Increasing Efficiency in the Market for Death

AlcoholThere are no hard and fast rules when it comes to governance. If an individual makes a decision that entails harmful health side-effects, or risks catastrophic negative health implications, the state neither automatically bails him out nor always leaves him to take responsibility for his own actions. Rather, one must take a balanced view of the imposition that either policy places on other individuals within society.

For example, if the worst consequences of alcohol abuse was increased demand for livers and there were plenty of them, there would be no problem in facilitating this rescue. If, on the other hand, successfully transplanting a new liver into someone who formerly abused alcohol resulted in the destruction of several livers and at the cost of millions in costs to the public health service, we would be less inclined to rescue the individual. The reality of the cost imposed on society lies somewhere between these two extremes.

Cirrhosis of the liver is often caused by alcohol consumption, usually years of excessive drinking (in many cases due to alcoholism). Especially amongst middle-aged people, it is a leading cause of death amongst other chronic liver diseases. Thousands of people in the US die every year for wont of a liver transplant. Although this would have to be verified empirically, it can be presumed that patients with previous history of alcohol abuse are more inclined towards recidivism than those without. On the other hand, there are claims that the process of liver transplantation can be an extremely changing experience, and that this balances out the likelihood of behavioural patterns that lead to additional future failure between the two groups.

Let us presume that the productivity, in terms of years added to the life of a citizen, of the liver was higher when the recipient was randomly selected from a population that didn’t include those who have past history of alcohol abuse or alcoholism. The productivity of the liver would be lower when the pool of potential recipients includes those people. Thus, the price paid by society to pick up the tab for these behaviours is the decreased productivity of our precious and scarce commodity, liver transplants. In addition, there is decreased inclination of individuals to donate their livers (or become living donors) when the perception is that they could go to an ungrateful alcoholic.

If the state is completely neutral about who receives liver donations (within reason), then it follows that this constitutes a cost to society. However, it is dubious whether this cost is warranted to protect the right of individuals to abuse alcohol. They endure years of drinking, ignore public health warnings and the advice of their doctor, possibly disregard family history of propensity towards alcoholism or liver cirrhosis, and society pays the price. Furthermore, this process does not happen overnight, and there are state mechanisms to help them quit.

It should be noted that there is limited ‘reciprocity’ in this freedom. This is quite opposed the case in which resources are devoted to care of the elderly, in spite of their potential higher productivity elsewhere. Everyone maintains the possibility that they will grow old and require such care, and are happy to sacrifice something small now to preserve the future. Not so with liver transplants caused by alcohol abuse.

There are several options at disposal of the government. They can ban the original behaviour which led to the problem, or refuse to take responsibility for the consequences, or both. For example, in the case of certain drug abuse: criminalisation and help for addicts in the form of rehabilitation imposes acceptable costs on the taxpayer, when compared with legalisation in which the costs of supporting addicts is in danger of spiraling out of control. Thus, the former option is the best policy available.

In the case of liver transplants for those who abuse alcohol, criminalisation is an unacceptable imposition on the freedom of others. Furthermore, those most likely to flaunt such laws will be those who are imposing the negative externalities in the first place, and prohibition is traditionally difficult to enforce. Both criminalisation and abdication of state care is inferior to abdication alone, as it preserves the rights of individuals to make their own decisions. Thus, abdication of state care is the solution. This should therefore be enforced where necessary, i.e. patients with chronic liver disease caused by alcohol abuse should be placed at the bottom of the transplant list ceteris paribus.

This also increases the efficiency of decision-making regarding alcohol abuse. Under the status quo, moral hazard abounds. When an individual gets caught up in patterns of behaviour which will cause liver failure, he creates demand for one more liver. As a result of his actions, one more individual will die for wont of a liver. However, he is very unlikely to be that individual when he has equal claim over transplants to other citizens. This is classic moral hazard.

When the cost of their decision to engage in excessive alcohol abuse is imposed directly on the group which enjoys the benefits, it ensures that the most efficient decision is being made. The individuals in question will weigh up all the costs and all the benefits of chronic cirrhosis of the liver before deciding whether to proceed. It is not the place of the state to impose their opinion of alcohol abuse on individuals. They should be free to make their decision, and take risks with their health as they see fit. Remember, they are no longer imposing any costs on the rest of us. As long as they have the necessary information with which to make an informed choice, the most efficient outcome is achieved from the perspective of society.

Something tells me, however, that they will very quickly discover that alcohol abuse isn’t a good choice. It might prove an extremely sobering experience.

© The Free Marketeer 2009

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