Voluntary payment transactions - the case of live organ donations

Hong Kong papers today reported that the Hospital Authority has decided to waive the medical fees of live-organ donors. At the same time, they have stressed that they were not following US, UK and recent Singaporean legislation under which recipients can financially compensate donors.

There are two separate issues here: who compensates the donor, and what 'costs' does the compensation cover. In the Hong Kong case, taxpayers are subsidising the donor by covering only the transplant-related medical and surgical expenses. This is analogous to the treatment of blood donors in most countries. Of course, economic costs of blood donation are largely limited to medical costs. In the case of live organ donation, relevant economic costs would also include forgone income. In the case of Singapore, the recipient can financially compensate the donor, and this compensation is not necessarily limited to medical and surgical expenses.

Concerns about 'organ trading', commodification, financial inducements etc are vastly overstated given the regulatory environment, and distract from the more interesting aspects of the Singapore experiment. One needs to remember that in the case of Singapore, compensation is voluntary (the amendments to the legislation were required so that such payments were not longer illegal), whereas all donors in Hong Kong will have their medical expenses waived.

What I am interested in are the social norms that are likely to develop in Singapore in relation to the 'appropriate price' paid by recipients to donors, and how (if at all) this will interact with the motivations of organ donors. Voluntary compensation in market transactions is not, of course, limited to live organ donation. Tipping at restaurants is an obvious example. Closer to home, a local restaurant, Lentil as Anything, allows customers to determine the price of their meal. While repeated play considerations may come into these examples (which would be largely irrelevant in the case of organ donation), one may find an analogy in the case of donations to software developers who make their software available at a zero price.