Full Transcript Repugnant Markets Script Wps

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RADIO 4

CURRENT AFFAIRS

ANALYSISREPUGNANT MARKETS

TRANSCRIPT OF A RECORDED DOCUMENTARY

Presenter: Tim HarfordProducer: Richard Vadon

Editor: Nicola Meyrick

BBCWhite City

201 Wood LaneLondon

W12 7TS

020 8752 7279

Broadcast Date: 12.07.07 2030-2100Repeat Date: 15.07.07 2130-2200CD Number:

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Duration: 2741Taking part in order of appearance:

Virginia Postrel

Writer

Al RothProfessor of Economics, Harvard University

Dr Lee RayfieldBishop of Swindon

Dr Tom ShakespeareResearch Fellow in Policy, Ethics and Life Sciences,

University of Newcastle

Prof Robin HansonEconomist, George Mason University

Prof Naomi PfefferSociologist & Historian, London MetropolitanUniversity

Prof Andrew OswaldEconomist Warwick University


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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. Its an inspiring sacrifice.

Yet there arent 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,

shouldnt 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 cant I call a bookmaker and bet on something a bit more

important?

BOOKMAKER 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, Im not too sure. Just hold the

line a moment please. Thank you. (Music)

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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 dont bet on deaths because its

a negative bet, you see.

HARFORD: Theres a lesson in that. If you want to

take a bet with a stranger that youre going to die, dont 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 thats going to pay your relatives if you die. Thats

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.


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It used to notbe so repugnant to sell slaves, but it now is. So I

think actually its a little hard to predict on first principles

which things will be repugnant and which not because theyre

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 dont think theres going to be a simple principle.

One thing that sometimes adds repugnance to some kinds of

transactions is adding money. Its against the law in Britain

and the US to buy a kidney, but its not against the law to give

away a kidney - right? Lots of kidney transplants these daysare from live donors. Its a wonderful thing - you know the gift

of life. So sometimes something that isnt 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 its

immensely precious because we believe that God himself came

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as a human being, there are those occasions when it is right to

give your body for others. When were 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 whats going on. The

kidney itself has become a commodity and its very difficult

then to sort of look at the altruistic sacrificial side of

something as separate from the whole event.

HARFORD: Its 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 Bishops 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 its

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 doesnt go


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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 arent 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 didntwin. The UN found in favour of France and basically

they argued that its such a repugnant thing for him to sell theright 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 werent that

worried about the dwarfs dignity. They were worried about

everybody elses dignity?

ROTH: I think so. I mean this was what I

thought was a pure case of repugnance. You know it didnt

involve these complicated questions about kidneys or

prostitution. This seemed like a pure case of repugnance. The

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UN collectively said yuck, you know you know he shouldnt

be allowed to do that.

HARFORD: Medical ethicist Tom Shakespeare has a

more personal perspective on the case: hes a person of restricted

growth himself. Dr Shakespeare certainly sees the repugnance, but

thats 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. Its

by definition objectifying. I think there are Its not as if

there arent 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 restrictedgrowth 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 peoples self esteem,

but also making people more vulnerable to violence. So if

somebodys watched dwarf throwing in a pub or wherever its

performed and then sees me walking down the street and

theyve had one drink too many, maybe theyd 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.


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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 whos 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 theres

almost a stronger economic argument against dwarf tossingthan there is against say trading organs.

HANSON: Sure. Theres 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: Thats right.

HARFORD: So weve got it the wrong way

round?

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HANSON: I would think so.

HARFORD: But its 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 its

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, its 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 theyre doing and will only be

harmed by banning that trade. Thats 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 were solving.

Professor Robin Hanson has personal experience of being on the wrong

end of a rush to judgement.


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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. Its not about the details, its not

about the consequences; its just about theres a line and you

dont cross it.

HARFORD: The project that was so hastily cancelled

was a proposal from the Pentagons 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 werent sure we could cover everything

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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 its not like somebodys 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. Thats the

nature of intelligence.

HARFORD: So youre not saying that this is

something we should be proud of. Simply that it might

actually work, it might deliver results?

HANSON: Right. If youre willing to do other

sorts of intelligence, if youre willing to have spies or look into

distasteful things that might happen, this is another way you


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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 Hansons. 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 itll be

handed over to one of the big commercial organisations which

are processing bone and that company will then process it.

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And theyve got catalogues you know showing the different

size bones and you can buy it in powder form or pellet form or

whatever. And theyre doing that for money. Now the point at

which it becomes a market, I mean thats 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 dont realise its happening.

HARFORD: So is our disgust counterproductive, by

driving these markets underground?

PFEFFER: I dont think it drives thingsunderground. It is underground because we are disgusted by

it and its very difficult for us to think about it. I mean Ive

given up eating meat working in this area. Im 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 its

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 Pfeffers research suggests that

a corpse is worth about 110,000, or $220,000 more than many

people in poor countries earn in a lifetime.


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HARFORD: So youre 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. Its used as a

dressing. When someones had a you know horrible burn, they

dress the burn with cadaver skin. But - and this was thereason 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, its often carried

out with some product thats been made out of cadaver skin.

HARFORD: So I might think that my loved ones

body parts after they die are going to some wonderful

therapeutic cause, but in fact theyre being used in penis

enlargements?

PFEFFER: Yes.

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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


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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 essentialthing

that theyre providing, which is the kidney.

HARFORD: If you pay people for kidneys, you could

certainly solve the kidney shortage. But wouldnt the offer lead to the

exploitation of the poor and the desperate?

POSTREL: If youre 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 saylets 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

Rayfields 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 Im

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

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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: Ive suggested that people could begiven 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 youre

talking about gifts. How do you reconcile the two?


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OSWALD: Im 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 its an unfamiliar thing to do in Western

society, but somehow have partly a gift and partly a purer

incentive.

HARFORD: Youre 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 its

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 dont work as well as organs from live ones. You might say that

this is both repugnant and inefficient. But Professor Oswalds incentive

scheme isnt 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.

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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 doesnt allow me to take a kidney from someone of

your blood type, or there can be other kinds of immunological

barriers. So theres about a 50% chance that you - not

knowing anything about you - that you could take my kidney,

but theres only about a 30% chance that my wife could take

my kidney because were 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 thats the case, then her

immune system would be ready to attack my kidney, so I might

wantto give her a kidney but I cant. And you might want to

give someone a kidney, but you cant. 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 isnt 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


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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! Isnt 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 peoples heroic

acts.

HARFORD: Belittling the heroism of kidney donors

sounds cynical. But perhaps Virginia Postrel isnt the cynic she seems

to be.

HARFORD: Now you did give a kidney to

someone you didnt 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 didnt ask. I heard

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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 youre completelynuts.

HARFORD: You dont feel in a way that youve

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 arms length transaction

with a stranger where she paid somebody she didnt know

because there can be a great deal of emotional entanglement

when there is a gift. It happens to be that Im 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. Its not some kind of horrible

exploitation. Its a perfectly normal, safe procedure and weshould 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, its 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 somebodys

life.

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