Matching Markets and Saving Lives
Dubbed as the economist who saves lives, Stanford’s Alvin Roth helped develop a solution to the long-standing problem with the market for kidney donations. Roth is considered a “matching market guru” and was awarded the Nobel prize in his work in matching markets to match patients in need of a kidney transplant to possible donors. It is estimated that there are greater than 90,000 people waiting for a kidney transplant today with not as many donors.
The queue that forms is tricky to deal with in the sense that a kidney has to be free. It has to come from a willing participant, who may have to pay to give it up if they are donating to someone in a different location. This causes “repugnant transaction(s)” to rise – a transaction some people would like to engage in, but others do not want them to. There is a black market for human organs, and this disrupts the market analysis. Digressing, the article goes on to explain more about matching markets in various scenario and why they would be used for analysis over say a commodity market.
The work done by Roth in obtaining his Nobel prize is related to the material learned in class on market clearing prices. Here we have a buyer (the person in need of the kidney), a seller (the person donating the kidney) and associated “prices” (relevance the kidney has to the person in need). It’s interesting to see such a seemingly simple concept come to life and be applied in a critical area.
https://qz.com/421547/nobel-prize-winner-alvin-roth-explains-the-hidden-economics-behind-tinder-marriage-and-college-admissions/