Question

Whenever someone suggests that when families or guardians be financially compensated for agreeing to donate organs from a loved one (or someone in their care) who has just died, the following objection is made: If the formerly “free” organ now has a price placed upon it, then transplant operations will become more expensive. Is this an economically valid argument? Why or why not?

(The present system requires that organ donation be voluntary on behalf of individuals making donations, or the families who make the decision regarding a loved one who is about to die. Furthermore, the donation is made to a non-profit organ procurement organization, which then receives a fee when it directs the newly procured organ to the hospital where it will be used in the transplant operation.)

PLEASE KEEP IN MIND THAT THIS IS NOT A QUESTION ABOUT THE ETHICS OF SELLING HUMAN ORGANS. WE ARE DEALING WITH THE ECONOMIC ARGUMENT THAT OPPONENTS OF SUCH TRANSACTIONS HAVE BEEN MAKING. Furthermore, DO NOT ASSUME ANY ROLE OF INSURANCE OR GOVERNMENT PAYMENTS IN YOUR ANSWER.

Answer 1

If the formerly “free” organ now has a price placed upon it, then transplant operations will become more expensive.

The above argument is economically not valid.

As per economics, there are two types of costs: Explicit cost and implicit cost. Implicit costs are also called imputed costs. Thus, calling the organ as "free" in the first place, is incorrect. Because even the organ carries an imputed cost. Had the organ donar not donated his/her organs, they would have to be purchased from the market at explicit costs during the transplantation. Thus, the organ demans a price to be charged by the non-profit organizations, even though they received it for "free".

Secondly, the argument that transplant operations will become more expensive is also flawed because if the non-profit organizations had to pay an amount to the donor at the first place, they would charge an even higher price in the market where such organs are re-sold. Thus, it would make the transplant operation even more expensive, than what it currently is.