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Injecting Adam Smith’s Ideas in the Market for Kidney Transplants

Walter Castro and Julio Elias ()

No 828, CEMA Working Papers: Serie Documentos de Trabajo. from Universidad del CEMA

Abstract: Organs for transplantation are extremely valuable, and their shortage has become one of the most burning public policy issues in most countries with developed transplant programs. Could the kidney transplantation system benefit from an injection of Adam Smith's ideas? In this paper, we combine Adam Smith’s ideas of both The Theory of Moral Sentiments and The Wealth of Nations to analyze the main developments of the market for kidney transplantation, including kidney exchange, default rules for deceased donations (presumed consent versus informed consent), priority rules, and proposals to pay organ donors. Injecting Adam Smith’s ideas into this problem bring new insights in terms of public policy and market design. For instance, his theory of equalizing differences, exposed in Book I, Chapter X, of the Wealth of Nations, provide a base to estimate what would be the price of a kidney in a legal market (Becker and Elias 2007). His views about human decisions struggling between ‘passions’ and the ‘impartial spectator’ and on the difficulties of organizing the economic life appealing mainly to benevolence, and other sentiments toward close ones, are illuminating for policy design of any system of donation (paid, non-directed donations, or exchanges) by providing an understanding of what motivates people in the context of markets. Considering Adam Smith’s ideas, we also evaluate many restrictions currently in place in the market for kidney transplantations that impose severe limits on individual decisions, some of them to make up for a possible lack of self-command. We hope we show with our analysis not only the topicality of Smith´s ideas but the importance for the economic analysis of combining both the Theory of Moral Sentiments and the Wealth of Nations, and not to consider them separately as isolated masterpieces.

Pages: 32 pages
Date: 2022-04
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Handle: RePEc:cem:doctra:828