Wednesday, June 30, 2010

The market for kidneys in Iran

The Iranian economist Farshad Fatemi at the Sharif University of Technology sent me this link to his very interesting working paper The Regulated Market for Kidneys in Iran.

Among other things, it is full of institutional detail and comparisons. Here are a few things that caught my eye.

Comparing total (live plus deceased) kidney donation across countries, per million population, the most recent figures (from 2007) are Iran 27.1%; UK 33.5%; Spain 49.5%; US 54.7%. (His source is the Barcelona-based Transplant Procurement Management Organization, whose international database I have yet to fully explore.)

His description of the market for kidneys in Iran includes the following

"After the donor passes the initial tests, the administrators contact the first patient in the same waiting list as the donor’s blood type [and other components of a match]...
If the patient who is on the top of the waiting list at the moment is not ready for the transplant ..., the next patient will be called... until a ready patient will be found. Then a meeting between the two parties is arranged (they are provided with a private area within the foundation building if they want to reach a private agreement) and they will be sent for tissue tests. If the tissue test gives the favourable result, a contract between the patient and the donor will be signed and they will be provided with a list of the transplant centres and doctors who perform surgery.
When the patient and the donor are referred to transplant centre, a cheque from the patient will be kept at the centre to be paid to the donor after the transplant takes place. The guide price has been 25m Rials (≈ $2660) until March 2007 for 3 years and at this time18 it has been raised to 30m Rials (≈ $3190). This decision has been made because the foundation was worried of a decreasing trend in number of donors.

"In some cases, the recipient will agree to make an additional payment to the donor outside the system; it is not certain how common this practice is, but according to the foundation staff the amount of this payment is not usually big and is thought to be about 5m to 10m Rials (≈ $530 to $1060). The recipient also pays for the cost of tests, two operations, after surgery cares, and other associated costs (like accommodation and travel costs if the patient travels from another city). Insurance companies cover the medical costs of the transplant and the operations are also performed free of charge in state-owned hospitals.
"In addition, the government pays a monetary gift to the donor for appreciation of her altruism (currently, 10m Rials), as well as automatic provision of one year free health insurance, and the opportunity to attend the annual appreciation event dedicated to donors...
"The minimum monthly legal wage for 2007 was Rials 1,830k (later raised to 2,200k for 2008). The minimum payment of Rials 45m is around 2 years of minimum wage. "
"[T]o prevent international kidney trade, the donor and recipient are required to have the same nationality. That means an Afghan patient, who is referred to the foundation, should wait until an Afghan donor with appropriate characteristics turns up. This is to avoid transplant tourism. "
"the donors are mostly men (Table 7). This can be because of the two facts. Firstly, the ages between 22 and 35; when the donation is accepted; is the fertility age; and women are less likely to be considered as potential donors. Secondly, as we mentioned before since men are supposed as the main breadwinner of the family, it is more likely that they sell their kidneys in order to overcome financial difficulties. Female donors count for around 18% of traded kidneys in our data; it is in contrary with the Indian case where 71% of the sold kidneys were from female donors (Goyal et al. 2002)."

In his sample of 598 transplants (Table 6), 539 were "traded kidneys," 10 "non-traded" and 49 "Cadaver", i.e. the vast majority of kidney transplants were live donor transplants with compensation to the donor.


dWj said...

I was just reading section 8.3 ("A multiobject auction mechanism") of your book with Sotomayor, and it seems to me that would be a natural mechanism here; it allows buyers and sellers to pick their own prices while handling all compatibility issues. (One of the problems with any static model is that it doesn't internally deal with people moving into the market on an ongoing basis. Presumably agents can, to some extent, deal with that themselves, raising their reserve prices or lowering their stated demand. I like to call this sort of behavior "microspeculation" -- where people top up gas tanks as hurricanes approach the gulf -- and I imagine in a situation where "market making" is impractical it's one of the primary forces for intertemporal optimization.)

Alex Tabarrok said...

Comparing live and deceased kidney donation rates is quite interesting. Countries break down into three classes - those that focus on deceased donation (e.g. Spain), those that focus on live donation typically for religious reasons (e.g. Iran) and those who do both (U.S.). You can see the three-pronged shape of the data in the picture at the bottom of this post:

Brian Moore said...

Hmm, Alex, Iran really is an extraordinary outlier there. That's a pretty striking graph.

gtaniwaki said...

The Fatemi paper is very interesting. Having previously read the Becker article, I was under the impression (apparently mistaken) that deceased donor kidneys were discouraged by the government.

But it seems that there must be more to it than the lack of dialysis equipment that led to the rise in live transplants in Iran. As the chart at Marginal Revolution shows, all countries with predominantly Muslim populations have low rates of deceased donation.

gtaniwaki said...
This comment has been removed by the author.
gtaniwaki said...

In section 5 of the Fatemi paper, I think the description of the model should include a footnote with a list of possible extensions.

First, demand is lumpy and inelastic (even the richest patient only wants one kidney and the poorest will not settle for a fractional kidney).

Second, the clearing price for the Y type kidney will be higher than for the X type kidney. Type Y patients will bid up the price of type Y kidneys until the market clears. Type X patients will not pay more for kidneys than the marginal cost to get another kidney, regardless of whether the next donor is type X or type Y.

This effect can be large if most patients enter the exchange only after attempts at informal matching outside the exchange fail. Many X type patients obtain Y type kidneys at below the market clearing price since the patient and donor both ignore (or are ignorant of) the price signal.

Third, like demand, supply is lumpy and inelastic. It may even be backward bending. Donor motivation to enter the market consists of both profit maximization and altruism (a utility function that may actually decline as market price goes up).

Fourth, in a multi-period market, rising prices may be a signal that prices may continue to rise. So donors may withhold their kidney causing supply to actually decrease until they are certain that a new equilibrium (or a market peak) price has been reached. Falling prices can have the opposite effect.

JCP said...

The new head of the Philippines' Department of Health recently said he is bent on lifting a total government ban on organ donations to foreigners:

kidney stones treatment said...

Iran has a good policy in terms of kidney donations. I hope that other countries would follow the good example lead by Iran.

kidney disease said...

But it seems that there must be more to it than the lack of dialysis equipment that led to the rise in live transplants in Iran.

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