Economics is increasingly less interested in money and more curious about other resources, like, say, kidneys, or marriage partners. Leon Neyfakh meets Harvard experimental economist Al Roth, who specializes in helping people get matched with the things they really want.When most people think of economics, they think of money — the study of how much things cost and why. Roth distinguishes himself by being more interested in situations where money plays little or no role — for instance, the process that determines who among the thousands of patients awaiting kidney transplants nationwide should receive the small number of organs that are available. As a society, we've decided we're not comfortable with people selling their organs, so some other system — some other kind of market — is required. And a market, in Roth's view, does not necessarily come down to prices, nor is it always ruled by simple principles like supply and demand: As long as people are competing with each other to get what they want, then resources are being allocated, and that means economists should be thinking about it.
Roth's interest in experimental economics led him to the design of practical markets. One of the first articles he published on the subject invoked a paper written decades earlier by a pair of economists named David Gale and Lloyd Shapley. In that paper, Gale and Shapley argued that the mark of a well-functioning — or in their language, "stable" — system is that at the end of the process, no two people would prefer each other over whoever they were matched with. With instability, Gale and Shapley argued, a market stops working well. Kagel, now an economist at Ohio State University, summarized the concept in terms of the marriage market: "A match is stable if there's no one you would prefer to be married to who would prefer to be married to you."
Roth had noticed instability in the National Resident Matching Program, and soon started seeing it all over the place. In 2003, he helped redesign the process by which kids were assigned to schools in New York, making it more likely that kids were sent where their parents wanted them to go. A few years later, he repeated the trick in Boston, and around the same time, he helped establish the New England Program for Kidney Exchange. He has also helped redesign the job markets for gastroenterologists and economists.I’m reminded of the episode of This American Life about the chances of finding your match somewhere amongst the Earth’s 6.5 billion people:Read more at the Globe, and see Roth’s paper on repugnance as a constraint on markets, (pdf) which helps put some perspective on “slavery and indentured servitude, lending money for interest, price-gouging after disasters, selling pollution permits and life insurance, and dwarf tossing.”