The Faculty Lounge

Is a Paid Date Prostitution?

"Everyone Has a Price

What's Yours?"

That's the slogan of What's Your Price, an internet dating site where self-classified "generous" people (i.e., those interested in paying for a date) can access profiles of self-classified "attractive" people (i.e., those interested in being paid for a date).  After a user completes a profile, the company then approves it, and the parties are on their own.  The experience appears to operate much like an internet auction or trade site (see here):

Once you find the people you'd like to date, ask them out by making an offer. If you're a generous user, name the price you're willing to pay for the first date. And, if you're an attractive user, name the price you want to get paid for the first date. Our offer negotiating system will allow you to accept an offer, reject an offer, or counter with a different price.

And then there are rules about paying one's date (here).  The "generous" person is expected to pay for the date and deliver the "attractive" person's dating fee in two installments (50% at the beginning of the date and 50% at the end; cash only).  Read all of the rules here.

The site's founder, Brandon Wade, is an MIT graduate.  In an interview with the NY Daily News (here), Wade denied any link between his site and prostitution:

"We really try to frame the entire process very clearly - you're paying for the opportunity of a first date - it's a chance to allow somebody to like you more than just from an online profile or picture," he said. * * * The site, he claimed, is kept very clean with a clear notice about what is acceptable to post or ask for and what is not. If someone violates the terms of the site, he points out, they could be taken to court. 

Early press reports focused on the fact that most of the "generous" site users are male and most of the "attractive" site users are female.  I'd be interested in knowing the gender break-down of users in each group (i.e., buyers or sellers of dates), as well as their educational background, employment status, race or ethnic identification and geographic locations of the users.  I'm sure that Wade would not make this data public, but it would serve as the basis for a fascinating study.  Other questions I'd like to ask include how much bargaining goes on between buyer and seller?  How do sellers maximize profits?  How does the "purchase" experience impact the participants' self-perceptions?  Other-perceptions?  Do the participants tend to reflect so-called "liberal" or "conservative" social values?  How are dating practices on this site different from traditional dating sites?  Are there intra-group norms that have developed, for the "generous," the "attractive," or users as a whole? 

The site gives me the creeps, I admit.  Yet there are economic aspects to dating and mating that aren't too far below the surface for some people.   I mean, unless each person on the date pays his or her own way, don't most dates involve some kind of economic exchange?

At the most simplistic level, is there a difference between a paid date and prostitution?  No, in that both scenarios involve one person's "selling" his or her time/body to another for a price.  Yes, if there is no sex act involved.  

Kamakahi v. ASRM et al. — Updates

Barak’s recent paper on the “rabbinic cartels” reminded me that I wanted to provide some updates on Kamakahi v. American Society for Reproductive Medicine et al., No. 11 CV 1781, complaint filed (N.D. Cal. Apr. 12, 2011), a federal antitrust class action seeking damages and an injunction in connection with the American Society for Reproductive Medicine’s guidelines for compensating oocyte donors.  I’ve blogged about the case, and about the oocyte pricing guidelines and oocyte market more generally, several times, including a series of posts ending with this one.

ASRM published a Bulletin last week stating that it was retaining counsel in the case and beginning work on the defense.  This prompted some renewed discussion from commentators on blogs and in legal sources.  I have to say that I have been pleasantly surprised at the thoughtfulness of some of the discussion and commentary relating to the case. 

Egg markets tend to be an emotional topic – far more so than sperm markets.  Our intuitions about egg markets, as with many taboo markets, are often laden with unrecognized class prejudices and anxiety about the body, especially women’s bodies. And, those emotions and intuitions can sometimes lead otherwise sensible people into very insensible arguments that they would never accept in other contexts.

So I was pleased to see discussions such as this one from Fertility Lab Insider: 

The whole egg donor compensation debate is like fun house mirrors. What you see depends on where you stand. If you think egg donation is a step along the slippery slope to child selling, you will see any compensation as too much and likely argue for only altruistic “compensation-free” egg donation. You will likely welcome any limit on payment for egg donation and likely be offended by elitist pricing. You probably would be inclined to support ASRM’s ethical recommendation that legally amount to price fixing.

If you don’t see egg donation as inherently wrong (or almost wrong), you may be more inclined to let market forces regulate prices but might be interested in regulating the manner in which egg donation is performed, medically and legally to protect the rights of both the donor and the recipient.

This interesting legal lawsuit forces a re-evaluation of third party donation and the rights of egg donors. Third party reproduction is inherently complicated because the rights of various parties must be equally protected. Throw in donor compensation in the “marketplace” of egg donation and lines of obligation and responsibility can become even more confused particularly if IVF medical providers also provide egg donor services.

And this exchange between Pamela Madsen and Darlene Pinkerton over at The Fertility Advocate is particularly interesting. In it, Pinkerton, Founder of A Perfect Match (and who, according to this, has resigned from SART because of the ASRM-SART efforts to limit donor compensation) weighs in.  She argues: 

The compensation issue with ASRM has not been about making sure the donor isn’t placing herself in harm’s way. We can put many safeguards in place to make sure that she fully understands what she is doing so she is making a truly informed decision and not being coerced to do something she doesn’t really want to do. We can make sure they have psychological evaluations and counseling (BTW: not even required by ASRM) and we can make sure they have legal counsel to go over the consent forms and to make sure their rights are protected (again not required by ASRM)… If this is truly about protection of the donor, then why isn’t ASRM insisting on this for every single donor? Why isn’t ASRM actually protecting the donor regardless of compensation she is receiving? Every donor should have counsel, because a donor who works at a fast food place may be more swayed by $5000 than the donor who is asking for more than $10,000 but is a medical doctor or attorney, like some of my donors are. If they don’t evaluate each donor and allow her legal counsel how can they possibly set a dollar number and say that it is unethical? They can’t, which is why I think the dollar amount is far more self-serving. (emphasis added)

Yep.  As I argue here:

[M]aximum wage restrictions are an odd – one might argue, backwards -- response to concerns over the financial coercion of poor women.  The ability of any sum to coerce action is a direct function of that person’s financial need.  Egg donor compensation caps, without reference to the potential donor’s financial status, do nothing to address financial coercion objections.  Ironically, the most likely effect of the ASRM price cap is to drive from the market for eggs used in fertility treatments the most highly desired egg donors, who tend to be better-educated and of a higher socioeconomic status.  These donors should be in a better position to evaluate the risks of egg donation against the monetary benefits and should be less susceptible to the “coercive” effects of monetary compensation, because they are more likely to have other income opportunities to choose from.

And this comment from Pinkerton on the incentives of fertility centers with in-house donor programs versus those without is also very interesting and raises a point about variation in the market that I had not thought of before: 

So let’s be real… the majority of physicians making these rules have their own in-house donor programs and stand to lose $$ if they can’t be financially competitive with compensation. The ones that don’t have their own donor programs could care less how much a donor is paid as long as everyone agrees and has counsel. Coincidence? I think not. . . .

The whole post is here and well worth reading in full, as is an earlier post on the suit by Pamela Madsen.

Now, lest you think that the blogosphere is full of only thoughtful, useful commentary on the case, don’t worry.  There’s plenty of rubbish flying about and I’ll be back next week to highlight some of it for you.

Related Posts: 

Politics And Profits in The Egg Business (When Sunny Samaritans Sue, IV)

When Sunny Samaritans Sue, Part III

When Sunny Samaritans Sue, Continued

When Sunny Samaritans Sue

 

Politics And Profits in The Egg Business (When Sunny Samaritans Sue, IV)

In my last few posts, I’ve been discussing Kamakahi v. ASRM, (N.D. Cal, filed April 12, 2011) a federal antitrust class action seeking damages and an injunction in connection with the American Society for Reproductive Medicine’s guidelines for compensating oocyte donors. So far, I’ve discussed how the oocyte donor compensation guidelines arose, how they are enforced, how the ASRM determined what is reasonable egg donor compensation (all here), and the problems with the ASRM guidelines under antitrust law (here and here). 

Today, I’d like to examine what, to many people, is one of the more interesting questions raised by the case: what do ASRM, SART, and/or individual industry collaborators gain by the egg donor compensation guidelines?  In other words, classifying the guidelines as a per se Sherman Act violation, as I have argued they should be, dispenses with the need for elaborate court inquiries into collaborator intent, anticompetitive effects, and other issues.  Yet this question, though inessential to an antitrust inquiry, is keenly interesting, because the answer is not readily obvious. 

What do ASRM, SART, or individual fertility centers gain from the oocyte donor compensation guidelines?

I see at least two potential industry benefits to the ASRM-SART pricing scheme, one involving profits and one involving politics. 

On Profits

As an initial matter, the ASRM-SART oocyte-donor compensation guidelines may depress the price of some eggs used in fertility treatments, depending on the effectiveness of those guidelines. Such price suppression would entail real costs to both consumers of fertility services, in the form of higher prices and less consumer choice, and to oocyte providers, in the form of lost compensation. 

Infertile couples pay large sums to fertility clinics for the bundle of goods and services (including, in many cases, a human egg) that will result in the creation of an embryo for implantation.  Unless the demand for fertility treatments is completely price insensitive, fertility clinics have the same incentive to contain the price of oocytes (a necessary input into some reproductive services) as any other buyer.

Though Kamakahi, a class action on behalf of egg donors, is a case about supplier harm, it should be emphasized that monopsony markets do not benefit consumers and create a deadweight efficiency loss (as do monopoly markets).  Consequently, today it is well established that horizontal purchase agreements present just as much anticompetitive danger as do horizontal selling agreements. 

Reliable egg donor compensation data is hard to come by: most of the numbers are either self-reported or rely on advertisements on websites and in college newspapers.  For reasons that I discuss here and here, the first source may understate average prices, while the latter may overstate them.  Nonetheless, there are reasons to believe that egg donors raise at least a colorable claim of price suppression, which pre-trial discovery could illuminate.  

First, surveys of fertility clinics and donor agencies listed with SART report average compensation rates per donation cycle of $4217 and $5200, respectively, roughly in accord with the ASRM guidelines.  Second, even studies relying solely on advertising data, which report higher amounts, find some evidence consistent with the influence of price caps.  Third, the complaint discloses that a survey of 375 websites of SART-member clinics found that, of those that mentioned the price of donor services, all of them were at or under $10,000.  Fourth, some fertility centers explicitly reference their adherence to the ASRM-SART price caps.  Says the website of defendant Pacific Fertility Center, as quoted in the complaint, “because of [its] continued efforts to practice medicine within guidelines set forth by ASRM and SART, egg donors participating in our program will NOT be paid above $10,000 per cycle.”  Fifth, and finally, recent sperm donor compensation data -- the same analogy employed by ASRM in 2000 to determine levels of “reasonable” egg donor compensation –suggests that egg and sperm donors receive a roughly equal average hourly compensation of between $75 and $93 for time spent in a medical setting.  This is despite the fact that—because egg donation requires hormone therapy, whereas sperm donation does not—egg donors face pain, discomfort, and health risks not faced by sperm donors, and these risks and side effects extend beyond the time spent in a medical setting. It is reasonable to suppose that egg donors would demand and—under normal market conditions—receive, additional compensation due to these factors.

None of this conclusively proves that egg donor compensation is successfully suppressed by the ASRM guidelines and enforcement efforts – as noted, the available data is sketchy and ultimately begs the question of what price human eggs would command in a market free of such restraints.  But, as previously discussed, price suppression is not a necessary element of a per se case and, in any event, the discovery, dialogue, and, ultimately, trial, should there be one, in Kamakahi should shed light on some of these questions. 

On Politics

If the ASRM- SART agreement is not successfully controlling human egg prices (or even if it is), then what other purpose might it serve? ASRM, SART, and SART-member clinics, doctors, and affiliated egg donor agencies spend time, effort, and money creating (at a minimum) the appearance of cartel enforcement. Yet, cartels are notoriously difficult to sustain. Why exert such effort, if not in the pursuit of above-market profits?

The most plausible alternative scenario is a desire to avoid industry controversy, including controversy related to egg donor compensation. Negative public attitudes toward fertility treatments threaten to prompt into action state and federal lawmakers that, to date, have been largely content to rely on industry self-regulation of the fertility market. It is possible that industry attempts to control egg donor compensation are prompted, at least in part, by a desire to provide the appearance that the industry is addressing issues of public concern and controversy, forestalling the need for state intervention. 

Profits, Politics, or Both?

 In conclusion, ASRM and the fertility industry can’t have it both ways.  Either their “ethical” guidelines on oocyte donor compensation are a farce that do not effectively control egg donor compensation and that, instead, exist primarily to fend off more coercive state or federal regulation (fertility industry self-regulation is, naturally, unique in this respect).  Or the guidelines effectively reduce egg donor compensation below the levels that would operate in a market free of such restraints. 

Or they could be doing both.  But it seems to me that ASRM can’t have it both ways: the guidelines can’t both be an example of effective self-regulation and yet fail to suppress oocyte donor compensation rates.  So, it should be interesting to see the defense strategy – which poison will they pick?

If I, and you, patient readers, have the energy for one more post on this topic, I’ll be back to discuss one thing that is not a potential effect of the oocyte donor compensation guidelines: the protection of oocyte donors. 

 

Prior related posts:

When Sunny Samaritans Sue, Part III

When Sunny Samaritans Sue, Continued

When Sunny Samaritans Sue

 

When Sunny Samaritans Sue, Part III

In my last post on this topic, I discussed Kamakahi v. ASRM, (N.D. Cal, filed April 12, 2011) a federal antitrust class action seeking damages and an injunction in connection with the American Society for Reproductive Medicine’s guidelines for compensating oocyte donors.  In that post I addressed questions of how the oocyte donor compensation guidelines arose, how they are enforced, and how the ASRM determined what is reasonable egg donor compensation.  In this post, I’d like to address the problems with the ASRM guidelines under antitrust law.

I should say at the outset that antitrust experts, in my experience, don’t consider the antitrust issues raised by the case particularly interesting – it’s a naked horizontal agreement to fix prices and is thus per se illegal under section one of the Sherman Act.  What more is there to say?  Though they are right, I think they underestimate the romanticism and/or paranoia, for lack of better terms, that tend to distort discussions of this market.  In other words, very few observers have analyzed the oocyte trade for what it is – a profitable industry.  Instead, the starting assumption seems to be that the egg market must differ from other markets because egg donors are engaged in a form of philanthropy that distinguishes them from suppliers in other industries.  As I’ve argued at length here, this framing is not only unhelpful, but harmful. 

Why are the ASRM oocyte donor compensation guidelines problematic under antitrust law?

Per se agreements are “agreements whose nature and necessary effect are so plainly anticompetitive that no elaborate study of the industry is needed to establish their illegality—they are ‘illegal per se.’” Nat’l Soc’y of Prof’l Eng’rs v. United States, 435 U.S. 679, 692 (1978).  Classifying an agreement as a per se violation dispenses with the need to inquire into market structure, the market power of the violators, or the anticompetitive effects of the behavior.  The agreements purporting to limit egg donor compensation are the same types of agreements that have been considered per se illegal in less emotionally-charged settings.  

However, courts sometimes analyze alleged anticompetitive behavior by nonprofit or professional associations under a rule of reason or “quick look” analysis, when the same conduct would be considered per se illegal if carried out by business organizations.  Such judicial deference is not explicitly a product of the organizational form or nonprofit status of the defendants, but rather of a perception that, in many such cases, the anticompetitive effects of the agreement or the intentions of the alleged violators are not immediately discernable. As elaborated by the Third Circuit in United States v. Brown University, the Supreme Court:

has been more hesitant to condemn agreements by professional associations as unreasonable per se, or to apply a per se rejection to competitive restraints imposed in contexts where the economic impact of such practices is neither one with which the Court has dealt previously, nor immediately apparent.

As I discuss at length in Sunny Samaritans and Egomaniacs: Price Fixing in the Gamete Market, the negative economic impacts of the agreement among fertility professionals to control egg prices are readily apparent, and there are no arguable procompetitive benefits. Accordingly, this is not the type of arrangement deserving of courts’ more detailed rule of reason analysis such as that afforded MIT in Brown or the NCAA in NCAA v. University of Oklahoma. Nonetheless, as I demonstrate in the paper, the oocyte donor compensation guidelines fail even under a detailed rule of reason analysis.

Indeed, it is telling that neither individual fertility-industry collaborators nor ASRM even raise pro-competitive justifications for the agreements, relying instead on social-welfare justifications. This is because, unlike those rare cases in which courts have allowed naked collusion on price or output, collusion on egg prices does not enable an otherwise nonexistent market to operate or enhance the quality or diversity of consumer choice. Indeed the ASRM–SART agreement has exactly the opposite effect: consumers are deprived of both quantity and choice.

Finally, in rare cases (such as Brown), courts have considered social welfare or other noneconomic justifications for anticompetitive behavior. It is important to note that even the Brown court—notable for its unusual embrace of social-policy justifications—insisted that social policy alone was an insufficient justification for anticompetitive behavior.

It is unlikely, therefore, that a court would entertain social policy justifications for the SART–ASRM price-fixing agreements, and even less likely that a court would find them persuasive in the absence of compelling pro-competitive justifications. Even in the unlikely event that a court was willing to entertain social-welfare arguments in support of price restraints in the oocyte market, however, such justifications should not carry the day. Unlike Brown— in which MIT could point to a social policy (equality of educational access) that Congress had supported for many years and that was arguably furthered by its agreements with the Ivy League colleges to set financial aid compensation— Congress has not ever, much less repeatedly, evinced a desire to exert controls on compensation to egg donors. Furthermore, it is implausible that social welfare concerns primarily motivate the price-fixing agreements in question, because the agreements do not have the effect of promoting the purported noneconomic justifications. 

In my next post, I will explore what is, for many people, the most interesting question posed by Kamakahi: why do the oocyte pricing guidelines exist?  What was the goal? I can think of at least two possibilities, one involving profits, and one involving politics.  I will discuss both in my next post, and also explain why the social welfare justifications are implausible.

 

Related posts:

Politics and Profits in the Egg Business (When Sunny Samaritans Sue IV)

When Sunny Samaritans Sue, Continued

When Sunny Samaritans Sue

 

When Sunny Samaritans Sue, Continued

Last week, I discussed Kamakahi v. ASRM, (N.D. Cal, filed April 12, 2011) a federal antitrust class action seeking damages and an injunction in connection with the American Society for Reproductive Medicine’s guidelines for compensating oocyte donors.  Those guidelines, which I’ve discussed at length in prior posts, specify maximum compensation levels of $5000, in the absence of justification, and prohibit compensation above $10,000.  In my next couple of posts on this topic, I’d like to give some background and analysis on the case, including how the compensation guidelines arose, enforcement efforts, how ASRM determined what is “reasonable compensation,” how the guidelines run afoul of antitrust law, and what we know – and don’t – about egg donor compensation rates.

 

How did the oocyte donor compensation guidelines arise?

As I discuss more fully in Sunny Samaritans and Egomaniacs: Price Fixing in the Gamete Market, ASRM and SART have taken the position, at least since 1994, that reasonable compensation to gamete donors is ethically permissible. It was not until 2000, however, in the wake of increasing controversy, within and without the medical community, regarding rising rates of egg donor compensation that ASRM quantified the definition of “reasonable” and began formal attempts to cap egg donor compensation at a specific amount. (Attempts to control compensation rates within particular geographic regions predate this, as I detail in the paper).

 

How are the compensation guidelines enforced?

Any price-fixing agreement is fruitless in the absence of enforcement efforts, and the ASRM oocyte donor financial-compensation guidelines are no exception. SART, the primary member organization for assisted reproductive technology (ART) professionals in the United States, has a stated purpose of standard setting and maintenance in the ART industry. SART-member clinics, which account for more than eighty-five percent of fertility clinics in the United States, are expected to abide by SART guidelines, including the ASRM Ethics Committee guidelines on oocyte donor compensation.

However, many fertility clinics and customers procure eggs from independent egg donor agencies. Without some mechanism for ensuring their compliance, the SART and ASRM efforts would be ineffective. In May 2005, SART, with the support of two consumer organizations—RESOLVE (the national infertility association) and the American Fertility Association (AFA)—sent a letter to independent egg donor agencies informing them that all donor agencies serving SART-member clinics were expected to abide by the ASRM egg donor compensation guidelines.  The agencies were asked to sign a voluntary agreement with SART to abide by the ASRM guidelines and to inform the SART-member clinics with whom they worked of their agreement. In exchange, donor agencies that had signed the agreement would be listed on SART’s Web site, and their names would be forwarded to RESOLVE and AFA to provide information to patient–consumers seeking guidance in their efforts to locate donor agencies.

In February 2006, a follow-up letter was sent to donor agencies reminding them that a failure to adhere to the SART–ASRM guidelines would result in the removal of their agencies from the list of SART- approved donor programs. Many donor agencies have a vested interest in maintaining good relations (and a customer–patient listing) with SART by agreeing to abide by the guidelines, and, as of June 2008, ninety-three had agreed to do so. 

Finally, individual fertility clinics report their own policing and enforcement efforts of the ASRM oocyte donor compensation guidelines.  In 2006, for example, the Boston Globe reported, after an interview with the medical director of the Donor Egg and Gestational Carrier program at the Boston IVF fertility-treatment center, that Boston IVF keeps records of egg donor agencies that exceed the ASRM compensation guidelines and refuses to do business with them.

 

How did ASRM determine what is reasonable egg donor compensation?

In published work, I compare the egg market to its closest cousin—the sperm market – because, among other insights, I believe it reveals the operation of gendered notions regarding women’s altruistic nature and their role in the marketplace—particularly in sacred areas, such as reproduction.  But audiences have fairly asked, “Why would you think that the sperm market is the proper comparison point?” And in many ways they are right: simple economics and biological differences between the sexes dictate different collection and matching procedures for egg and sperm, ensuring that these markets operate very differently.  Yet the history of the oocyte donor compensation guidelines itself necessitates this comparison, because ASRM justified its assessment of reasonable egg donor compensation by reference to existing sperm donor compensation rates.

The 2000 report of the ASRM Ethics Committee regarding financial incentives for egg donors stated that “[p]ayments to women providing oocytes should be fair and not so substantial that they become undue inducements that will lead donors to discount risks,” and proceeded to analogize the egg- donation process to the sperm-donation process.  A prior study had concluded that sperm donors earned an hourly average of $60 to $75 in 2000. The same study estimated that egg donors spend fifty-six hours in a medical setting per donation cycle. If egg donors were paid the same hourly rate as sperm donors, these calculations would support a payment amount of $3360 to $4200 per egg-donation cycle.

According to ASRM, however, because egg donation involves a time commitment, risk, and discomfort not associated with sperm donation, egg donors may deserve higher amounts.  The report concluded that “[a]lthough there is no consensus on the precise payment that oocyte donors should receive, at this time sums of $5000 or more require justification and sums above $10,000 go beyond what is appropriate.”

In other words, ASRM used sperm donation as a benchmark, and then apparently determined that the additional time, risk, and discomfort experienced by egg donors justified an additional maximum payment, without explaining where those numbers came from or why they might represent a reasonable compensation for the additional burdens that the committee agreed egg donors faced. In 2007, ASRM issued new guidelines that restated these same amounts and rationales.  The amounts have not been increased in the more than ten years since ASRM adopted them. 

In my next post, I’ll address some remaining issues raised by the complaint, including the application of U.S. antitrust law.

***********************************

You can download the complaint here:   Download Filed-Stamped Complaint

And view other news coverage here and here.

(Thanks to Danny Sokol and Judith Daar for the additional news items)

 

Related Posts:

Politics and Profits in the Egg Business (When Sunny Samaritans Sue IV)

When Sunny Samaritans Sue, Part III

When Sunny Samaritans Sue

 

 

When Sunny Samaritans Sue

On Tuesday an egg donor, Lindsay Kamakahi (on behalf of herself and all others who sold donor services during the past four years), sued ASRM (American Society for Reproductive Medicine), SART (Society for Reproductive Technology), all SART-affiliated clinics, and all egg agencies that agreed to abide by ASRM’s egg donor compensation guidelines.  The suit seeks damages and an injunction voiding the guidelines. You can access the complaint here Download Filed-Stamped Complaint.

This suit has been a long time coming.  Regular Lounge readers will recall that this is an issue I’ve blogged about on numerous occasions (see here and here, for example) and on which I’ve published several articles, including Sunny Samaritans And Egomaniacs: Price-Fixing In The Gamete Market in 2009.

I don’t have time today to go into as much detail as I’d like about the complaint, the history of the pricing guidelines, and why they violate U.S. antitrust law, though I will be back with all of that information over the coming days.  For today, let me simply close with an excerpt from Sunny Samaritans:

This naked price-fixing of egg donor compensation is so unusual in the modern U.S. regulatory environment of unrestrained competition that the most intriguing question it raises is not whether it violates the Sherman Act—under existing precedent it does. Rather, the relevant question is how, given the government’s substantial enforcement resources and the presence of an active and entrepreneurial plaintiffs’ bar, this buyers’ cartel has managed to survive unchallenged since at least 2000. One is tempted to assert that the twenty-dollar bill cannot be real, given that it is still lying on the sidewalk.

Glad to see Lindsay Kamakahi and her counsel reaching for that $20 bill.

Related Posts:

Politics and Profits in the Egg Business (When Sunny Samaritans Sue IV)

When Sunny Samaritans Sue, Part III

When Sunny Samaritans Sue, Continued

 

 

Al Roth: The Pied Piper of Repugnance?

Stephen Dubner has labeled Al Roth (George Gund Professor Of Economics and Business Administration at Harvard University) the “dean of repugnance.”  I prefer to think of Al as the “pied piper of repugnance,” with his many followers the children of Hamelin (who he doesn’t drown in a river, but rather leads to a magic cave where we talk about repugnance, kidney exchange, and other fun topics). All I know is that hosting Roth for a faculty workshop and visit to my Taboo Trades seminar last week was tons of fun and reaffirmed an impression previously formed from other sources and prior interactions: Al is incredibly generous with his time and expertise. 

Roth was here to discuss his new draft, Organ Allocation Policy and the Decision to Donate, co-authored with Judd B. Kessler.  I was the lucky workshop commentator, together with my colleague Kieran Healy (Sociology, Kenan Institute for Ethics).  Kieran’s research interests are in market- and gift-based exchange in human blood, organs, genetic material, and cultural goods, and the moral order of market society, and it is always a treat to work with him.

The Kessler and Roth project is a laboratory study of an experimental game modeled on the decision to register as an organ donor, and investigates how changes in the management of the organ waiting list might impact the donation rate.  Kessler and Roth find that an organ allocation policy giving priority on waiting lists to those who previously registered as donors (an example modeled on the regimes of Singapore and Israel) has a significant positive impact on registration.  Although the increase in registration rates generated by the priority rule was also eventually achieved by experimental conditions creating a discount, that directly decreased the costs of donation, and by a rebate, Kessler and Roth conclude that the priority rule appears to have advantages over both rebate and discount, including simplicity.   

For the lawyers among us, one of the more interesting aspects of the paper relates to the role of law and, particularly, the choice of default rule.  The paper compares the priority rule to other policies designed to increase the number of registered donors, such as the “opt out” (a.k.a “presumed consent”) rule popular in some parts of Europe, and “mandated choice,” under which everyone (such as those applying for a driver’s license) are required to choose whether or not to donate.  All three regimes are in contrast to the current U.S. “opt in” rule, under which everyone is presumed to be a non-donor unless they choose otherwise.

In contrast to so much work on the choice of donor registration rule, Kessler and Roth recognize that simply increasing the number of registered organ donors may not significantly increase the number of donated organs. As I’ve noted in prior posts, presumed consent laws are not the fix-all that advocates often assume.  Although presumed-consent laws increase the number of registered donors, their effect on procurement rates is less clear.  Specifically, presumed consent laws typically do not remove the next of kin from the procurement process, leaving a potential gap between registration rates and procurement rates.

So, the relevant question is not merely, “which rule increases registered donor rates?”, but also should be, “will any particular rule do a better job than the others of closing any resulting gap between registration rates and procurement rates?”  (Note that the gap works both ways: Kessler and Roth report that the New England Organ Bank is able to recover organs from about half of all non-registered potential donors in New England by approaching next of kin.)

Kessler and Roth conclude that a change to the default rule “is likely to have legal consequences that could be detrimental to organ retrieval,” because it “may weaken the link between the registration decision and the legal clarity of the potential donors’ last wishes.”  But this seems to me to overestimate the importance of law to current procurement practices and underestimate the understandable reluctance of procurement personnel to override the wishes of the deceased’s next-of-kin, even when legally entitled to do so.  Overly cautious legal advice is a well-documented phenomenon in other contexts, especially when negative publicity is associated with legal actions, even those in which the defendant prevails.

Nonetheless, I think that Kessler and Roth may be right that a priority rule has advantages over both opt-out and mandated choice rules.  Not because it increases legal clarity, but because it may increase the chances that potential donors have clearly signaled their wishes to next-of-kin, and thus mediates the space between donor wishes, procurement personnel, and next-of-kin.

Though it’s been suggested that the primary benefit of presumed consent lies in making the wishes of the potential donor more clearly known to her family, this strikes me as backwards.  Although presumed consent could conceivably signal societal norms about organ donation expectations, and thus nudge next-of-kin donation decisions in that way, it seems a rather poor vehicle for signaling individual intent.  A potential donor opting in to donation clearly indicates to her family that, at least at one point in her life, she affirmatively decided in favor of organ donation.  But a failure to opt out doesn’t do so as clearly: did she even see this part of the form?  Did she just not want to think about dying right now and so neglect to decide?

And mandated choice could be even worse on this front.  A prospective donor unwilling to contemplate death and the potential future uses of her body may do nothing under an opt-in regime, leaving open the possibility of posthumous donation through next-of-kin approval.  But, under a mandated choice regime, such an individual could well check no, thus signaling to family (perhaps incorrectly) a desire not to donate.  So, Kessler and Roth conclude that “more than half of the people who are not currently registered under opt in would need to choose “yes” in mandated choice to increase the recovery rate.”

It seems possible that a priority rule, in contrast, could prompt potential donors to alert their family to their donation decision, because it carries with it significant benefits to the entire family (at least under the Israeli model).  All of these conjectures about the role of the default rule on family decision-making are highly speculative, of course, but then so is most of what we think we know about donor registration and allocation regimes.  Which is why projects such as this one by Kessler and Roth are extremely important. 

Charles Clotfelter On Big-Time Sports In American Universities

Regular Lounge readers have heard me discuss before my seminar on Taboo Trades and Forbidden Markets.  Although markets in human organs, sex work, commercial surrogacy, and the like are probably more standard fare in a course of this nature, I think that college athletics and amateurism also have a place, and I normally spend some time each semester on college sports (plus, it’s the Durham-Chapel-Hill area, what do you expect?)

This year I struck gold because my colleague, Charles Clotfelter, has a fascinating new book coming out in the next few months with Cambridge University Press, Big-Time Sports in American Universities.  And last week he visited my seminar to discuss his book, which he’s spent years researching.

As a bit of background, Charlie is the Z. Smith Reynolds Professor of Public Policy Studies and a Professor of Economics and Law at Duke University, where he teaches courses on microeconomics and the economics of education. He is also a research associate of the National Bureau of Economic Research.  

From the CUP website:

For almost a century, big-time college sport has been a wildly popular but consistently problematic part of American higher education. The challenges it poses to traditional academic values have been recognized from the start, but they have grown more ominous in recent decades, as cable television has become ubiquitous, commercial opportunities have proliferated and athletic budgets have ballooned. Drawing on new research findings, this book takes a fresh look at the role of commercial sports in American universities. It shows that, rather than being the inconsequential student activity that universities often imply that it is, big-time sport has become a core function of the universities that engage in it. For this reason, the book takes this function seriously and presents evidence necessary for a constructive perspective about its value. Although big-time sport surely creates worrying conflicts in values, it also brings with it some surprising positive consequences.

One such conflict that Charlie discusses in the book is the compromise universities make in the academic realm in order to succeed in the athletic one. For example, there is abundant evidence that universities apply different admission standards to athletes than to the general student body (though Charlie is careful to note that athletes are not the only students to receive favorable admissions treatment).  As just one piece of evidence, a survey of 21 public universities with big-time athletic programs, covering data from various years between 1999 and 2007, found that an average of 4% of all freshmen at those universities were classified as special admits, whereas the corresponding percentage of football players was 49%.

Once admitted, many college athletes, in an attempt to maintain good academic standing in the face of rigorous practice, game, and travel schedules, seek out courses in which they are more likely to succeed. As a result, certain departments or programs at many universities become “the academic home” to a disproportionate share of athletes. At Virginia Tech, for example, 19% of football players were majoring in residential property management, while only 0.4% of all students were. At N.C. State, a third of the football players were sports management majors, compared to only 0.8% of all students.  As an extreme example, the book discusses the physical education course taught by an assistant basketball coach at the University of Georgia, with a multiple-choice test featuring such questions as, “How many points does a three-point field goal account for in a Basketball Game?”

Despite all of this, universities struggle to graduate student-athletes in the revenue sports.  Charlie calculated graduation rates for the 58 universities with big-time athletic programs for all students entering these universities between 1998 and 2001.  The average graduation rate was 72%. But the comparable rate for basketball players was only 42%, and for football it was 56%.

But the book is not intended as an indictment of college sports, so much as a realistic assessment of it.  Charlie also discusses the benefits from college athletics, both to the institution and to society at large.  Chief among these institutional benefits is the potential to increase the applicant pool, allowing the university to be more selective (this evidence – and its limitations – is discussed at length in the book).  But Charlie also discusses a rarely mentioned benefit of college sports -- the enjoyment of fans and spectators, including fans and spectators not part of the university community. As Charlie notes, “American universities, by way of their entertainment function, produce a thing of value that is enjoyed by a population potentially much more numerous than its living alumni, not to mention its current student body.”

As a basketball season ticket holder at a local university that will remain unnamed, I can speak first-hand to such positive spillover effects.  But at the same time, I have to wonder about the extent to which big-time college sports – with the benefit of favorable tax, antitrust, and other benefits not enjoyed by its professional counterparts, including the amateur status of its players – may crowd out other, localized sports enjoyment opportunities.  Many of my European and Asian friends find it distinctly odd that American universities provide the primary sports outlets in many parts of the U.S., as opposed to professional regional or local leagues.  And that Americans (at least in my neck of the woods) are obsessed with the Duke versus UNC basketball game, as compared to India versus Pakistan (cricket) or Netherlands versus Spain (soccer, or football for you euro-types).

It was a lot of fun hearing Charlie discuss the book.  And it was also interesting to hear the lengths to which he went to gather the necessary data, the lack of cooperation from many universities, and his corresponding creativity in gaining the information he needed to complete the project.  Advance praise from the CUP website includes statements from Roger Noll, Daniel Hamermesh, and Nannerl Keohane, among others.

 

Repugnant Transactions on Freakonomics Radio

Freakonomics has a recent (12/29) interesting podcast on repugnant transactions.  Though most of the show is dedicated to organ markets and its alternatives, other repugnant transactions, including prostitution and egg markets are also briefly discussed. 

Al Roth – dubbed “The Godfather of Repugnance” by Dubner -- is interviewed in some depth.  We’ve blogged frequently about repugnant transactions (and, specifically, about Roth and his work) here at the Lounge.  The posts on “repugnant transactions” or “taboo trades” are collected here.  And posts specifically about reproductive markets are collected here.

Important Canadian Ruling on Regulating Reproductive Markets

From the Globe And Mail:

A long-awaited Supreme Court ruling that takes the business of regulating the clinical world of baby-making out of Ottawa’s hands has raised questions about the future of fertility treatments in Canada, and fears that the black market for human eggs and sperm will continue to thrive.

Judges found the power to regulate and license doctors and clinics offering fertility treatments belongs to the provinces, as an area involving the practice of medicine. But the ruling, released Wednesday, upholds other elements of the federal Assisted Human Reproduction Act, including those governing the use of human embryos in stem cell research. . . . 

It was Quebec, later joined by New Brunswick, Saskatchewan and Alberta, that challenged the federal assisted human reproduction law shortly after it was passed in 2004. Quebec had argued that regulatory control over reproductive technologies is a provincial matter.

According to the report, the 163-page opinion continues to allow the federal government to prohibit payment to surrogates and limit payments to egg and sperm donors.  

And from the Toronto Star:

In a landmark advisory opinion, a deeply divided Supreme Court of Canada ruled major sections of the federal law on assisted human reproduction fall outside Ottawa’s power to regulate under criminal law.

The court said it is up to provinces to control the licensing of doctors and clinics and to regulate how they deal with donors and would-be parents, or with eggs, sperms or embryos for research purposes, including developing new genetic therapies for disease. . . .

Certain federal criminal bans still stand. It is still illegal to pay for surrogacy, and the federal government may limit reimbursements to donors and surrogates for expenses only, although the federal government has never defined an allowable expense.

Ottawa may still legislate mandatory written consent of donors; a ban on extracting eggs or sperm from persons under 18 except to preserve their fertility; and a prohibition on “chimera” or human-animal hybrids. 

Those practices, a majority of judges agreed, are rightly up to the federal government to control with criminal laws, under its power to protect morality, public health and security in Canada. 

Much more news coverage over at How Appealing

HT:  Larry Helfer

Sally Struthers, Uncle Sam and Tax Discrimination Against International Adoptions

Sally Struthers (of Archie Bunker fame) used to urge U.S. television viewers to sponsor a deserving child in another part of the world.  For a few dollars per month, a child could receive crucial healthcare! Food for the entire family! A new lease on life!  The sponsor would receive a photo of a sponsored child or perhaps even a letter from time to time.  It was, however, a decidedly distance relationship – i.e., sponsorship, not adoption.  Furthermore, the “sponsorship” of “a child” was not earmarked for any one particular individual, but rather for a charitable organization, so transfers qualified for an income tax deduction.

For Americans who adopt (not sponsor) children born outside the United States, some form of tax benefit has been available since 1997.  In 2010, the Patient Protection and Affordable Care Act (HR 3590) and the companion Health Care and Education Reconciliation Act of 2010 (HR 4872) made massive changes to the health care law and tweaked the adoption tax credit. For tax years 2010 and 2011, the adoption tax credit is $13,170.  It’s refundable, too.

Those bills became law in March, but I hadn’t focused on the changes to the adoption tax credit (changes to the tax law can be sneaky like that, popping up in all sorts of bills).  Until I taught tax credits in my basic Federal Income Tax class this semester, I hadn’t realized that adoptions of children who are U.S. citizens or residents are treated more favorably for income tax purposes than are adoptions of non-U.S. citizens or residents. 

Over-simply stated, a tax credit is available for expenses related to an international adoption only if the adoption becomes final, but the same finality rule does not apply to expenses for a U.S. adoption. 

What might be the policy reasons for this tax discrimination?  Is it because significant tax revenue is at stake?  According to U.S. State Department figures (see here), the number of international adoptions has increased steadily.  In 1999, there were 167,369.  In 2000, there were 18,477.  In 2001, there were 19,237.  (See here.)  If there were a correlation between completed adoptions and failed adoptions, one could make a rough estimate of the number of taxpayers who could have benefitted from an adoption tax credit, but for the fact they could not or did not finalize their international adoption.

Alternately, is the different tax treatment of U.S. and international adoptions just one more example of attempts to influence social policy through the tax laws?  Maybe, but I wonder whether tax credits factor significantly into a decision to adopt a U.S. citizen versus a non-U.S. citizen. 

Legally Tender? Selling the Body in Times of Economic Need

There are flourishing markets in human bodies and body parts, as Kim Krawiec has documented here, here and here, for example.  Eggs, organs and bodily fluids and sexual services can be bought for a price.  Today’s New York Times considers the flourishing Russian market in human hair in For Russia’s Poor, Blond Hair is a Snippet of Gold.   

Dark hair from India and China is more plentiful, but blond and other light shades are valued for their relative scarcity and because they are easier to dye to match almost any woman’s natural color. * * *  But as more of the world’s light-haired woman have climbed the economic ladder, the search for poor blondes willing to part with their locks has become ever more difficult.

“It’s not hard to understand why people in Ukraine sell their hair a hundred times more often than people in Sweden,” David Elman, a co-owner of Raw Virgin Hair Company, an importer based in Kiev, Ukraine, said in a telephone interview. “They are not doing it for fun. Usually, only people who have temporary financial difficulties in depressed regions sell their hair.”

Here in Mosalsk [Russia], a 16-inch braid, the shortest length a buyer will consider, fetches about $50 * * * Generally, about 70 percent of the hair bought in Russia comes from locks kept at home from previous haircuts. Some Ukrainian and Russian women, for example, traditionally cut their hair after the birth of their first child, and may decide only years later to sell it. In areas of dire poverty, it is a final resource to tap in times of desperation.

A few things about this article caught my eye.  First, the writer advances the hypothesis that the availability of blond hair has diminished as women’s economic power increases in blonde-dense parts of the world.  Second, the hair broker himself suggests that women are motivated by financial need, not “fun.”  Third, the majority of Russian hair for sale has been in storage as an heirloom, a marker of a life event (childbirth), a treasured keep-sake.  In sum, selling hair isn’t an economic activity just like any other.  It usually is motivated by economic need.

Kim Krawiec has argued in How is an Egg Donor Like a Prostitute?  that there is not much difference between egg “donation” and prostitution.  I agree with that analysis, and would extend it to selling hair, too.  It’s more comfortable to think of women who sell their hair as the impecunious-yet-plucky-and-hopelessly-in-love Della Young of O. Henry’s The Gift of the Magi. But the New York Times article suggests that sellers of hair are motivated by miserable, unabated poverty.  If the body is one the few resources a person has, selling it seems like a rational choice.  Somehow, that choice seems less value-laden when it comes to hair than, say, sexual services (i.e., “traditional” prostitution).  Perhaps that is because society does not traditionally associate hair with virtue.  A woman’s (or man’s) hair will grow back, after all.  But sexual “honor” or “virtue,” once sold, can never regenerate (or so the story goes).

By the way, I have straight, shoulder-length red hair.  Starting price should be around $100.00.  See here.

Testing, Commodification, And Students Who Don’t Give A Sh*t

Standardized tests are biased against students who don’t give a sh*t.  This is clearly a serious failure of American public education: school is supposed to prepare students for the real world, and in the real world, no one gives a sh*t.  But there’s a silver lining for dedicated educators such as yourself – reach out, make a difference, and teach students the importance of pretending to give a sh*t. (HT: Money Law).

The video probably caught my eye because I’ve been writing about standardized testing lately for a symposium volume at Wash U. (The live show was last spring.  You can read summaries of the presentations and responses here, here, and here.) 

My contribution, The Dark Side of Commodification Critiques: Politics And Elitism in Standardized Testing, responds to Kate Silbaugh’s comparison of the standardized testing literature to traditional debates about the commodifying effects of markets.  As regular Lounge readers know, I’m not a fan of commodification objections to markets (see, for example this post and this one).  It is, to my mind, an even less persuasive objection to standardized testing. 

Doubtless there are many problems, inefficiencies, and failures associated with standardized testing programs in our public schools.  Silbaugh identifies the usual suspects, including the flattening effect of standardization and “teaching to the test.” But far from demonstrating the failure of standardized testing, the commodification analogy primarily demonstrates the politically-driven and elitist nature of much of the standardized testing debate. 

Politics and elitism in commodification-like protests to standardized testing should not be terribly surprising.  Almost since their inception, commodification objections have held both an elitist flavor, and have been invoked for political gains whenever such arguments are more likely to resonate with audiences than narrower appeals to self-interest.  If standardized testing debates bear similarities to market commodification debates, it is only natural that the parallels extend to these traits as well.

For example, the insurance industry lobby frequently objects to commodifying or gambling on death through various secondary markets in life insurance, though annuities commodify and gamble on death in a similar fashion.   Coincidentally, secondary life insurance markets are an economic threat to the insurance industry, which priced existing premiums on an assumption that many insureds would allow policies to lapse or trade them in for a fraction of face value, rather than selling them on the secondary market to investors.   Similarly, the fertility industry defends its price controls on oocytes – the same type of professional price fixing agreement that has long been considered per se illegal in less politically charged industries – on commodification, among other, grounds.

Given the ease with which narrow self-interest can, in certain settings, be repackaged as broader commodification concerns, it is hardly surprising that many of the commodification-like objections to standardized testing emanate from educators themselves.  As Silbaugh notes, the entire point of the standardized testing program in public education was to establish a metric by which educators and districts could be held accountable for performance failures.    Not surprisingly, educators as a group prefer self-control to such accountability to outsiders.  Teachers and school districts alike have less autonomy and flexibility under the current standardized testing system and are now subject to more outside scrutiny.  Educators’ resistance to standardized testing is thus consistent with their own collective self-interest, and with their opposition to merit pay, vouchers, and a variety of other mechanisms that would subject educators and school systems to competitive forces or outside evaluation.

A second similarity between commodification objections to markets and those to standardized testing is their frequently elitist nature.  Kenneth Arrow raised this point in 1972, when comparing Richard Titmuss’s views on the impersonal altruism of the small number of blood donors in the United Kingdom to an “aristocracy of saints.”   Martha Nussbaum reaffirmed it when she argued that much commodification-based opposition to sex work fails to appreciate the “other realities of working life of which it is a part.”

Silbaugh mentions repeatedly that difficult-to-test topics such as art, music, physical education, critical thinking, and the like are being dropped from the curriculum in favor of those subjects more amenable to standardized testing, emphasizing that the burden falls hardest on poorer school districts, because more affluent suburban districts can afford to retain these subjects, while still attaining “adequate yearly progress.”   Assuming that it is true that art, music, critical thinking, and similar topics were systematically more likely to be included in the curricula of poorer school districts prior to the standardized testing movement, the empirical question of whether similarly situated students from poorer districts are better off learning art, music, and physical education than their more testable substitute topics remains open. 

The reality of differential educational funding across school districts in the United States necessarily means that poorer districts are faced with choices and trade-offs: choices among students, choices among subjects, and choices among the various means to deploy scarce resources.  Silbaugh’s argument that scarce time and resources are being spent on Subject A, rather than on Subject B, proves nothing in the absence of evidence that – given the necessity of choice – students would be better off learning B instead of A.  If children in poorer school districts are being deprived of valuable education opportunities, the problem would appear to lie with the differential funding of public education in the United States, and the consequent consistent poverty of some school districts, rather than with standardized testing. 

Though the analogy between commodification-like arguments against markets and against standardized testing is imperfect, the comparison yields more insights than Silabugh acknowledges. In particular, though Silbaugh concludes that her analysis demonstrates the failures of standardized testing, her analogy primarily reveals the politically-driven and elitist nature of the standardized-testing debate.

Read the whole thing here.

Cohen and Chen on Trading-Off Reproductive Technology and Adoption

Glenn Cohen (Harvard) and my new colleague Daniel Chen (Duke – Welcome Daniel!)  have posted Trading-Off Reproductive Technology and Adoption: Does Subsidizing in Vitro Fertilization Decrease Adoption Rates and Should it Matter? to SSRN.  I read this paper in draft form over the summer and quite enjoyed it, so I’ll be back next week with some more detailed thoughts on Cohen and Chen’s paper and its implications.  At the moment, though, the first week of classes and obligations next week over at the Conglomerate Junior Scholars Forum are keeping me busy.  Here’s the abstract:

For those facing infertility, using assisted reproductive technology to have genetically related children is a very expensive proposition. In particular, to produce a live birth through in vitro fertilization (IVF) will cost an individual (on average) between $66,667 and $114,286 in the U.S. If forced to pay these prices out of pocket, many would be unable to afford this technology. Given this reality, a number of states have attempted to improve access to reproductive technology through state-level insurance mandates that cover IVF. Several scholars, however, have worried that increasing access in this way will cause a diminution in adoptions and have argued against enactment of state mandates for that reason.

 

In this paper, which was selected for presentation at the 2010 Stanford-Yale Junior Faculty Forum, we push against that conclusion on two fronts.

 

First, we interrogate the normative premises of the argument and expose its contestable implicit assumptions about how the state should balance the interests of existing children waiting for adoption and those seeking access to reproductive technology in order to have genetically related children.

 

Second, we investigate the unexamined empirical question behind the conclusion: does state subsidization of reproductive technologies through insurance mandates actually reduce adoption; that is, is there a trade-off between helping individuals conceive and helping children waiting to be adopted? We call the claim that there is such an effect the “substitution theory.” Using the differential timing of introduction of state-level insurance mandates relating to IVF in some states and differences in the forms these mandates take, we employ several different econometric techniques (differences-in-differences, ordinary least squares, two-stage least squares) to examine the effect of these mandates on IVF utilization and adoption. Contrary to the assumption of the substitution theory, we find no strong evidence that state support of IVF through these mandates crowds out either domestic or international adoption.

Al Roth, Market Designer, in August Forbes

 There’s a great article in the August issue of Forbes magazine about Al Roth, the Gund Professor of Economics and Business Administration, Harvard Economics Department and Harvard Business School, who we blog about frequently here at the Lounge.  (See here, here, and here, for example).

The article begins:

Roth uses the mathematical tools of game theory to find fixes for big, broken systems. Over the last 20 years he has pioneered a branch of economics known as market design. Among Roth's accomplishments: designing networks for kidney donations and creating elegant systems that enable huge urban school districts to optimally place multitudes of students among hundreds of schools.

"He's unusual, because he's highly respected as a theorist, but he's also working directly in the field," observes Eric Maskin, an economist at the Institute for Advanced Study in Princeton, N.J. and corecipient of the 2007 Nobel Prize in economics for theoretical work on market design. "Al has managed to find ways to adapt the theory in very clever and ingenious ways."

The article then goes on to discuss some of the market design problems Roth has successfully tackled:  New York City's high school match, which prior to Roth’s intervention in 2003 was so flawed that a third of NYC high schoolers didn’t participate; Boston's public school system; and the medical school graduates residency program matching system.

One of the market designs for which Roth is best known is kidney exchange.  As the article explains:

A set of dismaying facts led Roth to design a system for matching incompatible kidney donor pairs and lone altruistic donors with other donors and recipients. The waiting list for donor kidneys stretches to 85,000 in the U.S., and 4,000 patients die each year as a result of the organ shortage. In 2003 Roth started work on a system that would allow people who want to donate kidneys to loved ones but can't because their blood types don't match, to exchange organs with other incompatible donor pairs. At this point the numbers of kidneys transplanted using Roth's system is small, fewer than 1,000 in 2009. But the potential is promising. "Al's work on kidney matching is one of the few great modern advances in transplant policy," says the American Enterprise Institute's Sally Satel.

 According to Roth, kidney exchange provides both frustration and satisfaction.  One of the sources of satisfaction was evident on Roth’s site last week.  The following e-mail, whose author gave Roth permission to post the email and accompanying photo:

Dear Dr. Roth,

I want to thank you for your role in establishing the New England Program for Kidney Exchange. On July 8 my husband Bryan, in a 3-way swap with donor/ recipient pairs at Hopkins, RIH/ Brown and Dartmouth, received his new kidney after years of failing health. He is already feeling remarkably better, and his new kidney is functioning well.

Here is a photo of our 3-year-old, Lincoln, and 3-month-old, Haven, thanking Bryan's brother for donating his kidney to a stranger at Hopkins so Bryan could receive one from Dartmouth. I can imagine that theoretical academic work can lack a human face at times, so I wanted to assure you that your work is truly changing lives. I can't thank you enough for giving my boys their Daddy back.

Yours,

Katie Silberman

Providence

 

Not many of us manage such academic success, while also impacting the daily lives of thousands of people.

Uncharitable Sperm

 In Free Fertility Foundation v. Commissioner Of Internal Revenue (Filed July 7, 2010) the tax court held that Free Fertility Foundation’s activities may promote population growth and the propagation of one man’s seed, but do not promote health for the benefit of the community.  The foundation thus does not qualify for a charitable tax exemption.  The facts of the case are fascinating on many levels, so I detail them at some length here.

According to the court, William C. Naylor, Jr. (Naylor), a software engineer who holds more than 10 patents on various inventions, founded and incorporated Free Fertility Foundation in 2003 in California as a nonprofit public benefit corporation with the purpose of providing sperm free of charge to women seeking to become pregnant.  Petitioner’s Web site states that:

Naylor is its “single sperm donor” and chronicles Naylor’s life from infancy to adulthood.  Naylor’s donor profile includes photographs, a physical description, health information, family history, and achievements.  In particular, the Web site provides great detail of Naylor’s academic and athletic accomplishments during elementary school (e.g., spelling bee competition), junior high school (e.g., science fair competition), high school (e.g., swimming competitions), and college (e.g., recognition as “top engineering student”).  On the Web site Naylor states:

I derive meaning and happiness from believing that I am making the world a better place.  Being a sperm donor is a way that I can help a few people to have children who otherwise could not.  This makes more of a positive difference to the world than all of the inventions and scientific discoveries that I could ever create.

Naylor is Free Fertility’s secretary and treasurer.  His father, a retired university professor, is the president and chairman.  Naylor and his father are the only board members and officers, and make all determinations about who will receive the free sperm.   Now, this is where the facts get very interesting:

Preference is given to women “with better education” and no record of divorce, domestic violence, or “difficult fertility histories” and are from families “whose members have a track record of contributing to their communities”; who are in “a traditional marriage situation”; who are under age 37; who are ethnic minorities; and who are “from locations where * * * [petitioner has] not previously accepted recipients.”

According to the court, “An organization is not operated exclusively for exempt purposes unless it serves a public rather than a private interest.”  The court goes on to say that the promotion of health for the benefit of the community is a charitable purpose, but only if “the class of beneficiaries is sufficiently large to benefit the community as a whole.”

The court ruled that, although the free provision of sperm may, under some circumstances, be a charitable activity, Free Fertility does not qualify for tax exemption “because the class of petitioner’s beneficiaries is not sufficiently large to benefit the community as a whole.”  Specifically:

the class of potential beneficiaries includes only the limited number of women who are interested in having one man-–Naylor–-be the biological father of their children and who survive the very subjective, and possibly arbitrary, selection process controlled by the Naylors.  Over a 2-year period, petitioner received 819 inquiries and provided sperm to 24 women.  In deciding who receives the sperm, petitioner has certain preferences that narrow the class of eligible recipients. It is not apparent what, if any, relationship some of these preferences have to the promotion of health.  For example, petitioner prefers women “from families whose members have a track record of contributing to their communities” and women “with better education”.  Petitioner does not provide medical care, research, education, or other services that advance or further health.

The court concludes:  “Simply put, petitioner’s activities may promote the propagation of Naylor’s seed and population growth, but they do not promote health for the benefit of the community.” 

The court may very well be right about the limited benefits of Naylor's activities, but the language used in the case does raise the issue of society’s differing expectations about the motives of men and women who part with reproductive material and, in particular, the traditional skepticism associated with claims of altruistic sperm donation. (Issues that I explore in depth here and here).

In contrast to the altruistic rhetoric surrounding even commercial egg donation, sperm donors are typically assumed to donate primarily, if not solely, for profit opportunity. Indeed, the presumption that sperm donors are motivated by profit-seeking is so strong that men expressing altruistic motives are frequently viewed with skepticism and assumed to be deviants or egomaniacs intent on propagating the earth. 

As I discuss in the above-linked articles, this concern is reported in sources as wide-ranging as the Archbishop of Canterbury’s Commission, which worried that sperm donors might invoke “altruistic idealism” to disguise what was actually “spiritual pride” in their greater virility and ability to propagate, to The Genius Factory, which notes that the key attraction of sperm donation to most young men is “making money for something you do anyway,” and that, although some men claim altruistic motives, many of them are really egomaniacs.

As I argue in Sunny Samaritans and Egomaniacs:

Sperm donation, historically associated with deviant behavior, continues to evoke a lingering skepticism regarding donor motives. Monetary payment may have the capacity to normalize these transactions, providing an acceptable donor motive unrelated to sexual impulses or egoistic desires to spread male genes. Sperm donation thus becomes a job like any other, mapping onto more comfortable stereotypes of male interests in financial gain.

The willingness of women to procreate solely for monetary gain, however, causes discomfort of a different sort. As is the case with commercial surrogates, egg donors are reframed as loving altruists, generously giving “the gift of life” to help others less fortunate.

Update:  I realized belatedly that Paul Caron posted on this case also.

HT: Naomi Cahn

Image source

Vive Le Dope, Redux

This weekend, Americans will enjoy fireworks, cookouts, and red, white, and blue.  And that means its time for cycling fans to gear up for yellow, green, and polka dot, plus 21 days of crashes, drama, adulation, and speculation, covering 3600 kilometres and 25 big climbs in the Alps and Pyrenees. Yes, the Tour began yesterday with a prologue in Rotterdam, and that means that talk of doping, Lance’s comeback (and Lance’s potential doping) has begun already.

In honor of the event, I’m reposting this bit I did at the close of last year’s Tour.  I’ll be back later with updates on the sports doping issue.  

Vive Le Tour! Vive Le Dope!: 

The Tour de France ended yesterday, with Alberto Contador in yellow, and Lance Armstrong on the podium in third.  Like Gordon, I love the Tour de France for many reasons, including that the French just aren’t that good at it anymore. I even went to the Tour last year, watching several stages in person (including the final stage on the Champs-Élysées) and rode part of the course (the flat part, but I did gain a new respect for the Mistral).  See one of my photos from the final stage at right – that’s me, stalking George Hincapie, who gave me a water bottle in exchange for a glass of champagne).

The drama of the mountain stages, Lance’s comeback, Phil and Paul (and Bobke, “Tour DAY France”), the unofficial norms – and their interesting enforcement mechanisms -- that guide professional cyclists’ behavior . . . and the doping scandals.  Yes, if you’re a fan of the Tour, or of cycling more generally, you’re familiar with the doping issues the sport has faced in recent years.

Even this year’s “clean Tour” has failed to escape the doping cloud.  Nor is the Tour likely to avoid such controversy in the future.  Aside from the history of the sport and the continuing doping allegations, power outputs have climbed suspiciously in the past decade -- even accounting for technological changes such as a reduction in the weight of the equipment, stiffer bikes, and better components.  And Contador’s record-breaking climb on the Verbier this year was sufficiently impressive to generate a rash of speculation about his potential doping.   

(See the chart at right from The Science of Sport for a comparison of Contador’s Verbier climb to famous Tour climbs of the past (and see their posts here and here for an elaboration of the comparison and its limitations, including factors such as wind, climb length, and race situation).

Doping problems aren’t unique to cycling, of course.  Baseball, track & field, and a number of other sports have faced doping scandals in recent years.  Moreover, controversial attempts to limit advancing technology’s impact on sport aren’t limited to drugs.  As existing swimming records fall around the world, FINA officials voted on Friday to ban the high-tech swimsuits that have made it possible, which have been likened by some to “doping on a hanger.”

A few weeks ago, I blogged about this year’s Reith Lectures, given by Michael Sandel.  Although the topic of that post was Sandel’s take on immoral markets, another important theme of the lectures is sports doping, which will come as no surprise to those who have read Sandel’s book, The Case Against Perfection, or Richard Posner’s Duke Law Journal response to it (my colleagues Doriane and Jim Coleman also weigh in, in the same journal issue, here).

As would be anticipated by those familiar with Sandel’s prior work, he opposes sports doping, believing that it detracts from the athlete’s achievement; “remake[s] nature, including human nature, to serve our purposes and satisfy our desires;” and poses the danger of transforming “three key features of our moral landscape—humility, responsibility, and solidarity.” (The usual caveats that a short blog post will doubtless fail to convey some of the nuances of either Sandel’s or Posner’s positions, and that you should read the full originals to get the whole picture, naturally apply). 

Posner, in contrast, argues that the sports doping “problem” is largely self-correcting.  Sports doping thus can mostly be left to the free market because: 

If what the public wants from sports performances is to observe hierarchies of innate qualities, then it is in the financial self-interest of the owners of professional sports teams, and for that matter the owners of amateur sports teams (such as universities), to prevent drug taking or other interventions that alter or obscure the relevant hierarchies.

There may be collective action problems, however.  Although doping bans may benefit team owners and athletes as a group, individuals have an incentive to defect from the agreement.  Here, according to Posner, is where public enforcement can play a beneficial role, through, for example, “criminal penalties on athletes who engage in forms of doping that both are difficult to detect and reduce the economic value of the sport.”

But it seems to me that Posner’s description, with it’s focus on resolutions to potential collective action problems, doesn’t sufficiently account for an important function of both public and industry-operated doping bans, at least in the context of the Tour.   The crowd does, to employ Posner’s terminology, prefer spectacle to sport, so long as we think that we’re getting sport, rather than spectacle.  If so, then the collective best interests of the industry dictate apparent – rather than real – control and enforcement (perhaps within some limits). 

Maybe it’s not earth shattering to suggest that the sport of cycling, just like numerous other industries, may benefit from the PR boost of cosmetic compliance.  Yet the point is rarely raised in debates on doping bans, which often boil down to discussions over the pros and cons of regulation versus free markets, and are less likely to address the potential benefits and costs (of which there are both) to a largely cosmetic, as opposed to real, regulatory or industry self-regulatory regime.

We loved Contador’s heroic feat on Verbier – it was exciting.  Just like we loved Floyd Landis’s epic 2006 comeback; Tyler Hamilton’s superhuman 142 km solo breakaway, stage win, and fourth-place GC finish with a broken collar-bone; and Vinokourov’s spectacular mountain-top breakaway.  Because, as Phil says in this video of the relevant Vino footage, “everyone loves a fighter.”

. . . Until we found out they were all doping, that is.

Maybe the Tour exists because – not in spite – of doping.  And it’s a wonderful spectacle. Vive le dope! Vive le tour!

Related Post: Testing Sport’s Limits : Cheating, Doping, and Technology

Scalping The Dalai Lama

 Via Al Roth, from The NY Times on Scalping World Peace, Outside Radio City:

The appearance of the Dalai Lama at Radio City Music Hall has inspired a certain chant on the Avenue of the Americas.

“Tickets for the Dalai Lama, tickets,” intoned a not-particularly-spiritual-seeming 55-year-old scalper from Brooklyn, standing on the corner of 50th Street on Friday afternoon. “Anyone selling tickets? Tickets.”

As Roth notes, New York’s 2007 ticket scalping law, which removed price caps on the resale of tickets, expired last week, leaving a more restrictive law passed in the 1920s in effect.

 Apparently, the Dalai Lama’s recent appearances in Florida were hot events as well, with tickets on eBay and Craig’s list selling well above their face value (in fact, many of the tickets were complimentary to Florida Atlantic University faculty, students, and staff, so the face value was zero, as seen in the eBay image above). "’It's disgusting, but there's absolutely nothing I can do,’" said Stacy Volnick, the FAU official in charge of logistics for the visit.”

Other than the NCAA as cartel readings, ticket scalping had to be the topic that most engaged my seminar students this year – I guess that markets in babies, sperm, and human organs are no competition for these more meaningful events in the lives of students at schools with major sports programs.

As a completely unrelated aside, I had the pleasure a few weeks ago of finally meeting Al Roth in person at a matching conference at Fuqua School of Business, "Roth and Sotomayor: Twenty Years After," co-sponsored by the Economic Research Initiatives at Duke (ERID) and the Wallis Institute.  (Not the Supreme Court Justice, you Court geeks – my spouse thought I had finally managed an interest in the nation’s highest court, which, as my friends and colleagues know, is one of my least favorite topics). Always a happy coincidence when the people whose work you admire turn out to also be friendly and generous in person.

Image source

What Religion Is Your Egg?

 Israel has always posed many interesting issues relating to oocyte donation.  Now, according to the WSJ, things are heating up even more. For example, under current Israeli law, only women already undergoing fertility treatments can donate their eggs, leading to oocyte shortages and reproductive tourism.  (For prior Lounge discussions of reproductive tourism by UK couples see here and here).

For example, from the website of IVF@Israel:

Egg donation is subjected to restrictions by the Israeli Ministry of Health. A new "egg donation" law is expected in the "near" future, hopefully. Currently, availability of eggs for donation in Israel is low, since the law limits donation from IVF patients only. However, we do offer egg donation in Kiev Ukraine (a major European airline hub). The IVF in Kiev had received formal recognition by the Israeli Ministry of Health, and is run by Israeli physicians. Donors are healthy, fertile women, who undergo routine tests as recommended by the American Society for Reproductive Medicine (ASRM).

When I was teaching a course on Taboo Trades and Forbidden Markets in Israel earlier this year, the country was still reeling from the scandal at an Israeli fertility clinic in Romania.  Thirty fertility center employees, including two Israeli physicians, were arrested in connection with allegations that the Sabyc fertility clinic in Romania made payments to human egg donors, a practice which is illegal there.

In part because of these and other scandals, new legislation designed to ease the oocyte shortage in Israel has been introduced, which would expand the pool of eligible egg donors. But, according to the WSJ:

In an effort to win support from the Knesset's ultra-Orthodox factions, the bill also has a provision requiring a woman undergoing fertility treatments in Israel to do so only with eggs from a woman of the same faith.

The debate has raised precarious ethical questions. "The notion that there is Jewish blood is offensive," said Zev Chafets, a former government spokesman who also has written about reproductive medicine in Israel. When people make such a distinction, he says, "'It's not about science; it's about race. It's saying, 'We don't want outsiders, and our criterion is blood.'"

But the legislation is also expected to “increase the already high demand for Jewish eggs in the U.S., and could call into question the religious status of thousands of children born to Jewish women around the world.”  In the U.S., there have been reports of a shortage of egg donors from particular ethnic groups, especially Jewish, East Asian and East Indian, with resulting price premia for such donors.

(HT: Danny Sokol)

Related Posts:
Egg Versus Sperm Donation (Part 982)
The Value of Smart Eggs

U.K. Oocyte Raffle


How Is An Egg Donor Like A Prostitute?



Like A Virgin? We Sell That Here!

Sunny Samaritans or Entrepreneurs? New York Allows Egg Donor Payments For Stem Cell Research

A New Meaning To "Nest Egg"

U.K. To Reconsider Payments to Egg and Sperm Donors

Adoption: Altruism versus Selfishness

 Tyler Cowen, in response to a post from Bryan Caplan, argues:

Bryan writes:

On adoption: I think that adoption is a noble, generous act, and admire those who do it.  But I personally don't want to adopt.

I can't disagree with any word in that first sentence, but it leaves me uneasy.  Bryan's forthcoming book -- Selfish Reasons to Have More Kids -- is about...selfish reasons to have kids.  (It will, I promise you, be very interesting and make a splash.)  So here is my challenge to Bryan: write down the ten most important selfish reasons to have kids and then ask how many of them apply to adopted children.  Most of them will.  Which isn't to say those are the only reasons to adopt (or have) kids, but they are real nonetheless.  So why do the adopting parents seemingly get described as selfless martyrs?  It's almost as if the selfishness, without the replication angle, has to be stuffed into a box somewhere.  Do all those selfish reasons for having kids require replication as a kind of amplifying mechanism, without with we are left with the slightly underwhelming purely altruistic motives?

From the remainder of the post, I gather that Cowen does not necessarily agree that the primary reasons to have (or adopt) children are selfish ones, though he leaves this aside for the sake of argument.  Instead, the point is that both biological and adoptive parents become parents for similar reasons – selfish ones, under Caplan’s definition -- yet Caplan believes the reasons of the biological parent are primarily selfish, whereas those of the adoptive parent are depicted as primarily generous. 

This is to me a quite fascinating post, as the (ir)relevance of motive is a topic I cover at length in both teaching and research (See, for example, prior posts here and here).   And I’ve frequently wondered why one transaction is routinely characterized as at least partially altruistic (e.g. egg donation, blood donation, surrogacy), whereas reasonably similar transactions are assumed to be largely or wholly selfish (e.g. sperm and plasma donation).  

But this difference in the presumed motives of adoptive versus biological parents is not one that had occurred to me before.  In prior work, I’ve theorized that characterizing particular transactions as selfless or altruistic is a means of normalizing otherwise jarring events – for example, mothers are supposed to love their children, not sell them for profit.  Thus the characterization of commercial surrogacy and oocyte donation as primarily altruistic, selfless acts may reduce the dissonance associated with cash-for-motherhood transactions. 

Is it possible that a similar move is at work with adoption?  And, if so, what is the discord that must be normalized?

Adoption is no longer particularly unusual in this day and age, of course – many of us adopt children ourselves or know others who have done so.  But, as Viviana Zelizer documents, the sentimental value of children (the economically “worthless,” but sentimentally “priceless” child, as she puts it) is a relatively recent development.  Historically, children who were not genetic offspring (thus serving no evolutionary impulse) were valued primarily for their ability to contribute to household income.  (I discuss this social transformation and its impact on the baby market in more depth here).

Today’s adoptive “priceless” children provide neither gene survival nor economic contribution.  This would, it seems, make today’s adoptions selfless acts, as judged by historical standards.