The design of the economics profession, in the Journal of Economic Literature

The current issue of the JEL actually includes several papers on market design. The one I blogged about yesterday concerns market design as an outward facing part of economics--economists help others design the markets they need.  The two I'll mention today are about the design of the academic profession of Economics itself, chiefly through the design of our system of publications (which in turn determines professional rewards like tenure and prestige).  Both papers argue that the norms of publishing in well-regarded journals may inhibit economists (particularly young economists) from tackling important problems in unconventional ways.


Sins of Omission and the Practice of Economics†
George A. Akerlof
Journal of Economic Literature 2020, 58(2), 405–418   https://doi.org/10.1257/jel.20191573

Abstract: "This paper advances the proposition that economics, as a discipline, gives rewards that favor the “hard” and disfavor the “soft.” Such bias leads economic research to ignore important topics and problems that are difficult to approach in a “hard” way— thereby resulting in “sins of omission.” This paper argues for reexamination of current institutions for publication and promotion in economics—as it also argues for greatly increased tolerance in norms for publication and promotion as one way of alleviating narrow methodological biases."


Publishing and Promotion in Economics: The Tyranny of the Top Five†
James J. Heckman and Sidharth Moktan*
Journal of Economic Literature 2020, 58(2), 419–470  https://doi.org/10.1257/jel.20191574

Abstract: "This paper examines the relationship between placement of publications in top five (T5) journals and receipt of tenure in academic economics departments. Analyzing the job histories of tenure-track economists hired by the top 35 US economics departments, we find that T5 publications have a powerful influence on tenure decisions and rates of transition to tenure. A survey of the perceptions of young economists supports the formal statistical analysis. Pursuit of T5 publications has become the obsession of the next generation of economists. However, the T5 screen is far from reliable. A substantial share of influential publications appear in non-T5 outlets. Reliance on the T5 to screen talent incentivizes careerism over creativity."

David Levine on market design, in the Journal of Economic Literature

David Levine uses a book review in the JEL as an opportunity to think about what distinguishes real market design from imitations.

Radical Markets by Eric Posner and E. Glen Weyl: A Review Essay†
David K. Levine
Journal of Economic Literature 2020, 58(2), 471–487   https://doi.org/10.1257/jel.20191533

Abstract: "At a time when standards of living have improved more than any time in history, this
book makes a proposal for radical change. It is based—loosely—on market design principles. The plan for attacking overlapping ownership is reasonably well thought out. Most of the book, however, proposes to use mechanisms designed for a narrow purpose; to attack real or imagined problems that they are ill-suited to solve. I conclude that while market design has a lot to offer when properly applied, the proposals here are not sufficiently well thought out to constitute a serious plan of action."

And here are his concluding paragraphs:

"The authors have a message. Market design is great and it is easy. Markets are sloppy affairs: sometimes buyers post prices, sometimes sellers, some goods are sold at auction, others on exchanges … some are even sold (sniff, sniff) through bargaining. We can fix this: we’ll replace all of these nasty old markets with a simple clean government run auction. The poor will become rich and the rich will have to work for a living!

"I have a message. Market design is great and it is hard. Allocating oil leases is not the same as allocating the radio spectrum. Thick markets are not the same as thin markets. Auctions are complicated. Private information may lie on the buyer side, on the seller side, or both. Real market designers know this. They tailor solutions to problems: having designed an algorithm for allocating residents to hospitals and faced with the problem of matching kidney donors to patients they did not blindly claim to have solved that problem, but instead dug into the details and designed an algorithm for the kidney matching problem. Real market designers sweat the details: they improve lives and prosperity. Listen to real market designers."

Kidney Exchange: an Operations Perspective by Ashlagi and Roth

Here's a survey that puts some emphasis on the many changes in the design of kidney exchange operations and processes that have moved it from its small beginnings to its current situation facilitating annual transplants in the thousands, and might help to scale it up further, since the supply of transplants is still far short of the need. 

Kidney Exchange: an Operations Perspective
Itai Ashlagi and Alvin E. Roth
May 2020

Abstract: Many patients in need of a kidney transplant have a willing but incompatible living donor. Kidney exchange programs arrange exchanges among such incompatible patient-donor pairs, in cycles and chains of exchange, so each patient receives a compatible kidney. Kidney exchange has become a standard form of transplantation in the United States and a few other countries, in large part because of continued attention to the operational details that arose as obstacles were overcome and new obstacles became relevant. We review some of the key operational issues in the design of successful kidney exchange programs. Kidney exchange has yet to reach its full potential, and the paper further describes some open questions that we hope will continue to attract attention from researchers interested in the operational aspects of dynamic exchange.


Here's the concluding paragraph:

"Looking back, kidney exchange has accomplished a lot, but not nearly enough. The number of people waiting for a kidney transplant is growing, despite the growth of exchange. But there is room for kidney exchange to continue to grow and to increase the availability of transplants further, by designing international kidney exchanges, by starting chains with deceased donor kidneys, and by introducing other market design innovations that have yet to be explored or even conceived."

************

Now online in Management Science, Ahead of Print

Kidney Exchange: An Operations Perspective

Itai Ashlagi , Alvin E. Roth 

Published Online: 

2 Jul 2021 https://doi.org/10.1287/mnsc.2020.3954

Market Design, Human Behavior, and Management, by Chen, Cramton, List and Ockenfels

Here is a sweeping review of some of the highlights of market design, notable for its attention to the role of experiments.

Market Design, Human Behavior, and Management
Yan Chen, Peter Cramton, John A. List, Axel Ockenfels
NBER Working Paper No. 26873
Issued in March 2020

Abstract: We review past research and discuss future directions on how the vibrant research areas of market design and behavioral economics have influenced and will continue to impact the science and practice of management in both the private and public sectors. Using examples from various auction markets, reputation and feedback systems in online markets, matching markets in education, and labor markets, we demonstrate that combining market design theory, behavioral insights, and experimental methods can lead to fruitful implementation of superior market designs in practice.

And here's their concluding paragraph:

Many opportunities and challenges in market design have to do with recent advances in computer and communication technology, which often allow for radical innovation in market design. Indeed, smart markets are popping up everywhere, from new kidney exchanges, dating, job and ride hailing markets, ad and spectrum auctions, to innovative climate, electricity and financial markets. The development of these markets not only creates new business opportunities to benefit our social and economic lives, but also improve our scientific understanding of engineering incentives and markets.There is probably no other field in economics and management science, where researchers and practitioners gain so much by carefully listening to and working with one another. In this spirit, perhaps the most foundational change for generation of knowledge is that researchers will increasingly have to use the carpool lane in their own work, for riding alone will soon be an  inefficient choice in the knowledge production game

Interview congestion in the Ophthalmology Residency Match

An ophthalmology residency program surveyed all its applicants on their experience in the match:

Current Applicant Perceptions of the Ophthalmology Residency Match
Michael J. Venincasa, MD; Louis Z. Cai, MD; Steven J. Gedde, MD; Tara Uhler, MD; Jayanth Sridhar, MD

JAMA Ophthalmology May 2020 Volume 138, Number 5 

"Hundreds of individuals apply for ophthalmology residency positions each year using the Centralized Application Services (CAS), administered by San Francisco Residency and Fellowship Matching Services (SF Match). Although the match rate remains relatively stable at approximately 75%, the mean number of applications submitted has risen from 48 in 2008 to 75 in 2019.1,2 In 2010, highly qualified applicants were advised to apply to between 10 and 20 residency programs,3 but more recent studies suggested a target of 45 applications for these applicants and more than 80 for applicants with less competitive qualification.2 The application process represents a considerable financial burden for applicants; in 2018-2019, the CAS application alone cost $685 to apply to 45 programs, which increased to $1910 for 80 programs. These high costs are not unique to ophthalmology. In emergency medicine, the cost of securing a residency position was estimated at $8312 in 2016.4

These trends also come with increasing administrative burden for residency programs tasked with reviewing rising numbers of applications. As a result, many programs have increasingly emphasized quantifiable cognitive measures, such as clinical grades and the US Medical Licensing Examination (USMLE) board scores.3 The USMLE Step 1 scores and Alpha Omega Alpha Honors Medical Society membership are factors with statistically significant associations with matching into an ophthalmology residency.5

...

"Respondents applied to a mean (SD) of 76.4 (23.5) ophthalmology residency programs, received 14.0 (9.0) invitations to interview (Figure 1), and attended 10.3 (4.4) interviews. 

...

"When respondents received an interview invitation without the involvement of a wait-list, they most commonly reported receiving the invitation between 3 and 4 weeks prior to the interview date (n = 87 [47.8%]). When instead receiving their invitation from a wait-list (n = 92 [49.7%]), the most common lead time was 1 to 2 weeks prior to the interview date (n = 43 [46.2%]), with 20 (21.5%) invitations arriving less than 1 week prior

...

"Many applicants struggled with scheduling conflicts with other residency programs, where interview dates overlapped or the desired date was filled at the time of invitation response. Certain dates were especially popular for residency programs, with 23 of 116 programs (19.8%) holding interviews on a single day during the 2018-2019 interview cycle.

***********

Note that the Ophtalmology residency match is run by SFMatch, not the larger NRMP, but the growing number of applications and interviews are common to both matching platforms.

What values do we bequeath to our grandchildren? Alberto Alesina et al. on the generations following the Cultural Revolution in China

In what is perhaps the last paper he completed before his recent untimely death on May 23 from a heart attack, Alberto Alesina (1957-2020) and colleagues consider how effectively the Cultural Revolution in China in disrupting the old pattern of elites, and of how it looks today in the grandchildren's generation.

Persistence through Revolutions
Alberto F. Alesina, Marlon Seror, David Y. Yang, Yang You, Weihong Zeng
NBER Working Paper No. 27053, April 2020.

The Chinese Communist Revolution in the 1950s and Cultural Revolution from 1966 to 1976 aimed to eradicate inequality in wealth and education, to shut off intergenerational transmission, and to eliminate cultural differences in the population. Using newly digitized archival data and linked contemporary household surveys and census, we show that the revolutions were effective in homogenizing the population economically and culturally in the short run. However, the pattern of inequality that characterized the pre-revolution generation re-emerges today. Grandchildren of the pre-revolution elites earn 17 percent more than those from non-elite households. In addition, the grandchildren of pre-revolution elites differ in their cultural values: they are less averse to inequality, more individualistic, more pro-market, more pro-education, and more likely to see hard work as critical to success. Through intergenerational transmission, socioeconomic conditions and cultural traits thus survived one of the most aggressive attempts to eliminate differences in the population and to foster mobility.

Discussiong the pandemic with the Indian magazine Open

The Indian magazine Open published a brief interview with me, conducted by email:

‘Not only is wealth inequality rising, but the consequences of wealth inequality are also growing’

Here is the most interesting Q&A exchange:

"How concerned are you about the loss of jobs, especially in countries such as India where people in very low-income (informal) jobs are bearing the brunt of the lockdown? Is wealth inequality set to rise rapidly? ...

"In the near term I am very concerned by the loss of jobs. Not only is wealth inequality rising as a consequence, but also the consequences of wealth inequality are growing. Prosperous office workers can work remotely and be paid, but many manual workers can’t work remotely, and aren’t being paid."

Human Challenge Trials for COVID-19 vaccines

Yesterday I blogged about trying to speed up vaccine development and distribution by taking some of the risk out of it for pharma companies via an advanced market commitment, and today let's consider again one of the proposals being discussed  for speeding up the testing process.

Here's a white paper proposing some steps to further consider and prepare for human challenge trials (aka controlled human infection studies)  to speed up the testing of potential Covid-19 vaccines.It is put out by the organization 1 Day Sooner, which seeks to promote such trials, and has started assembling a list of volunteers in case challenge trials should become practical, to help vaccines become available sooner.

Evaluating use cases for human challenge trials in accelerating COVID-19 vaccine development
Linh Chi Nguyen , Christopher W Bakerlee, T. Greg McKelvey, Sophie M Rose, Alexander J Norman, Nicholas Joseph, David Manheim,, Michael R McLaren, Steven Jiang, Conor F Barnes, Megan Kinniment, Derek Foster, Thomas C Darton, Josh Morrison; for the 1Day Sooner Research Team

Abstract: Recently, human challenge trials (HCTs) have been proposed as a means to accelerate the development of an effective SARS-CoV-2 vaccine. In this paper, we discuss the potential role forsuch studies in the current COVID-19 pandemic. First, we present three scenarios in which HCTs could be useful: evaluating efficacy, converging on correlates of protection, and improving understanding of pathogenesis and the human immune response. We go on to outline the practical limitations of HCTs in these scenarios. We conclude that, while currently limited in their application, there are scenarios in which HCTs would be vastly beneficial and, thus, the option of using HCTs to accelerate COVID-19 vaccine development should be preserved. To this end, we recommend an immediate, coordinated effort by all stakeholders to (1) establish ethical and practical guidelines for the use of HCTs for COVID-19; (2) take the first steps toward an HCT, including preparing challenge virus under GMP and making preliminary logistical arrangements; and (3) commit to periodically re-evaluating the utility of HCTs amid the evolving pandemic.

Here's the main experimental design element:

"In HCTs, a relatively small number of healthy volunteer participants are administered a vaccine candidate or a placebo. However, unlike in conventional trials, consenting HCT participants are then administered an infectious dose of pathogen, and the outcomes of this infection is tracked. By challenging participants with pathogens under close observation in a clinical setting, HCTs can provide a unique opportunity to assess efficacy of a vaccine candidate."

And here are their concluding recommendations:

"To preserve the option to implement HCTs in scenarios such as this, we recommend an immediate, coordinated effort by all stakeholders to address the considerations outlined in this manuscript and make the necessary preparations. These include:
 1. Convening experts to discuss the ethical and practical considerations associated with HCTs for COVID-19, concluding in a set of  recommendations and guidelines for their use in the present pandemic and their role in the licensure process (which, notably, could provide guidance that is broadly useful in the event of future pandemics, too),
2. Taking the first practical steps toward an HCT, including preparing challenge virus under GMP and making preliminary arrangements with volunteers, vaccine developers, regulators, academic institutions, and clinical researchers to run HCTs in situations where they are expected to be highly useful,
3. Keeping informed of the evolving situation, periodically conducting a systematic reevaluation, and adjusting course based on the progress of the pandemic and the outcomes of the first drug and vaccine trials.

"HCTs have the potential to considerably shorten the COVID-19 pandemic, saving many lives and enabling economies and societies to return to normality. But we must act now to ensure this opportunity is not missed."
********

It's an admirably careful and balanced paper for one with a policy recommendation, and it sets the stage for a useful and timely debate.

As an experimenter,  I have one reservation about the proposed controls. In the passage I quoted above, they said " healthy volunteer participants are administered a vaccine candidate or a placebo," i.e. the control is a placebo.  That strikes me as potentially controversial given that the next step of the experiment is to infect the participants with Covid-19.  I might prefer a study in which the control for one vaccine was a different potential vaccine, so that no subjects were (relatively) sure to contract the disease.

But this doesn't detract from the usefulness of the preparations they recommend: conducting further discussions, and taking initial practical steps.
********
Here is my earlier post on this subject:

Friday, May 8, 2020 

Human Challenge Trials (aka Controlled Human Infection studies) for corona virus vaccines

*********

Here's a similar in spirit paper, considering when and why human challenge trials might be appropriate, put out by the World Health Organization

Key criteria for the ethical acceptability of COVID-19 human challenge studies
WHO Working Group for Guidance on Human Challenge Studies in COVID-19
Authors:  WHO

"Overview: This document aims to provide guidance to scientists, research ethics committees, funders, policy-makers, and regulators in deliberations regarding SARS-CoV-2 challenge studies by outlining key criteria that would need to be satisfied in order for such studies to be ethically acceptable."
*******

Here's a news story from CNN, complete with some anecdotes about the sometimes sketchy history of human challenge trials:

Thousands of people want to be exposed to Covid-19 for science
By Robert Kuznia

"Human challenge studies date all the way back to the first vaccine, for the highly lethal smallpox disease. The vaccine was developed in the late 18th century by physician Edward Jenner, who aimed to put a piece of folklore to the test: that milkmaids seemed to contract a milder form of the disease, called cowpox.
"In an experiment that today would warrant steep criminal charges, Jenner took pus from the scab of a milkmaid and inserted it into an incision on the arm of an 8-year-old boy. The child, James Phipps, developed a headache, chills and other mild symptoms, but when directly exposed to smallpox -- again through incisions on the arm -- he proved impervious."
**********

Here's an op-ed from the Washington Post, by the philosophers Richard Yetter Chappell and Peter Singer:

Pandemic ethics: The case for experiments on human volunteers

They conclude:
"We are ethicists, not medical or biological scientists. When it comes to factual beliefs about the pandemic, we defer to expert scientific opinion, as everyone should. But what we ought to do with the facts we have, and how we should go about seeking facts we still lack, are ethical questions. Ethicists have a crucial role to play in this debate.

"There is too much that we don’t know about covid-19. The longer we take to find it out, the more lives will be lost. (That’s why the website asking for vaccine volunteers is called “1 Day Sooner.”) If healthy volunteers, fully informed about the risks, are willing to help fight the pandemic by aiding promising research, there are strong moral reasons to gratefully accept their help. To refuse it would implicitly subject others to still graver risks."
***********

And here's a  post  from the Volokh Conspiracy (pointed out to me by Frank McCormick) focusing on the question of paying volunteers for human challenge trials:

The Moral Case for Testing Coronavirus Vaccines through "Challenge Trials" on Paid Healthy Volunteers
Doing so can potentially save many thousands of lives. And moral objections to this practice are weak. The issues here are very similar to the longstanding debate over whether we legalize organ markets.  by ILYA SOMIN .

He concludes:
"Like others who risk their lives to benefit others, challenge trial volunteers deserve our gratitude, and proper compensation for their efforts. And there is no good moral justification for forbidding them to take those risks. To the contrary, we should move ahead with challenge trials as soon as feasible. Every day of delay could literally be a matter of life and death—a great many lives and deaths."

Advanced market commitment for a successful COVID-19 vaccine

Vaccines take a long time to develop and test, and so are risky for pharmaceutical firms to invest in. Here's a NY Times op-ed by several prominent economists suggesting that a market design solution, a government commitment in advance to support the market price of a successful vaccine, could be applied to speeding the development and widespread availability of a COVID-19 vaccine.


In the Race for a Coronavirus Vaccine, We Must Go Big. Really, Really Big.
We should commit tens of billions toward a program.
By Susan Athey, Michael Kremer, Christopher Snyder and Alex Tabarrok

"Vaccines often take 10 years to bring to market. We want a new vaccine as fast as possible, where each month matters.

The fact is that starting from the early stages of development, most vaccines fail. We cannot afford to fail, so we need to plan for success. To do that, we must think and invest as ambitiously as we can — and that means in a Covid vaccine advance market commitment.

The A.M.C. model was proposed in the early 2000s. And in 2007, the pneumococcus advance market commitment guaranteed vaccine manufacturers sales at a fixed price in return for an effective vaccine. It led to the successful development and distribution of hundreds of millions of doses of vaccine ...

"An advance market commitment for Covid-19 should combine “push” and “pull” incentives. The “pull” incentive is the commitment to buy 300 million courses of vaccine at a per-person price of $100, for vaccines produced within a specified time frame. If multiple vaccines are developed, the A.M.C. fund will have authority to choose products to purchase based on efficacy, the availability of sufficient vaccine for timely vaccination or suitability for different population groups. So firms compete to serve the first 300 million people with the most attractive vaccines, and the “pull” component provides strong incentives for both speed and quality.

"The “push” incentive guarantees firms partial reimbursement for production capacity built or repurposed at risk and partial reimbursement as they achieve milestones. The partial reimbursement ensures that manufacturers have “skin in the game,” while inducing them to build large-scale capacity before approval is certain."
**********

Earlier post: Monday, March 16, 2020

The Advance Market Commitment for pneumonia vaccine, by Kremer, Levin, and Snyder

Convalescent plasma collection ramps up

Here's a story from the WSJ:
Blood Banks, Pharma Join Microsoft to Sign Up Covid-19 Survivors for Plasma

"A coalition of research institutions, blood banks, drug companies and recovered Covid-19 patients is working to overcome a major challenge in developing new therapies based on survivors’ blood plasma: a shortage of donors.

"With a campaign launched Tuesday called The Fight Is In Us, the group aims to get tens of thousands of people who have recovered from Covid-19 infections to donate plasma using a self-screening tool developed by Microsoft Corp. MSFT -0.17%

"So far nearly 15,000 seriously ill Covid-19 patients have received plasma transfusions in an emergency, expanded-access program authorized by the Food and Drug Administration
...
"The Red Cross has collected plasma from 4,000 recovered Covid-19 donors to date through its website RedCrossBlood.org/plasma4covid, according to a spokeswoman. She said the organization supports the efforts of the coalition but didn’t join it. “At this time, the Red Cross is fortunate to be able to meet the needs of our hospital partners,” she said. “We also have the capacity to ramp up our supply if necessary.”
...
"Despite the unusual efforts to work together, for-profit companies in the coalition also continue to look for donors on their own through digital advertising and other online outreach, according to industry experts.

"Potential donors who go to the thefightisinus.org website start by using a self-screening tool. It asks if they were diagnosed for Covid-19 infection, have been symptom-free for more than 14 days, meet age and weight requirements for blood donation and have ever been diagnosed with HIV, hepatitis C or hepatitis B, which affects eligibility. The potential donors enter a ZIP Code and get a list of nearby donation centers.

"Peter Lee, corporate vice president at Microsoft, which developed the self-screening tool, said donors are currently directed to centers based on location. Coalition members are still discussing ways to determine how donors are allocated.
...
"Some plasma donors might prefer to give to a for-profit plasma company, where they might be reimbursed. Others might choose a local blood bank, where the plasma would be used right away for sick patients in a hospital and reimbursement isn’t offered
...
"In New York and other places affected early in the outbreak, many recovered patients have encountered long wait times to donate"

Incentive compatibility is not enough: evidence from the Israeli matching market for psychologists, by Hassidim, Romm and Shorrer

While it has taken some time for this paper to be published, I think it was the first to discover that some applicants in a labor market clearinghouse organized as an applicant proposing deferred acceptance algorithm were systematically misrepresenting their preferences, perhaps out of confusion. (This has since been observed in other markets as well.)  Their data are from the Israeli match for psychology graduate programs, which the authors also designed and organized.

Online early in Management Science:

The Limits of Incentives in Economic Matching Procedures
Avinatan Hassidim, Assaf Romm, Ran I. Shorrer
Published Online:13 May 2020
https://doi.org/10.1287/mnsc.2020.3591

Abstract: Organizations often require agents’ private information to achieve critical goals such as efficiency or revenue maximization, but frequently it is not in the agents’ best interest to reveal this information. Strategy-proof mechanisms give agents incentives to truthfully report their private information. In the context of matching markets, they eliminate agents’ incentives to misrepresent their preferences. We present direct field evidence of preference misrepresentation under the strategy-proof deferred acceptance in a high-stakes matching environment. We show that applicants to graduate programs in psychology in Israel often report that they prefer to avoid receiving funding, even though the mechanism preserves privacy and funding comes with no strings attached and constitutes a positive signal of ability. Surveys indicate that other kinds of preference misrepresentation are also prevalent. Preference misrepresentation in the field is associated with weaker applicants. Our findings have important implications for practitioners designing matching procedures and for researchers who study them.

India NDTV interview on coronavirus, convalescent plasma, etc. (5 minute interview by Dr. Prannoy Roy)

My 5 minutes come at 1:12, but if I've embedded this right the video should begin from there when you start it...

Olly Williamson (1932-2020)

The great student of transaction costs, Oliver (Olly) Williamson, has died.

Here's the Berkeley obit:
Nobel laureate Oliver Williamson, pioneer of organizational economics, dies at 87

"His multidisciplinary approach to analyzing organizational structures was unconventional in economics at the time—he described it as a melding of soft social science with abstract economic theory. He looked not only at formal firm structure but at culture and social norms. Prof. Ernesto Dal Bó, the Phillips Girgich Professor of Business, called Williamson’s work “a fountain of vocation-shaping epiphanies.”

“After reading his work, we could no longer think of markets, organizations, and legal or political institutions in the same way. And so we didn’t,” Dal Bó said. “His insights are now part of the common sense of social scientists.”
***********
He won the Nobel prize in economics in 2009: here's his autobiographical statement on the Nobel site. I was struck by this paragraph:

"Although I would not come to appreciate this last until later, there was a major difference between engineering and economics with respect to hypothetical ideals. Thus whereas assumptions of weightlessness or perfect gas laws or frictionlessness etc. served the purpose of simplification in engineering, these assumptions would give way to realities (in the form of friction, resistance, turbulence, and the like) as engineering applications were attempted. In economics, however, assumptions of frictionlessness (of which the standard assumption of zero transaction costs was one) often went unquestioned or, even worse, were invoked asymmetrically. Thus whereas markets were subject to “failures” for which corrective public policy measures were prescribed, there was no corresponding provision for failures in the public sector. A more symmetrical approach would be to recognize that positive transaction costs were the economic counterpart of friction and that all forms of organization experience such costs – albeit in variable degree (depending on the attributes of the transaction to be organized). I credit my engineering background with giving me a receptive attitude toward transaction costs, to include an interest in pinning down and working out the organizational ramifications of such costs."

Should emergency medical supplies go to the highest bidders? (That isn't necessarily what economists think...)

Should prices clear markets for emergency medical supplies? Many economists don't think so:

Prices of Medical Supplies

"About the European IGM Economic Experts Panel
This panel explores the views of European economists on vital public policy issues. It does this by polling them on important policy questions, by including a way for them to explain their answers briefly if they wish, and by disseminating these responses directly to the public in a simple format."

What makes a market transaction morally repugnant? by Leuker, Samartzidis, and Hertwig

Here's a new working paper on repugnance, from the Max Planck Institute for Human Development in Berlin.

What makes a market transaction morally repugnant?
Christina Leuker, Lasare Samartzidis, & Ralph Hertwig
April 23, 2020

Abstract: For many people, it is morally impermissible to put kidneys, jury duty exemptions, or permits for having children on the free market. All of these are examples of repugnant transactions—market transactions that third parties want to prevent. In two studies (N = 1,554), using respondents’ judgements of 51 different market transactions across 21 characteristics, we show that repugnance can be characterized along five higher-order dimensions: moral outrage, need for regulation, incommensurability, exploitation, and unknown risk. Repugnance toward the 51 market transactions was highly consistent across two samples. Our results can help identify mismatches between public sentiments and current regulations (selling carbon emissions is currently legal but considered repugnant), anticipate responses to novel markets that have not been publicly scrutinized (often arising from technological advances, such as markets for “designer babies”), and help design less repugnant markets (e.g., by making the risks involved in a transaction known to sellers).


And, in conclusion:

"Our studies have shown that perceived repugnance is quantifiable, and that market transactions can be profiled based on their underlying psychometric properties. The extent to which certain market transactions are considered repugnant is fairly stable across different respondent samples. Perhaps the most important finding from this research is that people’s judgments of a transaction’s repugnance can reflect a range of legitimate and important concerns. These concerns can be measured and possibly harnessed to predict how the public will perceive new, rapidly emerging transactions"

Blood and plasma: a brief history, from 1628

With all my discussion of convalescent plasma for Covid-19 this week*, here's a historical perspective on the technology and changes in medical practice since the discovery of blood circulation in 1628 that allows blood and plasma to be used in medicine.


A history of blood transfusion: a confluence of science—in peace, in war, and in the laboratory
by Kevin R. Loughlin
Hektoen International, Volume 12, Issue 2 – Spring 2020.

"Since 1628 when William Harvey discovered the circulation of blood, there had been hope that blood transfusion would be possible.
...
"After Harvey’s discovery, transfusion attempts began. In 1665 Richard Lower kept dogs alive by transfusing blood from other dogs.2 In 1667 French physician Jean Denys transfused nine ounces of blood from the carotid artery of a lamb into the vein of a young man. He continued the practice until the third patient so treated, died.3 Denys was sued by the wife of the deceased patient, who presumably died from a hemolytic reaction, but was exonerated. However, the French Parliament, the Royal Society, and the Catholic Church subsequently issued a general prohibition against transfusions.4

"It would not be until 1818 when transfusions were seriously considered again. A British obstetrician, James Blundell, performed a human blood transfusion in the setting of a postpartum hemorrhage.5 However, the debate over transfusions continued over the remainder of the nineteenth century. In 1849 C.H.F. Routh reviewed all the published transfusions to date and remarked in the Medical Times that of the 48 recorded cases, 18 had a fatal outcome and concluded that the mortality rate was unacceptably high.5 The next major advance in transfusion therapy would wait until the turn of the century.

"Karl Landsteiner was an Austrian physician and immunologist. While working at the University of Vienna, he became interested in blood serum work, specifically the factors that led to hemagglutination of red blood cells. This resulted in two landmark publications in 1900 and 1901 that described the evidence of blood groups that he named A, B, and C.6,7 These would later be modified to A, B, and O. Two years later, two of his colleagues, Alfred Von Decastelo and Adriano Sturli, would add a fourth blood type, AB.8,9 Landsteiner would be awarded the Nobel Prize in 1930 for his elucidation of the blood groups.

... in 1912, Doctor Roger Lee demonstrated that O blood could be given to a person of any blood type (universal donor) and that a person with AB blood could receive blood from any blood group (universal recipient).
...
"As blood transfusions became more widespread in medical practice, the concept of establishing blood banks became attractive. In the 1930s Bernard Fantus at Cook County Hospital20 and Carl W. Walter at Peter Bent Brigham Hospital started blood banks. In Boston, Walter’s efforts were viewed with such skepticism and disdain that his facility was relegated to a basement room at Harvard because some trustees thought the storage and use of blood was “immoral and unethical.”21 Fifteen years later he invented the plastic blood bag, which greatly facilitated transfusion therapy.21
...
"In 1940 Edwin Cohn developed ethanol fractionation, the process of breaking down plasma into component products. Albumin, gamma globulin, and fibrinogen were isolated to become available for clinical use.

"In 1944 dried plasma became available for the treatment of combat injuries. Component transfusion therapy became more widely used as the war progressed. The Red Cross concluded its World War II blood program in 1945 after 13 million pints had been collected.11

"In 1961 platelet concentrates became recognized for reducing mortality from hemorrhage in cancer patients. In 1964 plasmapheresis was introduced as a means of collecting plasma for fractionation. In 1971 Hepatitis B surface antigen (HbsAg) testing of donated blood began and in 1992 testing of donor blood for HIV-1 and HIV-2 antibodies commenced.
*************

*here's a recap of my earlier coronavirus posts relating to plasma this week:

Sunday, May 17, 2020

Cascades of convalescent plasma for Covid-19, and chains of exchanges, by Kominers, Pathak, Sönmez, and Ünver

Monday, May 18, 2020

Plasma and plasma products (such as antibodies) are a big business (and the U.S. dominates the international market)

Wednesday, May 20, 2020

Convalescent plasma collection and distribution

Convalescent plasma collection and distribution

Efforts to collect and distribute convalescent plasma from recovered Covid-19 patients are ramping up: there are lots of options.

I donate convalescent plasma at the Stanford Blood Center, in their program on
 CONVALESCENT PLASMA FROM RECOVERED COVID-19 PATIENTS
"This exciting initiative involves taking plasma donations from recovered COVID-19 patients and transfusing that plasma into critically ill COVID-19 patients in the hopes that the antibodies present in the donated plasma will help save the lives of the recipients."

Modern plasma collection is a one-arm process: the machine on my right in the photo alternates between taking blood and returning red blood cells through the same needle (in contrast to the old technology which had blood go out of a needle in one arm and red blood cells return through a needle in the other arm).

Collecting convalescent plasma is not regulated as a research activity, it is just ordinary plasma donation. However giving it to patients is done under FDA guidance, either as a research activity or as an emergency intervention for very ill patients:
Recommendations for Investigational COVID-19 Convalescent Plasma
"Because COVID-19 convalescent plasma has not yet been approved for use by FDA, it is regulated as an investigational product."

There are three FDA-approved pathways right now by which convalescent plasma can be administered to patients.
"Pathways for Use of Investigational COVID-19 Convalescent Plasma:
1. Clinical Trials,
2.  Expanded Access "for patients with serious or immediately life-threatening COVID-19 disease"
3. Single Patient Emergency"

Here is a consortium of nonprofit blood centers, there's likely one near you if you're reading this in the States:
America's Blood Centers (association of independent blood centers)

• ABC Resources on COVID-19 and Convalescent Plasma
• America’s Blood Centers Partners with BARDA to Expand Collection of Convalescent Plasma for COVID-19 Patients

Here's the American Red Cross effort: Plasma Donations from Recovered COVID-19 Patients

My impression is that the nonprofit blood centers don't pay donors, but are able to sell plasma to customers, including the commercial plasma industry, as part of the thriving domestic and international market in plasma. (I blogged Monday about U.S. plasma exports, all over the world, including especially countries in which compensating donors is repugnant.)
*****************
The for-profit plasma industry (which compensates plasma donors) is represented by The Plasma Protein Therapeutics Association (PPTA)
Here's an announcement about their plans for Covid-19 antibodies:

1. CoVIg-19 Plasma Alliance Builds Strong Momentum Through Expanded Membership and Clinical Trial Collaboration

"The CoVIg-19 Plasma Alliance, an unprecedented plasma industry collaboration recently established to accelerate the development of a plasma-derived hyperimmune globulin therapy for COVID-19, is rapidly building momentum. Its membership has expanded globally to include 10 plasma companies, and now also includes global organizations from outside the plasma industry who are providing vital support to encourage more people to donate plasma.

"In addition to those announced at its inception - Biotest, BPL, CSL Behring, LFB, Octapharma and Takeda - the Alliance welcomes new industry members ADMA Biologics, BioPharma Plasma, GC Pharma, and Sanquin. Together, these organizations will contribute specialist advisory expertise, technical guidance and/or in-kind support to contribute to the Alliance goal of accelerating development and distribution of a potential treatment option for COVID-19."

*******

Here's an NPR story: Market For Blood Plasma From COVID-19 Survivors Heats Up
May 11, 2020

"In Minnesota, a program coordinated by the Mayo Clinic has collected plasma from more than 12,000 COVID survivors for transfusion into more than 7,000 gravely ill patients, the result of a massive public appeal led by government leaders and nonprofit groups such as the Red Cross.

"Meanwhile, for-profit companies that typically pay $50 per donation of plasma used in other lifesaving therapies are advertising aggressively — and significantly bumping up their rates for COVID donors.

"In Utah, John and Melanie Haering, who contracted COVID-19 aboard the ill-fated Diamond Princess cruise ship, received gift cards worth $800 after making two donations apiece at a Takeda Pharmaceuticals' BioLife Plasma Services center. BioLife runs several of the more than 800 paid-plasma collection sites in the U.S., part of an industry that produces plasma protein therapies used to treat rare, chronic conditions such as hemophilia and in medical emergencies."

Surrogacy amidst the corona virus pandemic lockdowns

The coronavirus pandemic isn't only a story about disease, it's also a story about lockdowns, and restrictions on travel (among other things), especially international travel.  This is having a big, unintended effect on surrogacy markets, as surrogate pregnancies begun before the pandemic come to term. Here are two stories about the situation in the U.S. and in Ukraine.

The Guardian has the story about surrogacy in the U.S.:

Surrogates left holding the baby as coronavirus rules strand parents
The US surrogacy business is in turmoil, with parents overseas unable to pick up their baby and others unable to leave America

"Commercial surrogacy is legal in some US states, making it a hotspot for parents looking to have children through assisted reproduction. But the coronavirus travel ban has seen President Trump close the country’s borders to almost all international visitors, while a nationwide US passport office shutdown has made it impossible for parents who do manage to get into the country to obtain the necessary documentation to take their children home.

"As a result, babies are being born without their parents present at the birth (immigration authorities will only let parents in once the surrogate has given birth to the child). In at least one case, a mother flew from France to attend the birth of her child, only to be turned back by border control. Some parents aren’t being allowed in the country at all.

"Surrogates and surrogacy agencies are scrambling to look after babies themselves."
...
"The solution, Brisman says, is for the US immigration authorities to allow parents into the US to collect their children, and expedite the process by which they can leave the country. “I would like to see the government allow these people in quickly, and allow them home quickly,” she says. “We need expedited passports, birth certificates and visas for people whose babies are being born.”"
********

The NY Times has the story from the Ukraine:

100 Babies Stranded in Ukraine After Surrogate Births
Travel bans have prevented the babies’ parents from entering the country. One official says as many as 1,000 babies will be born before restrictions are lifted.

"Dozens of babies born into Ukraine’s booming surrogate motherhood business have become marooned in the country as their biological parents in the United States and other countries cannot travel to retrieve them after birth. For now, the agencies that arranged the surrogate births care for the babies.

"Authorities say that at least 100 babies are stranded already and that as many as 1,000 may be born before Ukraine’s travel ban for foreigners is lifted.

“We will do all we can to unite the children with their parents,” Albert Tochilovsky, director of BioTexCom, the largest provider of surrogacy services in Ukraine, said in a telephone interview.
...
"Ukraine does not tally statistics on surrogacy, but it may lead the world in the number of surrogate births for foreign biological parents, Mr. Tochilovsky said. His company alone is awaiting about 500 births. Fourteen companies offer the service in Ukraine.

"Ukraine is an outlier among nations, though not alone, in allowing foreigners to tap a broad range of reproductive health services, including buying eggs and arranging for surrogate mothers to bear children for a fee. The business has thrived largely because of poverty.

“The cheapest surrogacy in Europe is in Ukraine, the poorest country in Europe,” BioTexCom’s website explains. Surrogate mothers in Ukraine typically earn about $15,000.

"Some members of Parliament who have long opposed the business have renewed their calls for banning surrogacy services for foreigners now that the babies are stacking up without parents.

"Surrogacy is available in Ukraine only if a woman in a heterosexual partnership can demonstrate that she cannot bear children herself.
...
"The babies’ parents are now in the United States, Italy, Spain, the United Kingdom, China, France, Romania, Austria, Mexico and Portugal, the company said.

"Lyudmila Denisova, a human rights ombudsman for Ukraine’s Parliament, said the stranded babies underscore a pressing need for the country to bar foreigners from hiring Ukrainian women as surrogate mothers.

"A human rights official in the presidential administration, Nikolai Kuleba, has also demanded an end to the practice. “Ukraine is just turning into an online store for little ones,” he said."

Qingyun Wu defends his dissertation--remotely

Qingyun Wu successfully defended his dissertation at Stanford today, remotely, as we are all sheltering in place from the coronavirus pandemic.

He presented three papers, the screenshot above is from the third.

1. The lattice of envy-free matchings." Games and Economic Behavior 109 (2018): 201-211.
2 Entering Classes in the College Admissions Model." 
3 "Forbidden Transactions and Black Markets." 

Welcome to the club, Qingyun.

Plasma and plasma products (such as antibodies) are a big business (and the U.S. dominates the international market)

These days I'm thinking about corona virus covid-19 convalescent blood plasma, which I blogged about yesterday, and about which I hope to say more soon. But that has gotten me to think again about blood plasma generally, which is a source of many therapies, including antibodies, immunoglobulins, that defend against a large variety of diseases.

The U.S. is the Saudi Arabia of blood plasma and plasma products, with both a large domestic commercial market and annual exports valued in the billions of dollars. The reason is largely that it is legal in the U.S. to pay plasma donors, so there's ample supply through a big network of hundreds of  for-profit and nonprofit blood and plasma centers (the nonprofits mostly don't pay donors, I think). In many countries, paying their residents for plasma is repugnant and illegal. Fortunately for their citizens, they mostly don't also suffer from severe shortages of life-saving plasma medicines, because it can be bought from the U.S. (See e.g. my posts on Canada's plasma policies.)

Here are some relevant export figures. They make clear that the U.S. exports billions of dollars of plasma, and tens of billions of dollars of plasma products.

For those who would like to study these data, let me explain where they come from.  (They  include some things that aren't plasma products, and may miss some that are...) It's not so easy to find the U.S exports of exactly blood plasma and plasma products (I needed some help).

In Chapter 30 of the U.S. International Trade Commission (USITC) Harmonized Tariff Schedule (HTS),is the code:
HTS 3002: "Human blood; animal blood prepared for therapeutic, prophylactic or diagnostic uses; antisera, other blood fractions and immunological products, whether or not modified or obtained by means of biotechnological processes; vaccines, toxins, cultures of micro-organisms (excluding yeasts) and similar products:
 Antisera, other blood fractions and immunological products, whether or not modified or obtained by means of biotechnological processes"

That sounds good, but it includes (aside from plasma products) things that I don't want to include e.g. Malaria diagnostic test kits, and Fetal Bovine Serum.

On the other hand the subcategory 3002.12.00  is for "Antisera and other blood fractions" which includes sub-subcategories for things I do want to include:
3002.12.10 Human blood plasma.
3002.12.20 Normal human blood sera, whether or not freeze-dried
3002.12.30 Human immune blood sera

And then there are are codes 3002.13.00, 14.00, and 15.00 which cover the promising (very similar) categories in which most of the immunoglobulins are probably found, but maybe some other things too:

Immunological products, unmixed, not put up in measured doses or in forms or packings for retail sale
Immunological products, mixed, not put up in measured doses or in forms or packings for retail sale
and
 Immunological products, put up in measured doses or in forms or packings for retail sale.

The place to go to turn these numbers into export figures is dataweb.usitc.gov  (But getting data there isn't completely straightforward, and I got help from Julia Fabens.)  The table above shows that whole plasma itself has over $2 billion of annual exports from the U.S., and together with plasma products, including those involving antibodies (immunological products) there are almost $20 billion of exports from the U.S.

So, I'm guessing that soon, if clinical trials show that antibodies against covid-19, are useful, they will become readily available, commercially, in plasma and in pharmaceuticals.  A year ago, those human antibodies didn't exist, and so there was no way to use it to help patient zero or the next many thousands.  But now there's a lot of it, more each day, in the blood of recovered patients.  And there's a whole industry devoted to collecting it and purifying the antibodies into "immunological products." 

I hope human antibodies against covid-19 are clinically useful, to help mitigate and cure the disease if not to prevent it, because my sense is that a vaccine is (at least) many months away.

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