Let People Sell Kidneys!

In 2011, 35,031 people were added to the wait list for a kidney transplant. Only 31,626 were taken off the list that year, growing the waiting list by over 3,000 people.

Of those removed, 16,195 were taken off because they got a new kidney. However, 4,959 were taken off because they died and an additional 2,506 were taken off because they became too sick to either survive the surgery or have a new kidney make the difference (it's not clear from the source which one, or both, is the case).

About half of the individuals who are waiting for a new kidney are between the ages of 50 and 64. Their median wait time (between 2003 and 2004, the most recent years available) is 1,627 days or 4.45 years.

Dialysis cost about $75,000 per patient per year. That's $3,375,000 per patient.

Even if the market price for a kidney was $100,000, that would save not only millions of dollars per patient but, by getting kidneys faster, save thousands of lives. Every. Single. Year.

Data on kidney wait list found here.

Ethics Are Incentives

It is not enough to know what's the right thing to do; one must also have the incentive to. If your back is to the wall, you'll do unethical things (even if you may justify it as ethical while you're doing it). But it is hard to blame people for doing bad things if they are just responding to incentives. Consider this passage from Nothing to Envy describing life in North Korea during the famine.

...[Hunger] targets the most innocent, the people who would never steal food, lie, cheat, break the law, or betray a friend. It was a phenomenon that the Italian writer Primo Levi identified after emerging from Auschwitz, when he wrote that he and his fellow survivors never wanted to see one another again after the war because they had all done something of which they were ashamed.

As [North Korean] Mrs. Song would observe a decade later, when she thought back on all the people she knew who died during those years in Chongjin, it was the "simple and kindhearted people who did what they were told--they were the first to die."

If you refuse to give a starving child your food when you are starving, are you really a bad person?

A Mathematical Definition of Evil

I told my Advanced Micro students the other day that economists don't really believe in good and evil. There's just good or bad incentives. They protests: what about rapists and murders? This lead me to the following (working) definition of evil:

A person is evil if the derivative of his/her utility function with respect to actions with negative externalities is positive because such actions have negative externalities.

-A utility function is a mathematical formula that describes how different variables affect how happy someone is.
-Taking the derivative of the function with respect to a variable tells us if this person is happier (result is positive) or sadder (result is negative) if they get more of something.
-A negative externality is something that makes others' worse off.

So if someone enjoys playing loud annoying music because he enjoys the fact that he is annoying people, he is evil by this definition. If someone enjoys killing someone because the victim doesn't want to be killed, this person is evil. If someone enjoys torturing someone, but only if the victim doesn't enjoy being torture, then that person is evil.

Note that the victim would have her own utility function with a negative derivative with respect to the activity. The louder your music, the greater the torture, the sadder she is.

We can further qualify levels of evil by either (a) how much the person enjoys making others miserable (the size of the derivative) and/or (b) how much the negative externality hurts other (the size of the derivative of victim with respect to that same activity).

You can quibble--how much do we control our own utility functions?--but I think this is mathematically close to what most people imagine "evil" to be.

From Hope to Despair

Prepping for a lecture on economics and ethics, I stumbled upon this article by Drs. William Harmon and Francis Delmonico about organ transplants in Iran. Iran has a unique approach to organ donation: donors are paid, partly in cash and partly in the form of life-long health insurance. Unsurprisingly, 80% of donors are poor.

The Iranian model also makes evident what has long been anticipated would occur in a regulated market. There is a fundamental unethical construct that cannot be overlooked despite the attributes that we have cited regarding the Iranian system. It is the poor person who bears the burden of being the kidney source for transplantation. That exploitation becomes real in Iran (>80%) as it does in any other regulated market. The poor person is coerced to make this donation decision, as there are no other means available to obtain money for what becomes temporary personal or family support. This coercion violates the dignity of the human person who is used by those who are highly advantaged to undergo transplantation within the same society.

It takes an impressive amount of intellectual gymanstics to turn someone's best option into a source of their despair precisely because it is their best option.

Matthew Yglesias Is Hoarding the Internet

Matthew Yglesias, in a two (or more?) part series (I here; II here) calls high salaries inherently immoral:

It’s greedy, absurd, and morally indefensible for talented people born in favorable circumstances to be dedicating their lives to accumulating huge sums of money in order to engage in lavish consumption....While I was writing this post, I took a break from waxing indignant about multi-millionaires buying their third houses to donate some money to UNICEF.

If, like me, you're a regular reader of Yglesias's blog, you might know he posts more often than the prolific Tyler Cowen, often scooping people who could have posted on items he already posted on. Just as the wealthy hoard money, Yglesias is hoarding blog posts. With so many struggling blogs out there, he should take his own advice e-mail their bloggers with his latest discoveries so they have a chance to be well read as well. To paraphrase Yglesias, becoming obscenely knowledgeable in the Internet world and then hoarding your information is, itself, morally wrong.

Should We Tax Happiness?

A new study suggests that a good part of income (for cricket players) comes from luck. Home field advantage matters a lot in cricket (apparently), scout show up randomly, and a good debut has a lasting impact on your career. If you happen to be on your home turf when the scout shows up, you're be in a better long-term position than your opponents. (The study was able to separate out performance from the field and performance from skill.) Matthew Yglesias argues that this is evidence for "Progressive taxes and more and better public services."

This leads to an intriguing question: should we tax happiness? The goal of public services (in this context) to the help the worst off and we use progressive taxes to fund those services, ethically justified because the wealthy didn't "earn" 100% of what they made. And because taxing someone because they got something by luck is justified in the area of salary, then taxing someone because got something else by luck must be equally justified.

Before I go further, two points. One is that this is not a serious policy proposal. Measuring happiness is very hard to do, made even more so since you'll be taxing people based on information that's completely subjective. I have no idea how you would do it nor do I care to figure it out. It's just a discussion to check for consistency. Second, yes generic happiness and wealth are functionally the same thing. Yes, the happiness research disagrees with me on this, partly because of issues with happiness research and the difficulty of measurement. All I'm saying is that when you take money away from people, you make them less happy and when you give them money they are more happy. The two are, on the margin, interchangeable (so no comments about how taxing income takes away what people didn't earn but taxing happiness doesn't collect "happiness" for the government to consume).

With that out the way, consider your own happiness. Most notable in my happiness is my relationship with my girlfriend, Tanya. I love her a great deal and she's by far the most serious relationship I've had. We met somewhat by chance, via match.com. (I call this is by chance because I was thinking about leaving the site having gone on so many dead-end dates and she had recently joined it.) According to Yglesias, this is grounds for a tax on my happiness. Most happiness that comes from social interaction is very similar to the cricket story: if you happen on a good opening conversation (performance) with the right person (scout), it can scale into something truly astounding. The question becomes, is this a stupid idea because it's impractical or because the whole notion of taxing happiness inequalities is silly? My vote is the latter as, I wager, it would be for most people.

An Item From Santa's Lap

Paul Krugman applauds the Senate health care bill for, among other things, forcing insurance companies to cover patients with pre-existing conditions. This has been a long standing point of reform: why should a family be forced to cover the expenses of a medical problem when they had no role to play in the development of the condition. It's not as if they're smokers suffering from lung cancer. And many families can't afford the very expensive treatments that come with such conditions. But insurance companies can and so, the argument goes, they should pay.

For one, I'm not sure they can, but there's a deeper point. A pre-existing condition is tragic, doubly so if burdened on a family who cannot afford to properly address the issue. But that does not translate into forcing someone else to shoulder the burden, whether the target is insurance companies, hospitals, or the U.S. government (though the last is most justified since, in theory, it works for all of us). Some believe that doesn't matter; covering such individuals is the right thing to do. But that misses the larger picture. Even if they could afford it and even if they could continue to afford it for the foreseeable future, it would be ethically wrong to force one group to shoulder the problems of another group. Yes, I know we do this a lot already, but that's hardly grounds to keep doing it.

Here's an analogy. Some people are born ugly, or stupid, or socially awkward. Such people have difficulty getting dates or maintaining friendship. While befriending a person with such a pre-existing condition just to be nice would be seen as an admirable act of kindness, no one would agree to a policy which forces people to befriend or date such individuals. It would be seen as unethical, even if the individual is not able to "afford" such loneliness (i.e. they are suicidal).

It's all well an good to ask for things but you have to think about where they come from.

The Burden of the Pre-existing Condition

If you were born with Asperger syndrome, should people be forced to date you? Most of you would probably say "no." It's a good answer: why should people be punished for something that isn't their fault? So why do so many believe health insurance companies should be required to accept applicants with pre-existing conditions? (Before you respond with "I don't want to date someone who doesn't want to date me," remember Asperger syndrome severely limits your ability to read social cues; you won't be able to tell they are with you only by force.)

It's not even that insurance companies won't cover pre-existing conditions. It's that they won't cover them at a particular price: a low price. In the end there are those randomly burdened with a condition that's expensive to care for and they don't want to pay for it (at least all of it). But that does not translate into forcing someone else to cover the costs.

And no, insurance companies are not sitting on lots of excess cash. Record profits are not the same thing as high profits (and even if they were, proposing a permanent change based on temporary conditions is very reckless way to make policy). Because they are barely profitable, forcing their costs up with such reforms will force prices up and making it too expensive for someone who could otherwise get it. Now we are forcing our neighbor to carry the burden of our condition. Where's the justice in that?

All That We Are

NPR's The Diane Rehm Show today discussed the advantages of having a Hispanic woman (Sonia Sotomayor) on the Supreme Court. Because she'll be able to draw on a "wider palette" of experience, they say, she'll be a valuable asset and necessary resource.

Just because she had different experiences doesn't mean she has more, and certainly not ones more applicable to cases. Just because she'll be more empathic to women's issues or Hispanic culture doesn't mean she'll be more fair or that the court as a whole will be more fair. Yes, she can add something others can't, but in that endeavor aspects of a case can become more important than they should be. No net gain is obvious.

We are all merely the sum of our experiences so any fair judge would recognize that. This is what expert testimony is for. By expecting the justices to capture all that we are by their demographics alone, we hurt ourselves. Prioritizing gender or race (or sexual preference, or religion, or the presence of a disability, etc) requires us to narrow our field of search. It could well deny us someone far more accomplished, and fair, than whoever is left after we apply whatever parameters we happen to be prioritizing at the time.

Of Human Design

Mike recently directed me to a blog by a mutual vegetarian friend from college, Adam. The language is harsh: eating meat is oppression and so forth. What lovely serendipity that we covered prehistory in my development class today.

The roots of human civilization lie in what Jared Diamond calls "farmer power," or the development of food stuffs so other people can specialize in non-farming professions (soldiers, inventors, traders, etc). Critical to this was the domestication of animals for purposes of food and labor (the aforementioned oppression). Over generations brain power and survival techniques (such as good eyesight) were severely diminished. In other words, they are not natural in any normal sense of the word. Indeed they are less natural than a wooden table, since at least the wood retains original DNA. Domesticated animals are a new species.

Adam posted a few videos from Waking Life, an independent philosophical film. One character argues "the gap between, say, Plato or Nietzsche and the average human is greater than the gap between that chimpanzee and the average human," a rather strange claim given history. The average human purposefully domesticated plant and animal species, something no other animal has done. That's an astonishingly large leap from a chimpanzee.

A great departure from their wild ancestors, modern farm animals are basically bags of meat with scarcely a glimmer of intellect. They were bred to be property, and non-sentient at that (save for the most encompassing definition of sentient). Even by their cousin's standards they are stupid. Of all the oppressions of the world, meat-eating hardly seems like a worthy one to fight.

The Ethics of Greed

The Economist reports this week that CompartamosBanco, a Mexican bank, is making a killing in micro finance. Trail blazed by Nobel Peace Prize winners Muhammad Yunus and his Grameen Bank, micro credit loans very small amounts (a few hundred dollars) to entrepreneurs in developing countries. Usually done by nonprofits, CompartamosBanco is a notable exception.

Lending to those in developing countries is expensive because the social, legal, and physical infrastructure is so lacking. The Mexican bank spends about a $152 a year per client. No wonder its interest rates run 79%--usury to most developed countries. But the customers gladly accept the rate. CompartamosBanco has nearly one million borrowers--a far cry from Grameen Bank's seven million but impressive nonetheless.

CompartamosBanco's success encourages new entrants risking their own money (seven new competitors in Mexico alone) while Grameen continues to rely on subsidies and donations. As the economy of scales takes into effect, interest rates fall (seven years ago it used to be 115%) and yet more people rise out of poverty. Not only is this yet another example of how profit seeking helps us all, it reminds us of one of the strange lessons of economics: the only way to get low prices is to allow people to charge high ones.

Yea, Governator!

I was appalled when I heard about this recent ruling against California's homeschooling families. Considering that many homeschooling parents - like my own - are better educated than our credentialed public school teachers, requiring the former to submit themselves to special training is ridiculous! I'm really happy that the Governor has made a statement against this ruling and the Home School Legal Defense Association (HSLDA) petition has racked up thousands of signers. I'd encourage Californians to contact their state legislators and House representatives about the issue.

UK Kicks Around Fans

It's amazing how if you choose the right words to describe someone, you can justify anything. The UK is looking to restrict free speech, penalize people for breaking their own property, and disallowing them from buying and selling things. Sounds bad? It's ok: it's to stop "hooligans," or people who really enjoy sporting events.

Granted, sometimes those activities can lead to punishable offenses. But restricting them in general? Could prevent that nasty stuff, but it's just as likely (if not more so) to give the police a way to push everyone around.

Salads Do Not Melt

The Supremes ruled against allowing public schools to use race as a factor to determine where children went to school. The ruling, which a lifetime ago would have made conservative white folks very angry, now is making liberal black folks very angry. The ruling declares "racial balancing" as unconstitutional.

This technique, used by countless school districts the country over, attempts to create an equal balance of races in all the schools they reign over. This has not only had the nasty unintended consequence of denying a better student because they weren't the right race but making sure a student doesn't leave because they were the right race. In other words, it's forced integration.

Maybe it can be a good thing: people can learn through diversity. But all schools shouldn't be forced to comply with that particular strategy. At the same time, the Supremes shouldn't outlaw the practice, either.

I am surprised to hear that few talk about why schools are segregated, indeed communities in general. We have Chinatowns, black and white neighborhoods, and Little Tokyos. Yes, some of this is based on income, but people seem to prefer to hang out with people like them. They self-segregate. The melting pot seems like a fine idea in the abstract but in practice, most reveal they are happy with salad bowls, despite the possible benefits. Why force it any other way?

Is Modern Society More or Less Violent?

Before the tragedy at Virginia Tech I was discussing with friends on whether society is more violent now or in the past. I am inclined to think that despite the violence we hear about and the violent movies and video games, we are a much more benign people today.

While our entertainment in movies and games can be violent, it is better than older forms. From the cultured French:

In 16th century Paris, a popular form of entertainment was cat-burning, in which a cat was hoisted on a stage and was slowly lowered into a fire. According to the historian Norman Davies, "the spectators, including kings and queens, shrieked with laughter as the animals, howling with pain, were singed, roasted, and finally carbonized."

Not to be out done, the British engaged in bear baiting. Bears were chained in a pit, and hunting dogs would be set on it until it was killed. A variation on this was whipping a blinded bear. A Spanish nobleman was taken to a show where an ape was tied to the back of a pony. He commented "to see the animal kicking amongst the dogs, with the screaming of the ape, beholding the curs hanging from the ears and neck of the pony, is very laughable."

More primitive societies today seem to be more violent. If you think football, boxing and cock fighting are violent, you should avoid kok-boru. This game is popular in Central Asia. A goat is decapitated and the legs are cut off at the knee. Eight players ride on horses and try to grab the goat and toss it through a stone ring. Whipping and punching other players are part of the game, and the only protective gear are World War II Soviet tank helmets. China, Kazakhstan, Russia, Tajikistan and Uzbekistan all have national teams.

Edward Miguel of Berkeley did a fascinating study on modern witches in Tanzania. Families take care of the older relatives. When extreme rainfall is experienced (drought or flood) it becomes more expensive to feed the family. When these extreme events occur, older women are accused of being witches and killed by family members. In other words, when it gets to expensive to take care of the elderly they are branded as witches so as to justify their murder.

The Economist recently ran an article on honour killings in Turkey. The opening story was of a man who killed his sister because she eloped. He resisted killing her for three months because he loved her, "but then neighbours stopped talking to him, the grocer refused to sell him bread, the local imam said he was disobeying Allah, and his mother threatened to curse the milk she had breast-fed him." And so he put 7 bullets in her. A report that came out last August found that almost 1,100 honor killings happened in the previous five years, over four a week. Fifty-one of the killers were interviewed, and only three expressed regret.

While modern society is far from perfect, I feel that things are getting better. Though some of our entertainment is violent, it is fake. We don’t have social norms to kill family members if they do something disgraceful. If it becomes expensive to take care of someone, we don’t murder them in the name of witchery. While incidents such as Virginia Tech are tragic, the fact that it is so tragic shows how far our society has progressed.

Three Reasons to Burn the Flag

As David Frum at AEI notes, the pursuit of political correctness can have some perverse side-effects. At San Francisco State University (SFSU), for example, the College Republicans organization is met with hostility (and possible forced disbandment) by the administration because they trampled mini flags of Hamas and Hezbollah. Frum paints a different picture for Muslim groups:

In April, 2002, Muslim students organized a pro-Palestinian rally on the SFSU campus. To advertise their event, they distributed a flyer with a picture of a dead baby alongside the words: "Canned Palestinian children meat--slaughtered according to Jewish rites under American license."

They received a virtual slap on the hand.

It seems appropriate now to reiterate why a society wants free speech, beyond that it just sounds nice. As John Stewart Mill notes, there are three reasons.
1. Sometimes, you're wrong and they are right. You tell someone to shut up and you might loose a good idea.
2. Sometimes, something can be learned even if the minority opinion really is wrong. This new information can be completely unrelated to the original argument.
3. Sometimes, you need a bad idea because even if there is nothing to gain from a flawed notion, it can aid you in clarifying the truth. And the best way to expose an idea as wrong is to bring it into the light of popular discourse.

I find the last point to be the most subtle, but also the most insightful. When you tell people to shut up and not express an idea, they just become more convinced they are on to something and bitter people buy into the "conspiracy." But when you are willing to debate them and, in doing so, demonstrate why they are wrong, then you change people's minds. You might even convince your opponent.

Amazing Grace

The movie Amazing Grace describes the abolitionist movement in England. Part of the story on the support of eliminating slavery is not well known.

Economics is known as “the dismal science.” People incorrectly assume this stems from Malthus (I used to think this).

The reason why Thomas Carlyle dubbed economics as dismal was because early economists like JS Mill used economics to state that all men were equal. From a GMU professor who studied this in depth:

Carlyle attacked Mill, not for supporting Malthus's predictions about the dire consequences of population growth, but for supporting the emancipation of slaves. It was this fact—that economics assumed that people were basically all the same, and thus all entitled to liberty—that led Carlyle to label economics "the dismal science."

Carlyle was not alone in denouncing economics for making its radical claims about the equality of all men. Others who joined him included Charles Dickens and John Ruskin. The connection was so well known throughout the 19th century, that even cartoonists could refer to it, knowing that their audience would get the reference.

A War Against Toasters

Last night, Lou Dobbs was very upset because we are losing the war against drugs. He wrote a commentary last week about how drugs are destroying our society. One has to wonder, then, why the online poll on his website is (currently) running 80% in favor of legalizing marijuana.

It's actually not that hard to see because any "war" against an inanimate object will either be won very easily or become something entirely different (and much harder to succeed). Suppose the US declared a war against toasters. Two things might happen. The first is that the American people will rise up against their bread-grilling overlords and smash them to bits. War fought and won. But the second is much more likely: it will stop being a war against toasters and start being a war between toast-lovers and toast-haters.

Some people like doing drugs. A few of them would be better off if they don't, but others are happier despite its costs. We all, in fact, do things that aren't great for us and we wouldn't want people to micromanage our lives. If you are willing to say that certain drugs are unhealthy and should be banned, you must do the same of smoking, drinking and fast food. There's surviving life and there's living life. Let them eat toast.

Chasing the Dream

Discussing Martin Luther King Jr. I heard an NPR commentator complain about people who "misuse" his words. Her example was the idea that people should be judged "not by the color of their skin but by the content of their character" being cited with arguments against affirmative action.

I'm not sure what Dr. King would think of affirmative action but I doubt he'd like it. The legislation lowers acceptance standards for people of certain races and necessarily crowds out more qualified people because they literally have the wrong color skin. This is not "positive discrimination;" this is racism.

There is no doubt that these policies are well intended, but that hardly matters. They are disastrous not only because they fail to accomplish what they set out to do, they sow animosity between peoples. This should come as no surprise. When the law elevates one group above another, such preferential treatment always breeds hatred. Growing up under Jim Crow (a more extreme example of inequality to be sure), Dr. King would have been acutely aware of this.

This is why he embraced non-violence. This is why he spoke about togetherness and equality. This is why his dream was "one day on the red hills of Georgia the sons of former slaves and the sons of former slave owners will be able to sit down together at a table of brotherhood." Affirmative action does not aid that dream.

Santa Scrooge

Last night, Dickens' classic A Christmas Carol was on TV. I watched, mostly because Patrick Stewart played Ebenezer Scrooge, but while watching I was reminded of a common economic mistake.

Scrooge is portrayed as a villian in the story because he has no love for Christmas and only cares about money. Perhaps the greatest victim is Bob Cratchit and his family, who barely scrape out a living trying to keep from starving on Bob's lowely salary. The spirits that visit the businessman late at night convince him that caring only for money will be the moral death of him and he will be forced to wander the world in ghostly chains for all eternity after he dies as punishment. To save himself from this ghastly fate, he must embrace the "Christmas spirit," which he does with full force at the end of the story.

Yet woven beneath this tale of Christmas goodwill is an economic lesson, if you are willing to see it. Charity is a fickle mistress. By their nature, people often donate in certain times of the year, Christmas being one of them, yet the poor and homeless need things all year around. Are the starving more hungry in December than January? Are the diseased more infected while choristers sing than when the streets are silent? Of course not. Charity flies in and out based on the random fancy of others. I have nothing against it--people should do what they wish with their own earnings. But to condemn a man because he is not charitable at a time when everyone else empties their pockets lacks an understanding of everyday needs of the needy. Indeed, if Scrooge was generous only during the holiday (but the same other times) I doubt the Spirits would have seen a need to visit him.

And here is the great lesson in this classic (at least the movie version) because Scrooge understood giving far more than they. Upon his epithany of virtue, he proclaimed he would have the Christmas spirit in him all year around. Not once a year for a day or a week but all the time. Incidently, Bob Cratchit also understood this for on his family's Christmas dinner (before Ebenezer's revelation) he toasted his wretched boss because he is the one that pays his salary (once again) all year around.

And this is a great lesson of the morality of trade. Capitalism and the pursuit of profit gives a reliable reason for people to ensure their fellow strangers survive. Charity, while seemingly more moral, is contingent on the daily fluxuating depth of another person's humanity. A man who eats a feast in one month and starves in all others will probably die. But the same man who dines modestly every day of the year will survive and prosper. Charity has its place but if you want to ensure the continued prospertiy for the most people, Tiny Tim better make sure God blesses capitalism, too.