done on the same day. This posed a logistical issue, as finding several available operating rooms in nearby hospitals would not be an easy task.

Roth sent out proposals to networks of hospitals and clinics throughout the country and only received a single positive response from a group in New England. So, Roth set up his pilot program there in 2004.

It took some time to work out the kinks, but, soon enough, the waitlist began to shrink, and the rest of the country took notice. As early as 2007, Roth’s market design spread to a handful of other states, some setting up their own networks and others hiring Roth to do it for them.

With this expanding network, Roth watched as his system employed huge chains of donors and recipients, creating pools of up to seventy people exchanging kidneys, and the waitlist shrunk. Now, the world took notice, and Roth and his research partner were awarded the 2012 Nobel Prize in Economic Science.

Today, kidney exchange is standard practice throughout much of the world, even across borders. In 2015, the first international kidney exchange took place between pairs in India and Portugal. The following year the same thing was done with citizens of Austria and the Czech Republic. 

The Next Steps

Roth’s kidney exchange markets have been recognized as a massive success throughout most of the world, but some countries like Germany have yet to follow suit. They remain wary of the unintended consequences of creating a market for human organs. While Roth’s research has moved to other markets, he has continued to push for updates to the system surrounding kidney exchanges worldwide.

In places like Germany, that means working to setup highly regulated exchange programs and working with governments to change the laws that restrict those.

In the United States, it means changing legislation around insurance and health care costs. Currently, most donors are required to cover many of the costs associated with the procedure, but Roth is working to change that. 

Under the current system, insurance companies willingly pay hundreds of thousands of dollars per patient to treat those facing kidney complications. By covering the cost of donations, all parties involved could save massive amounts of time and money. But Roth’s end goal is even more ambitious and controversial. 

He wants to change the perception that buying and selling kidneys is a repugnant transaction. Admittedly, he’s facing an uphill battle in that particular arena, as all of his proposals for establishing financial incentives for donating kidneys have been shot down by the World Health Organization and other similar medical authorities. 

Still, a man can dream, right? Roth envisions a world where kidney sellers are celebrated as heroes for the lives that they save, instead of looked down upon for harvesting their own body parts for profit.

Other Applications of Roth’s Principles

While Roth is now well-known for his work in the kidney exchange field, his matchmaking principles have improved many other kinds of matching markets. This includes those for schools and jobs, markets that have typically been highly inefficient at finding the right fit.

Perhaps the most surprising application of Roth’s principles has been in the field of dating and relationships. After all, most people tend not to think of dating as a market that can be improved with economic principles, but, of course, economists believe it can. The initial idea to apply market design to dating came from Alvin Roth’s research partner, a man named Lloyd Shapley.

Shapley created a surprisingly effective strategy for finding ideal partners during speed dating events, though, I have to say, it’s so cold and impersonal that it’s not at all surprising it was designed by an economist.

Following an hour-long speed dating event, Shapley had all of the women in attendance fill out a rank list of their favorite potential partners. Every man in attendance was then given a list of women who ranked him first, and the men could then choose which of those women to engage with. 

The idea is shockingly simple, but it reveals a fundamental aspect of Roth and Shapley’s research on matching markets. They are incredibly inefficient, but that inefficiency can often be solved by compelling everyone involved to share information more openly. After all, in the case of the kidney exchange, Roth didn’t actually convince any additional people to donate kidneys. He simply found the right match.


What do you think? Are Roth’s innovations in matching markets actually praiseworthy? Or was he simply the first person to point out clear and obvious inefficiencies? 

Will society ever reach a point where it’s considered moral to sell your organs for money? Or does Roth’s cold, calculated economic thought process downplay the potential downside of creating a legal market for kidneys?

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