glance, the situation seems quite simple and not applicable to the tools of economics. People in need seek a relative or friend willing to donate a kidney. Those needy patients who do not find a willing donor wait in line for kidneys from cadavers. Why is Professor Roth, an economist, involved in a medical process?

There are special circumstances that make the kidney market particularly problematic and appeal to an economists special skills. Kidney donors and recipients need to match on a number of physiological measures. So while a needy patient might find a willing donor in, for example, his or her spouse, tissue incompatibility may preclude a transplant. In these cases, a willing donor cannot help his or her loved one because of biological mismatch.

A potential solution for couples suffering from this mismatch is to find a complementary couple in a similar situation. In the simplest case, two such couples might find that they can swap organs. So, for example, Mrs. Smith wants to donate a kidney to Mr. Smith, but they are biologically incompatible. Similarly, Mr. Jones wants to donate a kidney to Mrs. Jones, but cannot. If, by chance, they are mutually compatible, the solution is to have Mrs. Smith donate to Mrs. Jones, and Mr. Jones to Mr. Smith. Thus, both patients get the kidneys they need.

This sort of matching problem is well understood by economists and is a particular area of expertise of my colleague Al Roth. In some of his previous work, Professor Roth helped reform the system of matching medical residents to positions at teaching hospitals.2 Thus, the kidney transplantation system, which appears at first to be purely medical, has an underlying matching problem that has been studied by economists.

Such organ-swapping is legal, and it is beginning to happen. Here is a summary of a news story about one such arrangement (The Reporter, Vanderbilt University Medical Center, November 21, 2003):

The lives of two West Tennessee families have been changed forever by the generous act of organ donation, but not in the way they

had originally planned. Kay Morris, 53, was to receive a kidney from her daughter, Melissa Floyd, and Tom Duncan, from his friend and neighbor, Patricia Dempsey. But, there was a positive cross match within each couple so the transplants couldnt take place. Debbie Crowe, Ph.D., an astute Nashville immunologist, discovered that by swapping kidneys between the two pairs, the transplants would work.

In this case, Melissa donated her kidney to Tom, a man she had not previously met, while Toms friend Patricia donated her kidney to Melissas mother. These organ-swapping arrangements allowed transplants that could not take place otherwise. In this case, two recipients received new kidneys that they could not have had without involving the other pair. Fantastic.

There are, however, some difficulties with kidney swaps. First, sometimes it takes more than two pairs to find compatible matches. For example, Johns Hopkins recently performed a three-way swap. Involving more couples makes the matching process more difficult, particularly since donor and recipient need to be in the same hospital for the surgery. Second, surgeons who do swaps have a rule that all the surgeries must take place simultaneously. In the West Tennessee case, that meant four simultaneous operations (two donors, two recipients) and the Johns Hopkins triple swap involved six operating teams working on the three donors and the three recipients at the same time.

Why do the surgeons require simultaneous exchange? They fear that if the exchanges are not simultaneous, then some of the donors might change their minds. Perhaps, for example, Mr. Jones might become unwilling to donate his kidney after Mrs. Jones has received her new kidney. Obviously, it is impossible to compel someone to donate a kidney against his or her will.

To avoid this problem of failed exchange, surgeons require that all of the operations take place at the same time. The requirement for simultaneous

exchange makes the actual operations much more complicated. Recall that each operation involves many medical staff. So the requirement to have four or more full medical teams working simultaneously is very challenging.

Furthermore, simultaneous exchange prevents some swaps entirely. For example, a patients compatible donor might not be available until next year. If there were some way to store value over time, such swaps could take place. For example, a donor could give one kidney to a stranger now, and get credit for future exchange when the matching donor is discovered. Such swaps that involve delays are impossible if all exchanges must be simultaneous.

Using his expertise on matching, Professor Roth is working to improve the quantity and quality of these exchanges between couples. His work has the potential to greatly improve the system, but is limited and complicated by the requirement for simultaneous exchange.

Now imagine what the world would be like if all economic transactions required simultaneous exchange. A simple task like filling a cars gas tank would require a negotiation involving delivery of some good or service to the gas station owner. Perhaps the most profound effect would be the difficulty retirement would bring about. During later years, most people spend years or decades living off previously accumulated wealth. The ability to store up favors of the magnitude required to retire would be impossible if all exchanges needed to be simultaneous.

The world of simultaneous exchange is not mythical; it is called a barter economy. Before the invention of money, all human societies used barter. Even recently, some nonindustrialized societies existed without money. As the kidney example illustrates, the need for simultaneous exchange in barter societies places a serious damper on economic activity. Consequently, barter economies are less productive than societies that use money. Importantly for financial planning, barter economies make it very difficult to store up wealth to use in the future for retirement or other activities.