Tuesday 2 12 2013 Went over Test 1 Went over Kidney liver donation results Kidney 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 recipient o Look for bio relative match o Wait 6 months for cadaveric donor o Meet with dialysis and transplant patients association DATPA DATPA volunteers with End Stage Renal Disease ESRD No for finding matches altruistic system Vendors o Must meet strict medical standards check for drugs AIDS etc o Contact DATPA directly o Government Pays 1 200 to vendor Health insurance that covers surgery and any complications to vendor Pays for surgery recovery drugs o Recipient or charity pays 2 300 4 500 to vendor o 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 exists o 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 transplant o So number of transplants has grown but eligible receivers has grown more aka higher waiting list Thursday 2 14 13 Watched 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 Disease Estimating Qd Qs Quantity demanded per year o Number put on list o Number who die Quantity supplied per year o Straight forward o Number of transplants Kidney excess demand size of shortage Liver excess demand size of shortage o 2 500 in 1991 o 7 000 in 2000 o 1000 in 1991 o 4 000 in 2000 2 Shortcomings or Questionable Assumptions Authors underestimate Qd Graph above the difference between Qs and Qd is the shortage 3 They 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 up o 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 individual o Don t take into account different willingness to sell o 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 someone o 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 life o 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 up o 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 Whoever pays for transplant will pay donors make up amt for donor incurring risk of lower HUI What s the price of an organ continued Three components o Risk of death o Time lost during recovery o Risk of reduced quality of life Risk 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 5 000 Weekly earnings weeks lost during recovery 675 weekly 4 recovery weeks Risk of death component liver 16 600 Value of time loss kidney 2 700 Value of time loss liver 675 9 weeks recovery 6 000 Risk 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 Required Risk of death Time Lost Risk of reduced quality of life 7 500 Kidney 5 000 2 700 Liver 16 600 6 000 15 000 5 Total Compensation required 15 200 37 600 Reasonable Numbers India Experience o Payment to live kidney donors legal in the 1980 s o Average paid price was 1 177 o Indian income is 1 15 of US o 1177 15 17 000 Iran o No cadaveric donors until 2000 o Vender receives 3 500 to 6 000 o Iranian income 1 8 US o 5 000 8 40 000 Cost of transplant Current cost w o donor payment o Kidney 160 000 o Liver 335 000 Who would provide payment to donor Increase in transplants Assume static downward sloping demand o Price increases Qd increases o May not be good assumption o Insurance company o Wealthy individuals paying out of pocket for entire procedure Insurance payment More added to donor list o Total cost increase 9 5 o Transplant increase 44 from 13 500 to 19 460 eliminating the excess Kidney demand Liver o 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 recipients o Dialysis diabetes o Liver cirrhosis unpleasant No dying on list 6 Most unable to work while wait for transplant Higher probability of successful transplant o Health declines with time on list o Healthier individuals