I post market design related news and items about repugnant markets. See my Stanford profile. I have a 2026 book : Moral Economics The subtitle is "From Prostitution to Organ Sales, What Controversial Transactions Reveal About How Markets Work."
Showing posts with label Moral Economics. Show all posts
Showing posts with label Moral Economics. Show all posts
"The economist Al Roth, a professor at Stanford University, shared a 2012 Nobel Prize for his work in market design and matching theory. He spoke with Sarah Kessler about his latest book, “Moral Economics,” which offers a framework for understanding controversial markets, and how it applies to prediction markets. The conversation has been edited and condensed.
Your book explores what you call repugnant markets — meaning some people don’t think they should exist — like prostitution, surrogacy and drugs. How do prediction markets fit in?
When I think about repugnance and prediction markets, I think back to when Darpa proposed a policy prediction market that became characterized as a terrorist prediction market, and people really objected to that.
That objection was sort of misplaced. It would be great if terrorists who were planning attacks wanted to tip their hand by betting on them in advance. But also, if you were a terrorist who knew about the 9/11 attacks in 2001, and you wanted to make money, you wouldn’t bet on a prediction market. You would short United Airlines and American Airlines. What do you make of all the reports of insider trading on prediction markets?
The reason we forbid insider trading in securities markets is to give people confidence in them. Securities markets have an important financial function that is threatened by insider trading, and I’m not sure that prediction markets necessarily do.
What worries me about the current state of prediction markets and Washington insiders is more the blurring of private and public functions. I don’t think that being an associate of the president should allow you to bet on a Truth Social post by President Trump. That is very bad public policy, but not necessarily an indictment of prediction markets per se.
Do you have an opinion on whether prediction markets should be regulated by the C.F.T.C. or state gambling authorities?
Futures markets, like securities markets in general, play other roles in society. If you’re a farmer who’s growing wheat, a futures market allows you to sell your wheat before you’ve planted it, which allows you to buy the fertilizer and make plans. That’s one role for federal regulators.
The contract has a delivery date. It says on a certain day a freight car is going to deliver potatoes to me. If, for example, someone tried to corner the potato market by reserving all the freight cars so that you wouldn’t be able to deliver on the contract, the regulator could intervene. With prediction markets, there’s nothing that has to be delivered. It’s just that someone has to adjudicate whether the bet was a yes or a no. That requires maybe some kind of regulation, but that seems more like a customer relations thing.
Is there anything that you would change about the design of prediction markets?
I have some ideas about what we can do about gambling and addiction. An appropriate regulator or consumer protection agency could start to require that apps allow you to put a limit on your betting.
Before the game starts, you can say to the app: When I’ve lost a hundred dollars, shut down. Don’t let me make any more bets.
And that might help some people just the way bartenders are supposed to stop serving you if you’ve had too much to drink. "
The moral philosophers Peter Singer & Kasia de Lazari Radek interviewed me about Moral Economics on their podcast Lives Well Lived. At the end, they ask their guests to think about their own life, and to what extent their own life has been well lived. That's a bit like being asked what you would like to have inscribed on your tombstone. So I hedged a bit. But the conversation that followed was interesting, so if you scroll down you'll see the transcript of that last bit, which starts about minute 1:09 in the recording.
Jun 25, 2026 "Nobel Prize-winning economist Alvin Roth explains how innovative market designs can reduce exploitation and save lives. Drawing on his pioneering work in kidney exchanges, Roth explores some of society’s most contentious moral dilemmas involving organ markets, surrogacy, and unpacks the ethical tensions surrounding what he calls “repugnant transactions.”
"Lives Well Lived is hosted by Peter Singer & Kasia de Lazari Radek. Episodes consist of interviews with remarkable guests who have lived well, both in the sense of living an ethical life, but also in that they are fulfilled and happy with what they have achieved in their lives. Some of these guests will be well-known figures, but others who are doing extraordinary things will be unfamiliar to almost all of our listeners. The conversations will often cover ground that involves ethics, how to live well, and how to make a positive difference in the world. It will inspire and empower its audience to change their own lives for the better. "
Here's the transcript of the last few minutes of the conversation (starting around minute 1:09 of the recording).
PETER: We always asked our guests to think about their own life, and to what extent their own life has been well lived, and by what criteria they make that judgment? Would you like to comment on that, Al?
Al: Sure. Has my life been well lived so far? Well, first, I've had a very fortunate life so far. I am lucky in my family, and my children, and my grandchildren, and my friends. And when you talk about friends, one thing that's often not talked about are the relations that professors have with students. So I've made lifelong friendships with many students who are productively engaged around the world, and that's very gratifying, and I hope it helps make my life worthwhile.
But also, I'm a market designer, and market design is very outward facing part of, economics. And, one of its goals is, a phrase even older than effective altruism, which is tikkun olam (תִּיקּוּן עוֹלָם) mending the world. And one of the things that market designers try to do is fix markets when they're broken or create them when they're absent. When you think of something like kidney exchange, you know, in a different podcast, on a different subject, I could tell you about victory after victory, where thousands, many thousands of transplants have been done, and lives have been saved through kidney exchange, even though it's in a war that we're losing: the shortage of kidneys is growing faster than the increase in transplants as diabetes grows, and high blood pressure, things like that. So, I would hope that some of my life has looked well lived, not just from the inside, but perhaps also from the outside.
Peter: Absolutely sure that it has. You're right. And what you've done for kidney markets is just one example, where you've saved many lives, and I think that obviously would be an important part of living well. despite the fact that the problem, as you say, has not been solved as a whole.
Kasia: It must be very satisfying.
Al: People often say that to me, and it will be satisfying when I'm retired. Right now, it's still frustrating, right? There's so much left to do, and it's not so easy to do it. But the times are changing. In two weeks, I'm gonna be opening up the American Transplant Conference in Boston, and, you know, there are people who invite me to these things. I sometimes joke with my young colleagues that as the old people who feel a lot of repugnance die off, it'll be left to just us young people. And we'll see.
I was in a transplant conference in Cairo in November. in which we tried to reach consensus on the question of, should countries have to be self sufficient in transplantation, which is the traditional position of the World Health Organization and some other organizations. And, of course, it works against countries that don't have much kidney exchange, because you need a big pool of patient-donor pairs to find lots of exchanges. And in that spirit, incidentally, during COVID, I was in the United Arab Emirates for the first kidney exchange between the UAE and Israel. And, that had to overcome a lot of obstacles, but it makes a lot of sense, because the UAE and Israel each have only a population of about 10 million. And that's not enough to find kidneys in your domestic pool for the hard to match patients, for patients who have a lot of antibodies to human proteins. So, we would like to see much more cooperation and not just between rich countries, but also inviting patients from poor countries, patient-donor pairs, to take part in American kidney exchange. And that's something that remains very controversial, but I think that we might be on the verge of making some progress with that. That's something that Peter has written about also.
Peter: Yes, I certainly hope so, and because I'm now working as a regular visiting professor in Singapore, which is another small country, the population of about 6 million, there's a very good case for saying that Singapore should also get into international kidney exchanges, and perhaps assist some of the poorer countries in its region. So we're trying to make that argument, and let's hope we succeed. One thing I've tell you, there might be bad news. I don't believe that when you retire from Stanford, you're going to stop working on these issues and be able to relax and feel satisfied, because I know I retired from Princeton 2 years ago, but the issues that I'm concerned about, whether it's the factory farming or global poverty, or all these kidney issues as well, I'm still concerned about, I can't let them go just because I'm no longer paid to be a professor at Princeton.
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In terms of lives lived well and deeply, here's an earlier post of mine about teachers and students.
The FT has brief reviews of four new economics books: Moral Economics, The Common Good Economy: A New Compass, We Need to Tax Billionaires, and Money: The Inside Story
The price of good intentions Four new books that examine the morals, markets and money behind modern capitalism. by Tej Parikh
Here are the remarks about the one of the four that I'm most familiar with:
"At a time when public outrage can shape policy decisions faster than ever before, Nobel Prize-winning economist and Stanford professor Alvin Roth makes a compelling case for evidence over instinct in Moral Economics: What Controversial Transactions Reveal About How Markets Work (Basic Books £25/Basic Venture $35). Roth, whose pioneering work in market design transformed systems for kidney donation, examines some of the most contentious exchanges in modern society, including prostitution, organ sales, drugs and medical aid for the dying.
"In the process, Roth delivers some eye-opening hard-truths to those who might think moral intuition ought to underpin all regulation and law. He shows why most policy decisions involve unavoidable moral trade-offs, and how bans of activities deemed objectionable can result in transactions being pushed underground (where they become harder to regulate). He also makes the case for treating markets in distasteful services as moral tools, not failures.
“My goal is not to tell you what to think, but to help you think,” Roth writes in the introduction. He largely succeeds. This is an entertaining and mind-opening read from start to finish. Some may find the discussions about morally “repugnant” topics somewhat offensive — but that’s the point."
The latest episode of Freakonomics looks at the controversies and philosophies involved in the growing legalization of medical aid in dying (MAID). Stephen Dubner interviews people with multiple perspectives, and offers a personal insight of his own.
"DUBNER: I have a sister who died last year, it was a pretty rotten death, honestly, and she wanted to hasten it. We couldn’t physically orchestrate it. And it really made me see this issue in a new way. It just seemed, you know, I don’t want to say the scales fell from my eyes, but I’d never encountered it first-hand. And it made me think that almost anyone who did encounter it first-hand might have a reckoning, might be in favor of it. But I don’t know, maybe that’s just me. Do you have any sense of how broad the support is for it generally?
ROTH: We’re an aging population, so I think not only do more people have a reason to contemplate their own death, but more people know a peer who’s died, and certainly parents have died, and relatives, you know, siblings and friends. So I would think that anyone who’s seen an agonizing death should at least give some thought to whether we should be legalizing medical aid in dying."
You can listen or read the transcript at this link:
Who Gets to Choose a “Good Death”? New York is the latest state to legalize medical aid in dying. Stephen Dubner speaks with the governor who signed the law, a Nobel Prize-winning economist, a death doula — and an ethicist who thinks the very idea is wrong.
"SOURCES: Kathy Hochul, governor of New York. Suzanne O'Brien, death doula, founder of Doulagivers Institute. Al Roth, economist at Stanford University. Daniel Sulmasy, physician, philosopher, director of the Kennedy Institute of Ethics at Georgetown University.
I'll be speaking Sunday at the American Transplant Congress, on kidney exchange. It will be hard to squeeze in all the recent developments in my half hour, including current controversies.
"I asked Roth if he’s a libertarian, since libertarians say people should be free to do what they want as long as it doesn’t hurt others. No, Roth told me.
“People who call themselves libertarians often don’t like market regulation of any sort, but I’m a market designer,” Roth said. “I think that good regulations help markets work well.”
" Peter Coy, the veteran New York
Times economics columnist, writes about kidney exchange, after an
interview/conversation sparked by a recent working paper of mine, Market Design and Maintenance. (He's a rare economic journalist who reads economists' papers.)
He's
also a rare interviewer: his column includes the names of more of my
coauthors than I can recall in any other interview. In order of
appearance: Tayfun Sonmez and Utku Unver, Frank Delmonico, Susan
Saidman, Mike Rees (implicitly) when he names Mike's nonprofit Alliance for Paired Kidney Donation, and Elliott Peranson. Market design is, after all, a team sport."
And that list is one among many that Amazon compiles:
With so many best books, I asked Microsoft Copilot for an estimate of total numbers of new books annually, and got this table, which notes that the vast majority of new books are self-published. (I wonder how many are written by A.I....):
While I'm on the subject, here's a picture a friend sent me from a bookstore in Chicago's OHare airport. (Maybe Moral Economics is an airport book after all:)
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Afternoon update (this just in, still June 12): It turns out Moral Economics is a Best Book Club book too:)
"To really understand the nuts and bolts of economics, look to the black market. Alvin E. Roth is Craig and Susan McCaw Professor of Economics at Stanford University and the George Gund Professor of Economics and Business Administration Emeritus at Harvard University. He was awarded the Nobel Prize in Economics in 2012. He joins host Krys Boyd to discuss his work on organ donation which led him to study what he called “repugnant transactions” like sex and drugs and why he feels banning them completely doesn’t always have the effect we think it does. His book is “Moral Economics: From Prostitution to Organ Sales, What Controversial Transactions Reveal About How Markets Work.”
Transcript (also at the above link)
Here's a very contemporary Texas question:
"Krys Boyd [00:25:48] I’m really curious, Alvin, about whether making things illegal has much of an effect on things. I live in Texas, where recreational marijuana is against the law. I can tell you just anecdotally that it appears to not stop very many people. You pose this interesting question about why the laws work pretty well to keep people from committing murder for hire, but not so well at all from buying and selling illegal drugs. "
"Kidneys, surrogacy, prostitution, gambling, price gouging, assisted dying: some transactions make people recoil, even when all parties consent. Cato’s Ryan Bourne talks with Nobel Prize-winning economist Alvin Roth about his new book, Moral Economics, what makes markets “repugnant,” what economists can add to moral debates, and why banning exchange rarely makes scarcity, exploitation, or hard trade-offs disappear."
Below, Alvin Roth shares five key insights from his new book, Moral Economics: From Prostitution to Organ Sales, What Controversial Transactions Reveal About How Markets Work.
Alvin is the Craig and Susan McCaw Professor of Economics at Stanford
University and the George Gund Professor of Economics and Business
Administration Emeritus at Harvard University. A pioneering expert in
the field of market design, he was awarded the Nobel Prize in Economics
in 2012. He is also a member of the National Academy of Sciences and
past president of the American Economic Association.
What’s the big idea?
There’s an old joke about economics and sociology that says
economists try to understand the choices people make, and sociologists
try to understand why people don’t really have any choices. Alvin looks at how societies try to decide whether to allow some choices and ban others.
There are lots of morally contested markets and transactions that
some people would like to engage in, but others think shouldn’t be
allowed. Often, the objections are stated in terms of moral or religious
reasons. And the transactions that the opponents seek to ban don’t harm
them personally—they might not even know the transactions had occurred
unless someone tells them.
For example, same-sex marriage is a morally contested transaction:
two people want to marry each other, and some other people don’t think
same-sex marriages should be allowed—even though you can’t tell if
someone is married unless they tell you, for instance, by wearing a
wedding ring. For centuries, marriage was regarded as inherently
heterosexual. But, after considerable controversy, the U.S. and many
other countries have legalized same-sex unions.
This isn’t a unique situation. Lots of controversial markets are
connected to reproduction. There have been bans at different times and
places on contraceptives, in vitro fertilization, abortion, and
surrogacy. That is, there have been laws enshrining opposing views about
whether a woman should be able to prevent becoming pregnant during sex (by buying contraception), should be able to initiate a pregnancy without sexual intercourse (via IVF), or be able to terminate
a pregnancy via abortion, not to mention being a surrogate or having a
surrogate bear a baby. In the U.S., all those things have been through
the courts multiple times and with different results.
Notice that reliable contraception and IVF involve modern disputes
about modern technologies. Before reliable contraception, sex between a
man and a woman often resulted in pregnancy, and before assisted
reproductive technology, like IVF, sex was the only avenue to
pregnancy. Many traditional laws and norms that attempted to keep sex
within the bounds of marriage between a man and a woman were attempts to
ensure that babies would be born into families. But if pregnancy
becomes a choice, and if there are other ways to have a child than
intercourse between a man and a woman, then the door opens to more
expansive views about who can have sex with whom, and who can start a
family. So, while expanding marriage to include same-sex couples doesn’t
depend on modern technology, we can see that the changes in
reproductive technology may have moved the needle on what kinds of
marriages and related transactions receive social support.
Of course, bans on extra-marital sex, prostitution, or abortion never
succeeded in making those things disappear, even though they raised
barriers.
2. Bans on markets need social support to work well.
Some bans work well while others give rise to active black markets.
For example, why is it so easy to buy drugs, but so hard to hire a
hitman? U.S. laws aren’t so different for drug dealers and hitmen: if we
catch them, we send them to prison for a long time. Yet our prisons are
filled with drug dealers, and there have been years in which more than
100,000 people died from opioid overdoses. But murder for hire is so
rare that it doesn’t even make it into the national crime statistics,
and homicides from any cause are vastly fewer than drug overdose deaths.
At least some of the difference has to do with how people think about
drugs and murder. If I told you I was looking to buy some heroin, you
would be surprised, but you wouldn’t call the police (and if you did,
they would tell you that they were busy with more pressing calls). But
if I told you I was looking to hire a killer, you might very well call
the police, and when you did, they would encourage you to tell me that I
might find an available hitman at a certain bar, where I would find
myself trying to hire an undercover detective. To put it another way,
there are neighborhoods where drugs are readily available, and the
neighbors look away, but not so many neighborhoods where killers are the
norm, in part reflecting that the social norm against drugs is much
more porous than against murder.
“At least some of the difference has to do with how people think about drugs and murder.”
I don’t know how we should best make progress in dealing with the
markets for addictive, lethal drugs. Not only are we losing the “War on
Drugs,” but it won’t even accept our surrender: experiments with
decriminalizing drug use have shown the potential to make cities less
livable. We’re going to need to experiment, to find better ways to
proceed.
It’s worth noticing that we’ve learned to live with legal markets for
tobacco and alcohol, even though each of those causes more deaths than
are due to drug overdoses. And we’re wrestling with some other kinds of
addiction, such as gambling (particularly on your phone, during a game).
The drug epidemic teaches us that well-intentioned policies can fail.
By and large no one approves of heroin, but we haven’t succeeded in
vanquishing it any more than we succeeded in making alcohol disappear
during Prohibition.
3. Moral intuitions aren’t enough by themselves.
We need to gather and pay attention to evidence about the
consequences of particular policies. This is hard when moral intuitions
collide, partly because much moral argumentation rests on weak or no
evidence. But we can’t afford to judge our policies just by their
intentions. We have to at least look at their consequences, too.
Nevertheless, moral intuitions are important and consequential, so we
need to understand them better. There are some things that many moral
intuitions have in common. For example, concern about the possible
exploitation of vulnerable people is often an issue.
4. Sometimes adding money to a transaction arouses repugnance.
For example, paying in cash is what turns sex into prostitution.
Often, the objection to introducing money into transactions is that it
might be an undue influence that could coerce the poor into
transactions that they (or we) would prefer not to take part in. But
that’s over-broad: many people work for financial pay at jobs they
wouldn’t otherwise do. And many goods and services that we need wouldn’t
be available if they couldn’t be paid for.
“Many people work for financial pay at jobs they wouldn’t otherwise do.”
Pharmaceuticals made from blood plasma are a good example. Many
countries ban payments to plasma donors and try (almost always
unsuccessfully) to generate as much as they need of the large amounts of
plasma required to treat many diseases from unpaid donors. How do they
make up for the shortfall? Fortunately, you can buy plasma and
plasma-derived medicines from the U.S. We’re the Saudi Arabia of blood
plasma, exporting tens of billions of dollars of plasma products each
year, collected largely from plasma donors who are paid.
5. Religion remains important in many controversies.
It plays a large role in the growth of legal medical aid in dying, in the U.S. and elsewhere.
Overall, in pursuing moral economics, we have to keep in mind the maxim that ought implies can, and the things we feel morally obligated to do, whether by supporting them or banning them, have to be things that we can
do. To understand those limits, we need evidence, including
experimentation, to figure out how to proceed when we’re worried by all
our options.
"A Nobel Prize-winning economist makes the case that our moral objections to controversial markets are getting people killed.
Alvin Roth won the Nobel Prize in Economics for figuring out how to build markets that work. Now he's turned his attention to the markets we refuse to build, and why that refusal has consequences nobody wants to talk about.
In this episode, Mary and Al dig into what he calls "repugnant transactions" — the deals that some people want to make and others think shouldn't be allowed. They get into why banning organ sales creates black markets where donors get operated on in apartments, why the same logic that ended Prohibition applies to the war on drugs, how surrogacy bans in Europe are turning babies into stateless people, and why it's easy to buy heroin but nearly impossible to hire a hit man.
Al's argument isn't that everything should be for sale. It's that if you care about outcomes more than intentions, you have to confront what your bans are actually doing.
Subscribe for new episodes every week.
Chapters:
00:00 Friendship Isn't A Market
00:32 Meet Nobel Economist Al Roth
01:02 What Makes a Market "Repugnant"?
02:58 Should We Pay People for Kidneys?
08:31 Why Drugs Thrive But Hit Men Don't
15:58 Surrogacy, Politics, and Unintended Consequences
21:45 Why Prohibition Keeps Failing
25:19 Markets, Morality, and Reality
28:19 The Rise of Prediction Markets
34:30 What Money Can't Buy"
"Nobel Prize-winning economist Alvin E. Roth discusses the moral limits of markets, how bans create black markets, and why harm reduction often works better than prohibition."
He talks with Nick Gillespie about why some voluntary transactions
provoke moral outrage even when no one is being directly harmed. Roth
explains why black markets often emerge when governments try to ban
activities with persistent demand, why both markets and prohibitions
require social support to function, and how unintended consequences can
make moralistic policies backfire. They discuss the war on drugs,
prostitution, surrogacy, same-sex marriage, price gouging, and why Iran
remains the only country in the world with a legal market for kidney
donors.
They also explore Roth's work designing kidney exchange
networks and school choice systems, how digital technology and private
transactions make certain bans harder to enforce, and why harm reduction
may work better than prohibition in areas ranging from drug policy to
sex work."
Speaking with the great sociologist Mark Granovetter gave me the opportunity to tell the joke "“Economists study how people make choices; sociologists study why people don’t have choices," since Moral Economics is about the controversial markets over which society struggles with which choices should be allowed and which should be banned.
Stanford's Center for the History of Capitalism sponsored the conversation, and here it is on YouTube, but it's just a podcast, there's audio of our conversation, but no video.
"A kidney transplant does not work like buying a gallon of milk. Neither does hiring or getting into a medical residency. In these markets, both sides care deeply about who they end up with, and a good outcome depends on more than money.
Alvin Roth has spent his career studying what makes those systems succeed or fail. His work designing kidney exchange programs showed that even when people desperately want to help each other, the market can still break down unless the rules create the right kind of match. In this episode, Dart and Al discuss matching markets, moral economics, and the hidden rules that shape opportunity, fairness, and work itself.
Alvin Roth is an economist and professor at Stanford University best known for his work on market design and matching theory. He received the 2012 Nobel Prize in Economic Sciences for his work on stable matching and the design of markets used in medical residencies, school choice, and kidney exchange.
In this episode, Dart and Al discuss: - Why some markets depend on matching - Why fit matters more than money - What makes a market stable - Why real markets are messy - The difference between theory and engineering - What “repugnant transactions” are - Why societies ban some exchanges - How social norms shape markets - Why work is also a matching problem - And other topics…
Alvin Roth is the Craig and Susan McCaw Professor of Economics at Stanford University and recipient of the 2012 Nobel Memorial Prize in Economic Sciences, awarded with Lloyd Shapley for the theory of stable allocations and the practice of market design. His work has helped design matching systems for medical residencies, public school admissions, and kidney exchange programs. He is the author of Who Gets What — and Why and Moral Economics: Why Good and Bad Markets Exist.
"It was so fun talking to Alvin Roth, winner of the 2012 Nobel Prize in Economics.
"One of my favorite books of all time is Who Gets What and Why, which has shaped the way I view labor markets. His second book, Moral Economics, came out last week and it’s so so good - endlessly thought provoking, funny, and sharp. In the podcast, we talk about controversial markets and what makes something repugnant, how to think about exploitation and coercion, and what that means for labor markets.
"Check out the latest episode of The Economics of Work and Al's new book Moral Economics!
"Moral Economics from Basic Books:
Amazon: https://a.co/d/0cu6ZCLm
Podcast Episode:
Apple: https://lnkd.in/esVGQQx5
Spotify: https://lnkd.in/e4sr844Q
Youtube: https://lnkd.in/eif7DHMS"
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