NPR's Marketplace: Ryssdal interviews Dubner about his newest Freakonomics podcast--the four minute version

An algorithm that matches kidney patients and donors

The link above will take you to the four-minute version of the fifty minute Freakonomics podcast in which Dubner interviews me about my new book.

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Doctors from Johns Hopkins Hospital in Baltimore, Maryland, transplant a kidney. 

Interview by Kai Ryssdal, Interview with Stephen Dubner

Wednesday, June 17, 2015 - 14:49

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Matching markets are markets where money isn’t allowed to do what it usually does. For example, school admissions — colleges don’t just raise the tuition price until demand meets supply. Or how new M.D.’s get assigned to their residencies — they can’t just buy their way into the hospital they want. In each case, you have to find a way to match a candidate with an available slot.

You also can't buy a kidney, or pay for somebody's college education to get a kidney, or purchase a car for them in exchange of a kidney.

So how can you make a market for something that is indivisible and can’t put a price on? Al Roth, a professor of economics at Stanford, realized that this model could be adapted to help kidney patients find a potential donor.

"Let’s pretend you and I, Kai, we both need a kidney transplant. And that both of us have a relative who’s willing to donate one, but your relative is not a biological match for you and mine isn’t for me," says Stephen Dubner, author of "Freakonomics." "Wouldn’t it be awesome if you could enter all your data and all of the donor's data into some algorithm that could magically sort these data from all the transplant centers in the country and match up donors and patients?"

Roth’s algorithm has helped save a lot of lives. Ruthanne Leishman from the United Network for Organ Sharing says the United States has about 600 kidney paired donation transplants per year right now. In 2000, the U.S only had two.

Featured in: Marketplace for Wednesday, June 17, 2015

About the author

Kai Ryssdal is the host and senior editor of Marketplace, the most widely heard program on business and the economy in the country.

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Freakonomics podcast on Who Gets What and Why

Stephen Dubner came to visit me in Palo Alto to talk about my new book. He also interviewed some other people, including Ruthann Leishman who now manages one of the active kidney exchanges, at UNOS, but who I met when she helped launch the New England Program for Kidney Exchange. You'll also hear from an incompatible patient-donor pair who quickly found a match, and the nondirected donor who started the chain that worked for them..  We end the conversation over dinner...

(I haven't figured out how to embed the podcast itself, but you can listen to it if you click on the title below which will take you to the Freakonomics page for this show.)

Make Me a Match: A New Freakonomics Radio Episode

STEPHEN J. DUBNER
06/17/2015 | 11:00 pmPRODUCED BY: GREG ROSALSKY

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(Photo, cropped: Newtown Grafitti)

Our latest Freakonomics Radio episode is called “Make Me a Match.” (You can subscribe to the podcast at iTunes or elsewhere, get the RSS feed, or listen via the media player above. You can also read the transcript, which includes credits for the music you’ll hear in the episode.)

The gist of the episode: Sure, markets generally work well. But for some transactions — like school admissions and organ transplants — money alone can’t solve the problem. That’s when you need a market-design wizard like Al Roth.

Al Roth, an engineer by training, is a professor of economics at Stanford and won a Nobel in economics in 2012. (Roth shared the prize with Lloyd Shapley, whose research influenced Roth). What kind of work did Roth do to land the Nobel? It’s not the kind of thing that typically wins a Nobel. Roth has helped people who need a kidney transplant find a donor. He’s helped new doctors find their first jobs. He’s helped high-school students in New York City find the right high school – even though Roth himself, who grew up in New York City, dropped out of high school.

ROTH: I was, you know, a poor ungrateful student who didn’t appreciate what my teachers were trying to do for me. You should tell all your listeners they should complete high school.

Roth has also just published a very fine new book that is a great survey of his work — and his worldview, which is just as impressive. It’s called Who Gets What—and Why: The New Economics of Matchmaking and Market Design In the podcast, I visit Stanford to speak with Roth about market design, what’s it’s like to get that middle-of-the-night Nobel phone call, and why the world needs an economist-engineer like him in the first place:

ROTH: Matching markets are markets where money, prices don’t do all the work. And some of the markets I’ve studied, we don’t let prices do any of the work. And I like to think of matching markets as markets where you can’t just choose what you want even if you can afford it — you also have to be chosen. So job markets are like that; getting into college is like that. Those things cost money, but money doesn’t decide who gets into Stanford. Stanford doesn’t raise the tuition until supply equals demand and just enough freshmen want to come to fill the seats. Stanford is expensive but it’s cheap enough that a lot of people would like to come to Stanford, and so Stanford has this whole other set of market institutions. Applications and admissions and you can’t just come to Stanford, you have to be admitted.

You’ll hear how Roth and others have revolutionized the organ-donor market, and we hear the amazing story of how one particularly selfless woman kicked off a donor chain that gave life to many others. And you’ll also hear Ruthanne Leishman, from the United Network For Organ Sharing, talk about  the organ-donor algorithm developed by Roth and his colleagues:

LEISHMAN: It’s saving a lot of lives. We have about 600 kidney-paired donation transplants a year right now in the United States. In 2000, we had 2. … We would have stayed doing 2 or 4 or 6 a year without the algorithm.  

The next time you hear someone say that economists are a bunch of selfish good-for-nothings, feel free to counter by telling them about the fine work of Al Roth.

More on the debate over kidney sales: transcript of interview

In my earlier post, Dubner interviews me about kidney sales, I promised to link to a transcript when it became available, and now it has: there's a link at the bottom of the Freakonomics post You Say Repugnant, I Say … Let’s Do It!

Dubner interviewed me for about an hour and a half, so he and his producer Chris Neary had to do lots of editing to produce the half hour or so podcast. I recall a pair of questions, one of which made it into the show and one of which was left on the cutting room floor (or wherever unused electronic files are left).  The question that made it in was about what makes many people view kidney sales as repugnant. The question that didn't make it was, if I were asked to help design a market in which kidneys could be sold, what would be my primary concerns.

Regarding what is behind the repugnance of kidney sales, here's the text of my reply included in the transcript:
"Al Roth: The late Pope John Paul wrote about this and he objects strongly to the sale of kidneys but thinks the donation of kidneys is a very good thing, though if we do it for money is a very bad thing...I think his feeling is that it turns people from ends into means which is a bad thing in itself. So that’s one nature of objection. 
Another kind of objection is that it might be OK if I offered to buy your kidney because you’d be a hard guy to exploit, you’re a successful, financially solvent person, but pretty soon we’d start seeing the desperately poor and maybe they would in some sense be acting against their self interest, they would be being exploited or coerced even, by the temptation of the money in ways that if they could use their better judgement they wouldn’t want to be.  So that’s sort of a coercion argument. 
And then there’s a slippery slope argument that says if we started allowing people to sell their kidneys, it would be primarily poor people who would sell their kidneys, and pretty soon we would start hearing political discussion that said, ‘you know, we don’t really need unemployment benefits, we don’t really need aid to families with dependent children because after all, everyone’s got two kidneys and they can take care of themselves by selling a kidney if they need to’...and that makes us a much less desirable society to live in."


I don't have a transcript to consult about what I said when they asked what I would do if asked to help design a kidney market, but as I recall, my answer went something like this.
The first thing I'd want to think about is what kind of review we would want to use to judge if the market had been a success ten years (or longer) after it had been started. The criteria we'd surely want the market to be evaluated on would include:
 How had the donor/vendors fared?: were they healthy and well treated, and respected, and did they encourage new potential donor/vendors to make the same choices they had?
How had patients with kidney disease fared?: were they receiving healthy kidneys, had the waiting list for transplants largely disappeared, were kidneys being allocated in ways that were widely seen as equitable?


To focus thoughts for future debate, we might want to think about a system in which only the federal government could legally pay for a live kidney, and would have a mandate to set the price (and associated benefits like follow-up medical care) high enough so that there would be a waiting list of donor/vendors, who could e.g. be expected to undergo regular health and suitability tests (suitability being a broad term meant to include physical and mental health, deeply informed consent, etc.)  for a year before being accepted as donor/vendors, and that the kidneys obtained in this way would be allocated anonymously through some regulated procedure that might resemble the current procedures for allocating deceased-donor organs.

In terms of how I've interpreted the ongoing debate between those in favor of sales and those against, I  think that a good deal of the coercion concern can be addressed by an appropriately designed one year waiting period, although I say that without having recently talked to someone who makes that argument with conviction.
I don't see any easy way to bridge the gap between those who think that selling kidneys is a bad thing in and of itself, not to be traded off with possible benefits of other sorts (e.g. to patients and perhaps to donor/vendors), and those who don't see it that way, or who feel that the current dire circumstances of many thousands of those with kidney disease gives legitimate counterweight to this concern.
And the slippery slope concern is the one that personally gives me the most pause. I can see how appropriate legislation would prevent e.g. your bank from asking for a kidney as collateral, but I can't see any way to be sure that making kidneys a potential financial asset wouldn't make us a less sympathetic society (even though a one year waiting period and other qualification tests would limit how much kidney sales could be used as a justification for cutting unemployment insurance in particular).

My work on kidney exchange has largely avoided being enmeshed in this debate, since the "in kind" kidney exchange doesn't seem to arouse repugnance. Thus for example Debra Satz' recent book Why Some Things Should Not Be For Sale: The Moral Limits of Markets, Oxford University Press, 2010, finds little to object to about kidney exchange, but largely disapproves of kidney sales. (I expect to meet Professor Satz for the first time this weekend, at a philosophy of economics conference in Helsinki...)

Dubner interviews me about kidney sales and such

Repugnance radio* turns out to have two parts, and the second part is a Freakonomics blog post with a link to a podcast (which you can also download free at itunes), in which my voice is heard. Organ transplants are the main subject, from various angles.

Remind me to figure out how to have mood music come on when I speak, as I do in the podcast... (I might choose different mood music...)

If there's a transcript on the web at some point, I'll link to that for those of you who don't have a half hour to listen. 

*The Levitt quote about economists in my earlier post about the NPR broadcast also made it into the podcast...

Repugnance radio

Freakonomics Radio on NPR's Marketplace had a short segment called It's repugnant, but hey, it's efficient!, in which they speak about organ sales, among other things.

In it, Steve Levitt says
"One of the easiest ways to differentiate an economist from almost anyone else in society is to test them with repugnant ideas. Because economists, either by birth or by training, have their mind open, or skewed in just such a way that instead of thinking about whether something is right or wrong, they think about it in terms of whether it's efficient, whether it makes sense. And many of the things that are most repugnant are the things which are indeed quite efficient, but for other reasons -- subtle reasons, sometimes, reasons that are hard for people to understand -- are completely and utterly unacceptable."

In the comments, they get the following crack:
"There is one organ that nobody will ever need: The brain of an economist."

Update on that Medicare Auction

Peter Cramton writes to update us on the progress of the letter he organized about A poorly designed Medicare auction .

"I want to thank you again for being a signatory on the letter to Chairman Stark expressing our concerns with the flawed Medicare Competitive Bidding Program. I sent the letter linked below to Chairman Stark late on Sunday night. He responded within two days with a letter to the head of Medicare concluding, “I urge you to give these comments and recommendations serious consideration. I would also request that you inform me in a timely way as to whether CMS plans to incorporate any of the recommended changes and if not, why not.”  The full letter is linked below.

"Letter from 167 Concerned Auction Experts on Medicare Competitive Bidding Program" to Chairman Stark, Health Subcommittee, Ways and Means, U.S. House of Representatives, 26 September 2010. [Letter from Chairman Stark to CMS] 

Yesterday, the deputy head of CMS, who is in charge of the competitive bidding program, contacted me to request a meeting  to discuss the issues. We have not met yet, but I am optimistic that something good will come from this. Please be patient. Washington has now effectively shut down until after the elections. This will be a slow burner, but thanks to all of you the chance of a sensible outcome is positive. One could not say that a week ago.

A thousand thanks!

Best,

Peter

PS You may find the [Excerpts from replies] of interest. The excerpts are anonymous. Finally, here is a Freakonomics Blog with Ian Ayres that appeared today in the Opinion Pages of the New York Times.

Professor Peter Cramton

Economics, Tydings Hall

University of Maryland

College Park MD 20742-7211

Update: Peter and Brett E. Katzman have a followup column in The Economists' Voice (Oct. 2010): Reducing Healthcare Costs Requires Good Market Design

Me and market design, in Forbes

Susan Adams in the August Forbes magazine (but online now) has a nice article about me and market design called (maybe for search engine reasons)" Un-Freakonomics: A Harvard professor uses economics to save lives, assign doctors and get kids into the right high school."

Here's the sentence I liked best:
"Leaning over a cup of Turkish coffee at a cafe across the Charles River from his messy journal-strewn corner office, he bends over backward to give credit to his younger protégés, students and coauthors. "Market design is a team sport," he insists."

If you want to see me bend over backwards while leaning over a cup of coffee, we'll have to have a cup of coffee:) But seriously, Ms. Adams got that part very right--lots of people have to do lots of things before a new marketplace is designed, adopted, and implemented. I'm very lucky in my colleagues.

The article title might suggest I have some sort of quarrel with Freakonomics, but that's not the case, although my work is very different. I recall reading Freakonomics and being full of admiration for the way it brought Steve Levitt's work to a general audience. I wouldn't mind doing that someday with market design, and maybe Ms. Adam's generous article will be a step towards making market design known to a wider public.

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Roger Myerson and Paul Romer on designing nations and cities

Two emininent economists have been thinking about design on the largest of scales.

Roger Myerson thinks about nation building in general, and Iraq in particular, and reflects on the role of political leaders' reputations, for patronage among other things.

Paul Romer thinks about macro-market-design in the form of new "charter cities," to be modeled roughly on Hong Kong.

Here is Roger, in "A Field Manual for the Cradle of Civilization:Theory of Leadership and Lessons of Iraq, " Journal of Conflict ResolutionVolume 53 Number 3 June 2009 470-482. (HT Paul Milgrom)

"Agency incentive problems in government make patronage an essential aspect of statebuilding, and political leaders become fundamentally constrained by their reputations. Democratic competition requires many leaders to develop independent reputations for exercising power and patronage responsibly, which can be encouraged by political decentralization."

Roger then recounts Xenophon's description of the rise of Cyrus (Koresh), the Persian leader.

"The key to Cyrus’s success was his apparent love of justice, which was inculcated by his education and which enabled him to earn the trust and loyalty of a great army. But what kind of justice was it that Cyrus loved so much? It was certainly not justice for poor peasants, whose crops were gathered to support his conquering forces.
What Cyrus loved was justice for the soldiers who served his cause. Apparently Cyrus’s greatest pleasure in life was to judge the valor of troops in battle and to reward them richly for their accomplishments, asking nothing for himself. As a mechanic knows the names of his tools, Cyrus learned the names of all the captains in his army, so that each could be confident of his service being remembered. When everybody recognized Cyrus as the best leader to distribute their booty after a victory, he could take power, first over the multinational coalitional forces and, ultimately, over Asia."


Paul Romer, explains the idea of charter cities here, and in a Q&A at Freakonomics, here: Can “Charter Cities” Change the World? A Q&A With Paul Romer

He argues that to credibly move to better rules, you might have to do some things all at once and start fresh. (He suggests a good place to start would be to have a new Cuban city administered by Canada at Guantanamo Bay, to try to recreate the experience of Hong Kong.)

He too isn't afraid to think big:

"Q. It all sounds great as a theoretical exercise, but honestly, don’t your colleagues tell you that something like this will never happen?

A. They do say this, which is actually kind of ironic when you line it up with the other things they say. They recognize that the construct of a charter city is something that could make everyone better off. They admit that there is no technological or economic constraint that keeps us from building many of these. Then they say that for political reasons, it will never happen. They tell me that you can’t change politics; you can’t overcome nationalism; there is no way for countries to work together to extend the reach of good rules. Then these same economists suggest that we should just stick to business as usual. We should offer conventional economic advice and assume that political systems will naturally follow our advice when we point to something that could make everyone better off. But of course, they have already revealed that they don’t believe this. What’s going on here is a kind of self-censoring. Economists seem to think that we should propose things that are acceptable and that political systems will pursue, but that we should avoid proposing or even discussing things that are controversial or politically incorrect. I think we’d do our jobs better if we just said what’s true without trying to be amateur politicians. "

Romer and Myerson seem to have different views of where economics ends and politics begins.

A proliferation of penny auctions

Last year I thought about blogging about Swoopo, the "entertainment shopping" site that is run as an "all pay" auction for consumer goods, in which all bidders must pay to bid, but only the winning bidder receives the object. But soon enough there were excellent posts on the subject by others. I particularly like Ian Ayers at Freakonomics, who explained how Swoopo is similar to the "escalation auction" proposed years ago by Martin Shubik, which has become a staple demonstration in game theory classes, and Tyler Cowen at MR, who observes that Swoopo auctions can make a lot of money for the owners of the site, while most of the bidders lose. He writes "In short, swoopo is about as close to pure, distilled evil in a business plan as I've ever seen. " (emphasis in original). And here's the Wikipedia entry.

Swoopo bidders are a bit of a puzzle of the behavioral economics kind: are they like buyers of lottery tickets, who know that they will likely lose but find entertainment value by purchasing the right to dream (see this paper by Emily Oster)? Or are they making mistakes? And if the latter, will demand for this kind of auction dry up? Or will new suckers keep appearing?

But there are other, market level questions we can ask, and I got the beginning of an answer when I did a google search on "swoopo", or another search on "penny auction" . You'll find two things if you click on those searches: there are now a lot of similar auction sites, and there are also plenty of people who are eager to sell you software to set up your own "penny auction," as these sites have come to be known.

(BidRodeo's icon is a man on a bucking bronco, over the motto "Hold on the longest and win!")

What are the questions to which those observations are the beginnings of answers? I guess one is, "is it easy to earn outsized rents by selling to the gullible?". I presume most of the new sites make very little money. Whether they also attract away swoopo's customers or otherwise reduce swoopo's rents remains to be seen.

A new (job market) paper by Edward Augenblick at Stanford suggests that the already-established penny auctions may not disappear in the blink of an eye: Pay-As-You-Go: Theoretical and Empirical Analysis of a New Auction Format

He finds Swoopo to be quite profitable, and the abstract concludes:
"Finally, I attempt to address the long-term prospects of the market for these auctions. Using high frequency auction supply and user data, I estimate the current and optimal supply of auctions for a given number of users. This analysis suggests that the structure of the auction creates barriers to quickly developing a large userbase, allowing the most-established competitor to continue making large profits in the medium-term. This analysis is supported by auction-level data from five competitors. "

HT Eduardo Azevedo and Muriel Niederle

Anesthesia was once repugnant

A wonderful story by Mike Jay in the Boston Globe, The day pain died , recounts how the first surgical use of anesthesia came long after its pain-killing properties were known. An impediment to its use, however, was the thought that pain relief was repugnant, i.e. there was something wrong in having a pain free operation.

Here is the beginning of Jay's story, and the end (emphasis added):
"The date of the first operation under anesthetic, Oct. 16, 1846, ranks among the most iconic in the history of medicine. It was the moment when Boston, and indeed the United States, first emerged as a world-class center of medical innovation. The room at the heart of Massachusetts General Hospital where the operation took place has been known ever since as the Ether Dome, and the word "anesthesia" itself was coined by the Boston physician and poet Oliver Wendell Holmes to denote the strange new state of suspended consciousness that the city's physicians had witnessed. The news from Boston swept around the world, and it was recognized within weeks as a moment that had changed medicine forever.
But what precisely was invented that day? Not a chemical - the mysterious substance used by William Morton, the local dentist who performed the procedure, turned out to be simply ether, a volatile solvent that had been in common use for decades. And not the idea of anesthesia - ether, and the anesthetic gas nitrous oxide, had both been thoroughly inhaled and explored. As far back as 1525, the Renaissance physician Paracelsus had recorded that it made chickens "fall asleep, but wake up again after some time without any bad effect," and that it "extinguishes pain" for the duration.
What the great moment in the Ether Dome really marked was something less tangible but far more significant: a huge cultural shift in the idea of pain. Operating under anesthetic would transform medicine, dramatically expanding the scope of what doctors were able to accomplish. What needed to change first wasn't the technology - that was long since established - but medicine's readiness to use it.
Before 1846, the vast majority of religious and medical opinion held that pain was inseparable from sensation in general, and thus from life itself. Though the idea of pain as necessary may seem primitive and brutal to us today, it lingers in certain corners of healthcare, such as obstetrics and childbirth, where epidurals and caesarean sections still carry the taint of moral opprobrium. In the early 19th century, doctors interested in the pain-relieving properties of ether and nitrous oxide were characterized as cranks and profiteers. The case against them was not merely practical, but moral: They were seen as seeking to exploit their patients' base and cowardly instincts. Furthermore, by whipping up the fear of operations, they were frightening others away from surgery and damaging public health.
The "eureka moment" of anesthesia, like the seemingly sudden arrival of many new technologies, was not so much a moment of discovery as a moment of recognition: a tipping point when society decided that old attitudes needed to be overthrown. It was a social revolution as much as a medical one: a crucial breakthrough not only for modern medicine, but for modernity itself. It required not simply new science, but a radical change in how we saw ourselves."
...
"Once Morton had successfully demonstrated his technique of ether anesthesia, it was quickly seen that its implications reached considerably beyond the dental business. Before 1846 was out, it had been successfully tried by the most celebrated surgeon in Britain, Robert Liston, who pronounced that the new "Yankee dodge" had "the most perfect and satisfactory results" and was "a fine thing for operating surgeons." It was enthusiastically championed by an emerging generation of medical humanitarians, and the new buzzword "anesthesia" crystallized the sense of novelty and medical miracle. Chemistry had, as Thomas Beddoes had prophesied, come to rule over pain.
Despite its successes, resistance to the idea didn't vanish overnight. Until the end of the century, some doctors would maintain that pain had a necessary role in the preservation of life, but from 1846 onward they were outnumbered by those who insisted that it was the job of a physician to inflict as little of it as possible. Some religious voices would hold out for a good deal longer: Pope Pius XII would confirm that "the Christian's duty of renunciation and of interior purification is not an obstacle to the use of anaesthetics" only in February 1957.
Despite the long resistance, that demonstration in the Ether Dome marked a transition that was as irreversible as it was historic. The practice of medicine finally achieved a goal that it had, until that moment, never truly been able to imagine: loosening pain's age-old stranglehold on humanity. And in a sense, the invention was the least of it. The real milestone witnessed in Boston that day was the moment when culture had finally caught up with chemistry."

The article comes from Jay's new book The Atmosphere of Heaven.

Update: Dubner at Freakonomics follows up on this post and draws some interesting comments, including this one:

“So discredited had narcotic drugs become by the middle of the seventeenth century that when Nicolas Bailly, a barber-surgeon of Troys, administered a narcotic potion to a patient before an operation, the venture aroused widespread condemnation. Bailly was arrested and fined for practicing witchcraft. The stupefaction of patients by administration of herbal remedies was then forbidden in France under heavy penalty.”
(Victor Robinson, M.D.: Victory Over Pain. A History of Anesthesia, London: Sigma, 1947. p.40)— kaloniki "

Opposite of repugnance: Protected transactions

I've been thinking lately about transactions that are the opposite of repugnant, i.e. transactions that, as a society, we often seek to promote, for reasons other than efficiency or pure political expediency.

In yesterday's post I mentioned monogamous marriage between a man and a woman, which in many countries and U.S. states is promoted over other forms of marriage (such as polygamy or same sex marriage).

Home ownership in the US is an obvious one, in this post-housing-bubble financial crisis, in which there have been Federal bailouts of the various Government Sponsored Entities like Fanny Mae and Freddy Mac, set up to promote home ownership.

Food production by small farmers, not only in the US, but also in Europe and Japan: we protect this by subsidies, price supports, government supported crop insurance programs, etc.

Fishing by small fishing boats: if we were only interested in protecting fish to keep fisheries sustainable, we might regulate fisheries by imposing seasonal limits on how much could be caught. But in many cases we also set daily limits (e.g. some fishermen on Cape Cod are limited to catch no more than 400lbs of scallops a day). This makes large, factory fishing uneconomical, and protects small local fishermen.

The right to purchase guns probably falls into this category in the U.S.

Of course, as with repugnant transactions, protected transactions may involve a lot of complications, like providing public goods and protecting rights. But it may be that to better understand which kinds of transactions may come to be regarded as repugnant, it will help to understand which kinds of transactions are sometimes protected.

Update: looking at the comments, commuting alone in a car seems worth including on the list of protected transactions in the U.S. (And thank you to Dubner at Freakonomics for his generous plug of this blog...)

Auctions of airport slots: dead in the water, again.

The latest news on plans to auction off takeoff and landing slots at NY's LaGuardia airport: DOT scraps auction plan for NYC airports .

NYC's airports are the most congested in the nation, but plans for an auction have been politically troubled from the start (see some of my related earlier posts). What is the nature of the politics? Perhaps some of the airlines that fly in and out of NYC airports actually like the congestion, since it keeps out new competition by preventing airlines that don't presently have any slots from getting any.

Freakonomics has a non-auction suggestion for relieving the congestion: Shut Down LaGuardia.

Market for matchmakers: sorting by price

Dating and matchmaking services vary widely on a number of dimensions, one of which is price. Below I'll talk about services whose prices vary from zero to an initial fee of $20,000. One question is how much if anything does that already tell you about who might use which services?

Penny-Pinchers Might Unite at Free Dating Site
"Match.com, which is owned by Internet company IAC/InterActiveCorp and also runs dating site Chemistry.com, was set to announce Thursday the launch of DownToEarth.com. ...DownToEarth.com joins other free dating sites like Plentyoffish.com and OkCupid.com, and expects to bring in revenue from ads. It is geared toward Web dating newcomers and lets users put up post-rendezvous ratings regarding the truthfulness of others' pictures and profiles."

Online Dating Putting You Off? Try a Matchmaker
"Matchmakers prescreen potential matches, focusing on long-term compatibility rather than “short-term chemistry,” Ms. Clampitt said.
While online sites allow unlimited fantasizing, matchmakers encourage clients to take their heads out of the clouds. “Sometimes we will get a guy who is a good-looking man, but no Brad Pitt, and he wants a thin model,” said Shoshanna Rikon, the owner of Shoshanna’s Matches, a Yenta-style matchmaking service in Manhattan that includes an in-person interview and a Web presence, and charges about $1,500 for eight dates. “We try to be more realistic with who we set him up with.""

The New Arranged Marriage
"Janis Spindel Serious Matchmaking Incorporated's fees begin -- begin! -- at $20,000 for an initiation fee, plus $1,000 for a one-year membership that includes 12 dates. That also includes a background check and a home visit, during which Janis spends time with the client, to get a sense of him and verify that he is who he says he is (i.e., rich or very rich). Her image consultant also comes to inspect his wardrobe and, if necessary, make plans to revamp his look. Janis has many clients outside the New York area (in Tampa, Miami, Los Angeles, Toronto, Las Vegas). An out-of-town client must fly Janis and an assistant first class and put them up in a hotel for the home visit. Additionally, a marriage bonus is expected -- sometimes it's a car or extravagant jewelry; other times it's cash. She has received gifts in the $75,000-to-$250,000 range. "

This latter service primarily charges fees to men, and actively recruits attractive women to match them to. This reminds me of a 1993 paper by Mark Bagnoli and Ted Bergstrom called "Courtship as a Waiting Game" which considers why husbands are often older than wives. In their model, people live for two periods. In period 1, men and women are each endowed with a "quality" between 0 and 1, and a woman's quality is common knowledge at period 1, but, although men know their own quality at period 1, it only becomes common knowledge at period 2. So, in their model, the highest quality men wait until period 2, and marry the highest quality women. I guess that, in this model, the $20,000 above would be a signal of male quality... :)

Of course, the value of a match could be a subject of dispute; e.g. here's an 1885 report from the NY Times about a matchmaker suing to receive his full fee after a marriage was arranged but called off. Needless to say, matrimony need not be the only object of matchmaking; Daniel Hamermesh has a Freakonomics post describing an internet site "Ashley Madison, which matches up married women and men who wish to have a quick fling. " (I couldn't figure out their fee structure from the easy to access parts of their web page, but they do offer a $249 refund under their "Affair Guarantee Program" if you fail to have one...)

Repugnant gambles

Justin Wolfers has a blog post at Freakonomics in which he observes that the Australian Federal Treasurer regards bets about the recession repugnant if placed on a book making site, although fine if placed in options markets. (This even though the bettors on the bookmaking site apparently are of the opinion that Australia will avoid a recession...)

Organs for transplant: supply and demand

An interesting post at Freakonomics brings to attention a paper in the International Journal of Health Services by Herring, Woolhandler, and Himmelstein titled
INSURANCE STATUS OF U.S. ORGAN DONORS AND TRANSPLANT RECIPIENTS: THE UNINSURED GIVE, BUT RARELY RECEIVE

The subtitle tells much of the story, the paper finds that "16.9 percent of organ donors but only 0.8 percent of transplant recipients were uninsured"

The paper begins with the following story:
"In September of 2005, one of us (Herring), then a third-year medical student, cared for a previously healthy 25-year-old uninsured day laborer who arrived at the emergency department with rapidly advancing idiopathic dilated cardiomyopathy. The patient was ultimately deemed unsuitable for cardiac transplantation.
The decision on transplantation was driven, in part, by realistic concern about the patient’s inability to pay for long-term immunosuppressive therapy and to support himself during recovery. Absent such resources, the likelihood of a successful outcome is compromised (1–4). The clinicians caring for him faced a wrenching dilemma: deny the patient a transplant, or use a scarce organ for a patient with a reduced chance of success. He died of heart failure two weeks after his initial presentation. This tragedy inspired us to examine data on the participation of the uninsured in organ transplantation, both as recipients and as donors."

HT Scott Kominers

Freakonomics on legalizing prostitution

Should Prostitution Be Decriminalized?, a thoughtful post on the subject at Freakonomics.

ReRegulation of the financial markets

A lot of market design is done, thoughtfully or on the fly, by regulators. A good overview of recent events in the financial market meltdown is at
Freakonomics: Diamond and Kashyap on the Recent Financial Upheavals