Maitreesh Ghatak
Posted online: Nov 09, 2009 at 0244 hrs
I was recently invited to give a lecture in Kolkata on whether to legalise the sale in human organs (the kidney in particular). Coincidentally, the day before the lecture, I was in Singur to discuss with farmers the issue of land acquisition. Some of the farmers I met said they were not ready to sell their land, whatever be the price offered. Other, more affluent farmers claimed that the returns from farming were small, and so they would not mind selling their land if they got a suitable price. On the face of it, land acquisition and legalisation of the trade in human kidneys seem to have little in common. But one can indeed draw a parallel between the two if one thinks in terms of the legal and ethical limits of economic transactions.
Most day-to-day market transactions involve ‘willing’ buyers and sellers. Barring taxation and quality control, the state has little or no role to play in them. On the flip side are transactions where either the buyer or the seller is ‘unwilling’. When one of them exerts pressure over the other or adopts dishonest means, it is naturally considered unlawful. But the act of buying and selling human kidneys is unacceptable in the eyes of the law even when both the buyer and seller are willing. In the case of agricultural land, on the other hand, the State can have the legal sanction to acquire it even in the face of unwillingness from farmers.
In economics, we evaluate everything in terms of three main criteria: efficiency, equity and individual freedom. Advocates of the free market usually prioritise efficiency and individual freedom, while those leaning left emphasise equity. If the transacted commodity, be it agricultural land or one’s kidney, is more valuable to the seller than to the buyer, then the transaction generates greater economic efficiency. But if poverty and deprivation are among the reasons for selling (as in the case of a poor farmer selling land, or his kidney), then, the efficiency argument notwithstanding, the transaction becomes problematic from the point of view of equity. The criterion of individual freedom dictates that no one can interfere in the decision to sell or not to sell things that are our own, such as our labour or our land, or, according to some, our kidneys.
Coercive land acquisition by the government such that the farmer is paid a price at which he would not have voluntarily sold his land clearly fails in terms of all these three criteria. If it is indeed more efficient to set up a factory on farmland then that means the total profits and the social benefits offset the loss to the farmer, monetary as well as non-monetary. In that case, there must be a price at which the farmer will voluntarily give up his land.
In the case of kidney sales, or distress selling of his land by a farmer, it is a voluntary exchange and so the issue of concern is equity. The problem is that there is no dearth of inequitable transactions around us (for example, child labour). Some market transactions make inequity more apparent and shocking —such as a poor person selling his kidney— than others, such as a poor farmer selling his land, which we have gotten used to. But this is clearly somewhat subjective. Also, it is not as though equity would be restored if all these markets were eliminated altogether. Would the desperate circumstances that might drive a poor person to sell his kidney on the black market be alleviated by a crackdown on organ trade? The only way to deal with the problem of inequity is poverty alleviation, and not shutting down markets arbitrarily.
Besides equity, two other arguments are usually advanced to restrict voluntary transactions in the marketplace. For instance, if a transaction between Tom and Dick has an adverse effect on Harry (e.g., pollution), then Tom and Dick clearly cannot have an unrestricted right to trade. However, for both land and kidney sales, it is not clear that there is any indirect effect on third parties. Of course, there might be aesthetic or moral objections to any exchange (e.g., prostitution or gambling), but it is difficult to use them to legally forbid a transaction, because they are almost always subjective.
Another case for regulating voluntary exchanges could be made when there are questions about the judgement of the seller or the buyer. Is he equipped to weigh the pros and cons of his decision? Does he possess complete information about the risks involved? Clearly, these are reasonable concerns. But the difficulty is that they apply to many other contexts (e.g., taking a loan, making a risky investment, gambling, smoking, drinking etc) and while they call for suitable regulations and information campaigns, it is hard to justify banning all such activity.
Are there any other arguments against legalising sales of kidneys? To answer this, let us turn to some facts about kidney transplants. No country except Iran has legalised the sale of human kidneys, though most countries allow family members to donate the organ. In India, selling one’s kidney was banned by law in 1994.
The surgical procedure for removing a kidney is not too risky and usually there is no significant long-term damage to the donor either if they have access to adequate healthcare. What then could be the reason for prohibiting the sale of an organ that one is free to donate? Those in favour of legalising kidney trade have a simple argument: it is better to have two individuals living with a kidney apiece than one of them living with two. This is the argument put forward by economists Gary Becker and Julio Elias (2007)*. As Figure 1 shows, there is a big and growing gap between people on the waiting list for kidney transplants in the US and the number of kidney transplants. Figure 2 shows the rising number of deaths on the waiting list. Becker and Elias argue that if the price of a commodity is fixed by law at zero, it will naturally give rise to excess demand, and consequently to black markets and abusive practices. However, they also acknowledge that the long-term health consequence of selling kidneys has not been good in developing countries, even when it is legal, be it in India before the ban or in Iran after legalisation. A large percentage of respondents in surveys conducted in India and Iran claimed they developed health problems after a kidney was removed and as many as 80% said they would reverse their decision to sell their kidneys if they got another chance. It is, of course, possible that the results of a similar survey would be different in a developed country with better healthcare facilities. Let us, therefore, assume for the purposes of our discussion that the surgical procedure does not entail much risk. Would it be all right then to legalise the kidney trade? To answer this question and to understand land transactions better, let’s consider the case of heart transplants. That’s the topic for the next part of this research.
—*Becker, G and JJ Elias (2007): “Introducing Incentives in the Market for Live and Cadaveric Organ Donations”, Journal of Economic Perspectives, 2007
To be concluded in FE Edge, Monday, November 16
The author is professor of economics at the London School of Economics.