How much for your Kidney?

Last night and this afternoon I will be lecturing about price ceilings and floors. There is the classic example of the minimum wage for price floors. Rent controlled apartments is the classic example for price ceilings, but my students did not seem to be familiar with rent control. So a new classic example for price ceilings: organ donation.

Right now the price ceiling is zero, you cannot sell your organs but you can give them away. As of 8am this morning there were 98,049 people waiting for a kidney, so there is a shortage of kidneys.
It is not just economist who are advocating kidney sales, but also physicians [link].
As one surgeon put it

"There's one clear argument for sales," Dr. Matas told a gathering of surgeons earlier this year. The practice, currently illegal in the U.S., "would increase the supply of kidneys, save lives and improve the quality of life for those with end-stage renal disease."

Dr. Matas and others will be speaking at the Cato Institute at noon today on this very subject [link].

There may be other unintended consequences of selling kidneys that should be considered, but the standard economic theory holds price ceilings can create shortages.

Hanging with Ben

At the Monetary Policy confrence I attended today, Federal Reserve Chairman Ben Bernanke, announced the Federal Reserve would reveal more about the economic forecasts they make (see NY Times Article). Given that the object of the Fed is to get people to react to their policy, seems like a good move to me (although I know little about monetary policy).

I did like his answer to a question about whether the American public should know more about how the Fed works. He discussed some programs the Fed has such as a model UN type program, where students pretend to be members of the FOMC. However, he said it is more important for Americans to understand their mortgage and how to balance their checkbook.

Breakfast with Ben

Tomorrow I will be attending the International Monetary Conference hosted at the Cato Institute. The conference is organized by my colleague Jim Dorn, and features a talk by Ben Bernanke current chairman of the Federal Reserve. With high oil prices, the sub prime market, the low dollar, it appears the task of sailing the economy through will be a difficult one. Is the economy deader than a five month old bed-bug or will this be our winter of discontent. Only time will tell.

If I knew what was going to happen to the economy I would be a lot richer man. Perhaps I can ask Dr. Benanke some advice.