Tuesday 2/12/2013Went over Test 1Went over Kidney/liver donation resultsKidney vending in Iran- Only country to legally permit kidney vending- Only country without a shortage - Why kidney vending legal?o Muslim Law: Not okay to take organs from dead people to put into living people, but its fine to do living to living.o Now cadaveric donations legal: stroke, car accident > life support so technically alive- Potential recipiento Look for bio/relative matcho Wait 6 months for cadaveric donoro Meet with dialysis and transplant patients association (DATPA) DATPA: volunteers with End Stage Renal Disease (ESRD) No $ for finding matches, altruistic system.- Vendorso Must meet strict medical standards (check for drugs, AIDS, etc)o Contact DATPA directlyo Government: Pays $1,200 to vendor Health insurance that covers surgery and any complications to vendor Pays for surgery, recovery drugso Recipient or charity pays $2,300 - $4,500 to vendoro Citizens only!Pros with Vending in Iran- No illegal organ trafficking- DATPA no incentive to pressure vendors- Anyone can get an organ (no wait list)1- Altruistic donation still existso Bio donors 12%o Cadaveric donation 16%Concerns with vending in Iran- Low income individuals are the ones selling- Iranian poverty line is $5 per month- Earn 67x annual income by vending!- What happens to vendors?o We do not know. Iran does not keep this data that well.- Vendor outcomes worse than donor outcomes? Income and health highly correlated. o It seems like the receivers have much better health that the vendor down the road, but hard to tell because their incomes are not the same. So we cannot tell if it is a causal relationship. NUMBERS/CHART- As technology improved: more people become eligible to receive transplanto So number of transplants has grown, but eligible receivers has grown more aka higher waiting list.Thursday 2/14/13Watched Reason.TV video about selling organs (Drew Carey)- Government could pay $90,000 per donor and still save money because government currently pays for dialysis ESRD: End Stage Renal DiseaseEstimating Qd > Qs- Quantity demanded per yearo Number put on list +o Number who die- Quantity supplied per yearo Straight forwardo Number of transplants- Kidney excess demand (size of shortage)o 2,500 in 1991o 7,000 in 2000- Liver excess demand (size of shortage)o 1000 in 1991o 4,000 in 20002Shortcomings or Questionable Assumptions: Authors underestimate QdGraph above: the difference between Qs and Qd is the shortage.3They think that the Qd of transplants is going to fall when we start paying donors. Because insurance companies are going to respond to the higher price (because we are paying) and will pay for less transplants.Shortcomings or Questionable Assumptions: - Authors underestimate Qd- Qd of transfer will go down if payments occur because price of transplant went upo Maybe not true. Demand for body part is very inelastic. Also, maybe the receiver themselves will cover the difference to the increased price.What the price of an organ?- At what price is the average individual indifferent between selling and not?- Author calculate price for an average individualo Don’t take into account different willingness to sello Don’t take into account altruism/disutility Maybe someone would be willing to donate if they don’t receive payment, but if they get paid that would cause them disutility (NOT VALID POINT)o Assume donors can estimate risk somewhat accurately “not necessarily bad assumption” because we can explain the risk to someoneo Assume risk neutrality What tends to happen in real life, people tend to be risk loving when it comes to small things (slot machine) but risk averse when it comes to large sums or one’s lifeo Horizontal supple curve? (one price)Shortcomings or Questionable Assumptions: 4- Authors underestimate Qd- Qd of transfer will go down if payments occur because price of transplant went upo Maybe not true. Demand for body part is very inelastic. Also, maybe the receiver themselves will cover the difference to the increased price.- One price to donors- Assume risk neutrality. Assume that donors are risk natural.- “make up” $ amt for donor incurring risk of lower HUI- Whoever pays for transplant will pay donorsWhat’s the price of an organ? (continued)- Three componentso Risk of deatho Time lost during recoveryo Risk of reduced quality of lifeRisk oF death component: kidney-PROFESSOR IS MUCH MORE CONCERNED WITH YOU UNDERSTANDING THE THREE COMPNOENTS AND WHAT MAKES THEM UP (see above) RATHER THAN THE NUMBERS- Compensation for risk of death = prob of death * value of life =$5,000Risk of death component: liver- $16,600Value of time loss: kidney- Weekly earnings * weeks lost during recovery = $675 weekly * 4 recovery weeks = $2,700Value of time loss: liver- $675 * 9 weeks recovery = $6,000Risk of reduced quality of life: Kidney- Most able to live healthy lives, most would donate again (though this is a little flawed because its like asking “hey would you save your sisters life again with a donation” and of course they will say yes- Arbitrary estimate of $7,500 (we have no good way to estimate, this is questionable)Risk of reduced quality of life: Liver- Most able to live healthy lives, would donate again. (same flaw as above for kidney)- $15,000 (arbitrary)-Total Compensation RequiredKidney LiverRisk of death $5,000 $16,600Time Lost $2,700 $6,000Risk of reduced quality of life $7,500 $15,0005Total Compensation required$15,200 $37,600Reasonable Numbers?- India Experience:o Payment to live kidney donors legal in the 1980’so Average paid price was $1,177o Indian income is 1/15 of USo $1177 * 15 = $17,000- Irano No cadaveric donors until 2000o Vender receives $3,500 to $6,000o Iranian income 1/8 USo $5,000 * 8 = $40,000Cost of transplant- Current cost w/o donor paymento Kidney: $160,000o Liver: $335,000- Who would provide payment to donor?o Insurance companyo Wealthy individuals paying out of pocket for entire procedure Increase in transplants- Assume static downward sloping demando Price increases, Qd increaseso May not be good assumption Insurance payment More added to donor list- Kidneyo Total cost increase 9.5%o Transplant increase 44% (from 13,500 to 19,460 eliminating the excess demand)- Livero Total cost increase 11.2%o Transplant increase 67% (from 5200 to 8685 eliminating excess demand)Impacts of Reduced Wait Time- Increased quality of life for recipientso Dialysis ->