Trading kidneys, repugnant markets and stable marriages win the Nobel Prize in Economics

Roth and Shapley charted a course for economists to go beyond simply arguing for markets in everything.

The 2012 Nobel Prize in Economics - technically the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel, but nobody cares - has been awarded to two American Economists, Alvin Roth and Lloyd Shapley "for the theory of stable allocations and the practice of market design". The Nobel Committee explains what that means:

This year's Prize concerns a central economic problem: how to match different agents as well as possible. For example, students have to be matched with schools, and donors of human organs with patients in need of a transplant. How can such matching be accomplished as efficiently as possible? What methods are beneficial to what groups? The prize rewards two scholars who have answered these questions on a journey from abstract theory on stable allocations to practical design of market institutions.

Lloyd Shapley used so-called cooperative game theory to study and compare different matching methods. A key issue is to ensure that a matching is stable in the sense that two agents cannot be found who would prefer each other over their current counterparts. Shapley and his colleagues derived specific methods – in particular, the so-called Gale-Shapley algorithm – that always ensure a stable matching. These methods also limit agents' motives for manipulating the matching process. Shapley was able to show how the specific design of a method may systematically benefit one or the other side of the market.

Alvin Roth recognized that Shapley's theoretical results could clarify the functioning of important markets in practice. In a series of empirical studies, Roth and his colleagues demonstrated that stability is the key to understanding the success of particular market institutions. Roth was later able to substantiate this conclusion in systematic laboratory experiments. He also helped redesign existing institutions for matching new doctors with hospitals, students with schools, and organ donors with patients. These reforms are all based on the Gale-Shapley algorithm, along with modifications that take into account specific circumstances and ethical restrictions, such as the preclusion of side payments.

Even though these two researchers worked independently of one another, the combination of Shapley's basic theory and Roth's empirical investigations, experiments and practical design has generated a flourishing field of research and improved the performance of many markets. This year's prize is awarded for an outstanding example of economic engineering.

The committee have yet again reaffirmed the old adage that the most important thing to do when trying for a nobel prize is to live long enough that your achievements are recognised. The Gale-Shapley algorithm, for instance, was devised in 1962, when Lloyd Shapley was 34. It concerns a maths problem known as the stable marriage problem: if you have an even number of men and women, can you always come up with a set of marriages where there are no two people of opposite sex who would both rather have each other than their current partners? (1960s maths problems: usually heteronormative.) If you can, then the marriage is "stable".

The Gale-Shapley algorithm is a way of always ensuring stable matches; and much of Shapley's work covers the same areas, straddling the boundaries between economics, mathematics, and computer science.

Roth is the younger of the two winners, and works in a far more empirical sphere. As the committee points out, although the two men never actually collaberated, Roth took Shapley's theoretical work and applied it to actually existing markets. For instance, Roth used the Gale-Shapley agorithm to ease the kidney shortage in the US. David Wessel explains (£):

As of noon yesterday, 58,470 people in the U.S. were waiting for a kidney transplant. Most won't get one this year. There aren't enough donated kidneys to go around. Surgeons transplanted just 15,129 kidneys last year. Now a band of transplant surgeons and economists are trying to fix that by creating a moneyless market for exchanging kidneys. Most transplanted kidneys come from a person who has died, a supply that grows slowly because of ignorance about the need for donations or grieving relatives' reluctance. But a kidney taken from a live donor works better, and almost everyone has a spare. As techniques improve for removing healthy kidneys and for suppressing the body's tendency to reject a transplant, doctors increasingly turn to kidneys from living donors, usually relatives. Last year, 43% of kidneys transplanted in the U.S. came from living donors, up from 28% a decade ago. But a biological barrier often blocks a transplant from a relative. In about a third of all would-be pairs, blood types are incompatible. In others, the sick person has antibodies that can initiate a rejection of the donated organ. It's heartbreaking "to have the treasure of the live donor and then have that not go forward because of a biological obstacle," says Massachusetts General Hospital transplant surgeon Francis DelMonico.

Occasionally, transplant centers spot a way out: One New England father with blood type A couldn't donate a kidney to his daughter with blood type B. So he gave a kidney to a teenager with blood type A, and the teenager's sister gave a kidney for the man's daughter. New England's transplant centers have done six such exchanges. Baltimore's Johns Hopkins University has done seven.

The crucial thing about Roth's work, from an economic point of view, is that it involves finding stable allocations using market-like situations without involving money. The kidney swaps in the New England situation are market-like, trading kidneys for kidneys in a way that makes all parties better-off, but they don't actually require kidneys to be bought and sold.

We can see the importance of this by looking at another paper of Roth's, not cited by the committee, on repugnance in markets (pdf). Roth demonstrates that some markets are limited because the very existance of a market in some goods is considered repugnant. He argues, for instance, that the trade in horse meat being banned in California is not done through fears that eating horse meat is unsafe; nor is it done for animal welfare reasons, since it is still legal to farm and kill horses. But banned it is, and Roth argues that the natural response of economists to situations of this type - to argue for freer markets - is wrong, since it ignores the very strong feelings involved in the situation. Instead:

Being aware of the sources of repugnance can only help make such discussions more productive, not least because it can help separate the issues that are fundamentally empirical—like the degree of crowding out of altruistic donations that might result from different incentive schemes compared to how much new supply might be produced—from areas of disagreement that are not primarily empirical.

Hopefully his new Nobel Prize should give that argument greater weight in the years ahead.

A patient receives a kidney in Johns Hopkins university in Baltimore. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Love a good box set? Then you should watch the Snooker World Championships

The game relies on a steady arm, which relies on a steady nerve. The result is a slow creeping tension needs time and space to be properly enjoyed and endured. 

People are lazy and people are impatient. This has always been so – just ask Moses or his rock – but as illustrated by kindly old Yahweh, in those days they could not simply answer those impulses and stroll on.

Nowadays, that is no longer so. Twitter, YouTube and listicles reflect a desire for complex and involved issues, expansive and nuanced sports – what we might term quality – to be condensed into easily digestible morsels for effort-free enjoyment.

There is, though, one notable exception to this trend: the box set. Pursuing a novelistic, literary sensibility, it credits its audience with the power of sentience and tells riveting stories slowly, unfolding things in whichever manner that it is best for them to unfold.

In the first episode of the first series of The Sopranos, we hear Tony demean his wife Carmela's irritation with him via the phrase “always with the drama”; in the seventh episode of the first series we see his mother do likewise to his father; and in the 21st and final episode of the sixth and final series, his son uses it on Carmela. It is precisely this richness and this care that makes The Sopranos not only the finest TV show ever made, but the finest artefact that contemporary society has to offer. It forces us to think, try and feel.

We have two principal methods of consuming art of this ilk - weekly episode, or week-long binge. The former allows for anticipation and contemplation, worthy pursuits both, but of an entirely different order to the immersion and obsession offered by the latter. Who, when watching the Wire, didn’t find themselves agreeing that trudat, it's time to reup the dishwasher salt, but we’ve run out, ain’t no thing. Losing yourself in another world is rare, likewise excitement at where your mind is going next.

In a sporting context, this can only be achieved via World Championship snooker. Because snooker is a simple, repetitive game, it is absorbing very quickly, its run of play faithfully reflected by the score.

But the Worlds are special. The first round is played over ten frames – as many as the final in the next most prestigious competition – and rather than the usual week, it lasts for 17 magical days, from morning until night. This bestows upon us the opportunity to, figuratively at least, put away our lives and concentrate. Of course, work and family still exist, but only in the context of the snooker and without anything like the same intensity. There is no joy on earth like watching the BBC’s shot of the championship compilation to discover that not only did you see most of them live, but that you have successfully predicted the shortlist.

It is true that people competing at anything provides compelling drama, emotion, pathos and bathos - the Olympics proves this every four years. But there is something uniquely nourishing about longform snooker, which is why it has sustained for decades without significant alteration.

The game relies on a steady arm, which relies on a steady nerve. The result is a slow creeping tension needs time and space to be properly enjoyed and endured. Most frequently, snooker is grouped with darts as a non-athletic sport, instead testing fine motor skills and the ability to calculate angles, velocity and forthcoming shots. However, its tempo and depth is more similar to Test cricket – except snooker trusts so much in its magnificence that it refuses to compromise the values which underpin it.

Alfred Hitchcock once explained that if two people are talking and a bomb explodes without warning, it constitutes surprise; but if two people are talking and all the while a ticking bomb is visible under the table, it constitutes suspense. “In these conditions,” he said, “The same innocuous conversation becomes fascinating because the public is participating in the scene. The audience is longing to warn the characters on the screen: ‘You shouldn't be talking about such trivial matters. There is a bomb beneath you and it is about to explode!’”

Such is snooker. In more or less every break, there will at some point be at least one difficult shot, loss of position or bad contact – and there will always be pressure. Add to that the broken flow of things – time spent waiting for the balls to stop, time spent prowling around the table, time spent sizing up the table, time spent cleaning the white, time spent waiting for a turn – and the ability for things to go wrong is constantly in contemplation.

All the more so in Sheffield’s Crucible Theatre. This venue, in its 40th year of hosting the competition, is elemental to its success. Place is crucial to storytelling, and even the word “Crucible” – whether “a ceramic or metal container in which metals or other substances may be melted or subjected to very high temperatures,” “a situation of severe trial”, or Arthur Miller’s searing play – conjures images of destruction, injustice and nakedness. And the actual Crucible is perhaps the most atmospheric arena in sport - intimate, quiet, and home to a legendarily knowledgeable audience, able to calculate when a player has secured a frame simply by listening to commentary through an earpiece and applauding as soon as the information is communicated to them.

To temper the stress, snooker is also something incredibly comforting. This is partly rooted in its scheduling. Working day and late-night sport is illicit and conspiratorial, while its presence in revision season has entire cohorts committing to “just one more quick frame”, and “just one more quick spliff”. But most powerfully of all, world championship snooker triggers memory and nostalgia, a rare example of something that hasn’t changed, as captivating now as it was in childhood.

This wistfulness is complemented by sensory pleasure of the lushest order. The colours of both baize and balls are the brightest, most engaging iterations imaginable, while the click of cue on ball, the clunk of ball on ball and the clack of ball on pocket is deep and musical; omnipresent and predictable, they combine for a soundtrack that one might play to a baby in the womb, instead of whale music or Megadeth.

Repeating rhythms are also set by the commentators, former players of many years standing. As is natural with extended coverage of repetitive-action games, there are numerous phrases that recur:

“We all love these tactical frames, but the players are so good nowadays that one mistake and your opponent’s in, so here he is, looking to win the frame at one visit ... and it’s there, right in the heart of the pocket for frame and match! But where’s the cue ball going! it really is amazing what can happen in the game of snooker, especially when we’re down to this one-table situation.”

But as omniscient narrators, the same men also provide actual insight, alerting us to options and eventualities of which we would otherwise be ignorant. Snooker is a simple game but geometry and physics are complicated, so an expert eye is required to explain them intelligibly; it is done with a winning combination of levity and sincerity.

The only essential way in which snooker is different is the standard of play. The first round of this year’s draw featured eight past winners, only two of whom have made it to the last four, and there were three second-round games that were plausible finals.

And just as literary fiction is as much about character as plot, so too is snooker. Nothing makes you feel you know someone like studying them over years at moments of elation and desolation, pressure and release, punctuated by TV confessions of guilty pleasures, such as foot massages, and bucket list contents, such as naked bungee jumping.

It is probably true that there are not as many “characters” in the game as once there were, but there are just as many characters, all of whom are part of that tradition. And because players play throughout their adult life, able to establish their personalities, in unforgiving close-up, over a number of years, they need not be bombastic to tell compelling stories, growing and undergoing change in the same way as Dorothea Brooke or Paulie Gualtieri.

Of no one is this more evident that Ding Junhui, runner-up last year and current semi-finalist this; though he is only 30, we have been watching him almost half his life. In 2007, he reached the final of the Masters tournament, in which he faced Ronnie O’Sullivan, the most naturally talented player ever to pick up a cue – TMNTPETPUAC for short. The crowd were, to be charitable, being boisterous, and to be honest, being pricks, and at the same time, O’Sullivan was playing monumentally well. So at the mid-session interval, Ding left the arena in tears and O’Sullivan took his arm in consolation; then when Ding beat O’Sullivan in this year’s quarter-final, he rested his head on O’Sullivan’s shoulder and exchanged words of encouragement for words of respect. It was beautiful, it was particular, and it was snooker.

Currently, Ding trails Mark Selby, the “Jester from Leicester” – a lucky escape, considering other rhyming nouns - in their best of 33 encounter. Given a champion poised to move from defending to dominant, the likelihood is that Ding will remain the best player never to win the game’s biggest prize for another year.

Meanwhile, the other semi-final pits Barry Hawkins, a finalist in 2013, against John Higgins, an undisputed great and three-time champion. Higgins looks likely to progress, and though whoever wins through will be an outsider, both are eminently capable of taking the title. Which is to say that, this weekend, Planet Earth has no entertainment more thrilling, challenging and enriching than events at the Crucible Theatre, Sheffield.

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