Introducing incentives in the market for live and cadaveric organ donations.

O rgan transplants began in 1954 with a kidney transplant performed at Brigham & Women’s hospital in Boston. But such procedures only began to take off with the development in the 1970s of immunosuppressive drugs that could prevent the rejection of transplanted organs. Since then, the number of kidney, liver, heart, and other organ transplants has grown rapidly, but not nearly as rapidly as the growth in the number of persons with defective organs who desire transplants. The result has been longer and longer queues to receive organs. Seriously ill individuals often die while waiting for transplants. When an economist sees a persistent gap between demand and supply—as in the demand for and supply of organs for transplants—the next step is usually to look for obstacles to equilibrating that market. Such obstacles are obvious in the market for transplants since very few countries—with the exceptions of India in the 1980s and the early 1990s and Iran starting in 1988—allow monetary incentives to acquire organs either from living individuals or from cadavers. This paper argues that monetary incentives could increase the supply of organs for transplant sufficiently to eliminate the large queues in the organ market, and it would do so while increasing the overall cost of transplant surgery by no more than about 12 percent. The few papers that have discussed using monetary incentives have concentrated on increasing the supply of organs from cadavers (for example, Cohen, 1989; Becker, 1997; Kaserman and Barnett, 2002; Epstein, 1993). We instead stress the potential from using incentives to elicit more live donations, although we also