The Economics of Organ Donation

Why there is a severe shortage of donated organs, the debate over incentives and payment, and policies like opt-out systems that aim to increase donation.

Tens of thousands of people around the world die each year waiting for organ transplants, such as kidneys and livers. The supply of donated organs falls far short of demand. Economists study why, and what might help.

Why there is a shortage

Deceased donation depends on people agreeing to donate after death and families consenting. Many people never register their wishes.
Living donation of a kidney or part of a liver involves surgery and risk, so relatively few people donate to strangers.
Buying and selling organs is illegal in almost every country, including India under the Transplantation of Human Organs Act, 1994.

Because organs cannot legally be bought and sold, prices cannot balance supply and demand. This leads to long waiting lists.

The debate over payment

Some economists, including Gary Becker, argued that allowing regulated payments to donors could greatly increase supply and save lives. Iran is the only country with a legal system of paid kidney donation, and it has reported much shorter waiting lists.

Most ethicists and governments oppose payment, arguing it could exploit poor people, undermine altruistic donation and lead to coercion. Alvin Roth has described such markets as repugnant transactions: exchanges that many people find morally unacceptable, regardless of potential benefits.

Policies that increase donation

Opt-out systems: in countries such as Spain, people are presumed to consent to deceased donation unless they opt out. Spain has one of the highest deceased donation rates in the world, though experts credit its strong organisational system as much as the opt-out law.
Kidney exchange programmes, matching incompatible donor-patient pairs.
Removing financial barriers for living donors, such as covering lost income and travel costs.
Public awareness campaigns and registration drives.

The kidney waiting list

A patient needs a kidney transplant but has no compatible living donor. She joins a waiting list for a deceased donor kidney, which may take years. Meanwhile, she undergoes dialysis several times a week, which is costly, exhausting and limits her ability to work. Each additional donor can transform a life and save health systems money.

Thinking opt-out laws alone solve the shortage

Opt-out rules can help, but families are still usually consulted, and donation depends on hospitals identifying potential donors and organising transplants well. Strong health system organisation matters as much as the law.

Key takeaways

The supply of donated organs falls far short of demand.
Buying and selling organs is illegal almost everywhere, including India.
Some economists favour regulated payments; most ethicists and governments oppose them.
Opt-out systems, kidney exchanges and support for living donors can increase donation.