I'll be giving a seminar at the University of Regina on "An Options Market for Human Organs" on October 3rd. Here is the abstract:
There is a chronic shortage of human organs for transplant. This shortage is largely the result of the failure to use market pricing in the face of a phenomenal increase in demand resulting in part from an aging population but more from the dramatic medical technology improvements during the past 50 years.
The shortage can easily be seen as an excess quantity demand over the quantity supplied at zero price. The naïve, simplistic solution is to allow markets in human organs to emerge with positive prices for the organs (and the transplant procedure).
But the market solution is fraught with difficulties, including the problem of killing a donor or, more commonly, who bears the risk when the probability of death of a live donor is increased. Also the transaction, negotiation, and legal costs associated with identifying a legal heir and working out a deal with them after a potential donor is killed can be ghoulish and daunting.
This paper presents an alternative: an options market for organs. Potential donors sign an irrevocable contract, receiving an upfront payment in exchange for their organs (should someone want them for transplant). Essentially, the purchaser buys an option of first refusal when the person dies.
It is expected that many of the buyers of these options would be life insurance companies who would most likely play a leading role in organizing the market.
The seminar is scheduled for 2:30 - 4pm in CL435.
I'm looking forward to seeing my friends in the economics department while I'm there (and, of course, playing with the Roughrider Pepband for the game that evening).