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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The politics of the kiss

From the classical period via the Kremlin to the Clintons: a brief history of political smooching.

Iowa and New Hampshire are behind us. Super Tuesday beckons. For fans of the competitive sport of baby-kissing, this is as good as it gets.

Meanwhile, closer to Britain, kissing’s in our very constitution. Jeremy Corbyn’s future, depending on his success, could involve taking a trip to the Palace to kiss hands as Prime Minister – and as a republican. Being sworn into the Privy Council in November, he even managed a peck on the royal paw, but reportedly stood fast and did not kneel.

Why is there so much snogging in politics? 

Ancient Romans and Persians established – dare we – a pecking order on meeting. This ritual would make it instantly clear if they were equals (full-on, mouthy kiss, the basium), separated by a slight gap (cheeky peck, an osculum), or vast unequals (foot-kissing accompanied by much grovelling). Even heads of state greeted people in this way.

And there was nothing more dramatic – and bizarre – than the socialist fraternal kiss. Kremlinologists would even measure its intensity, to see how close Communist leaders were. The rule was to do three alternate kisses on the cheek, aping the Ancien Régime’s Orthodox Easter greeting. When two leaders were especially chummy – like then Soviet leader Leonid Brezhnev and GDR head Erich Honecker at the 30th anniversary of the GDR in East Berlin in 1979 – the world would witness a big, sloppy lip-plant. Paris Match splashed Régis Bossu’s iconic black-and-white image of the socialist snog across a double-page spread. Le Baiser, they called it.

Nikita Khrushchev, Joseph Stalin’s successor, locked lips with USSR chairman Klim Voroshilov when returning from a US visit in 1959. In July 1937, Stalin planted a decidedly non-frigid one on Ivan Spirin, a polar explorer and state hero.

But Brezhnev was the true practitioner. The joke in Russia went that he described a Warsaw Pact comrade “as a politician, rubbish...but a good kisser!”

Aside from the steamy Kremlin, social kissing on the mouth declined with the Black Death.

The courtly handkuss (kiss on the hand) generally went the same way with the fall of the German and Russian monarchies in 1917-18, though hung on longer in Austria. 

But French president Jacques Chirac made it his trademark, playing to the gallery with French élégance. An Associated Press story from 1967 chronicles the sad plight of European diplomats who had chanced it in Washington. One congressional wife jumped back, claiming she had been bitten; another said a stone was missing from her ring. “Chivalry has its drawbacks,” the story observed.

But back to the babies. We see kissing-as-canvassing in William Hogarth’s 1755 series The Humours of an Election

And in a close-fought 1784 Westminster by-election, we read of 24 women out canvassing with kisses – including the Duchesses of Rutland, Argyll, Ancaster, and (somewhat infamously) Devonshire. 

Kissing voters’ wives – now probably frowned upon by CCHQ – was customary fare for the 18th-century candidate. It’s only in the following century that we see the desexualisation of the electioneering kiss, moving to babies as innocuous. 

In 1836, Charles Dickens has his character Pickwick go to witness a post-Reform Act by-election in Eatanswill. “He has patted the babies on the head,” says the candidate’s election agent, trembling with anxiety. Roar of applause. “He has kissed one of ‘em!” Second roar. “He's kissing ‘em all!” The crowd’s shouts are deafening. And the candidate Slumkey coasts home to Parliament.

US presidents Richard Nixon, Grover Cleveland and Benjamin Harrison forswore baby kissing, grasping for a higher-minded political plane. Bernie Sanders, too. 

But how are the rest of today's politicians doing, kiss-wise?

Barack Obama: After two terms, a kisser to be reckoned with. With adults. Apparently he doesn’t relish kissing babies, and has been called fatally ill-at-ease holding one. Full points for his lucky save with a reticent Aung San Suu Kyi in 2014, ending with a perfectly creditable side-hug and ear-kiss.

Pity Michelle, photographed rolling her eyes as Barack went in for the selfie with, say, Danish Prime Minister Helle Thorning-Schmidt in 2013. (For her part, Michelle fobbed off Silvio Berlusconi with a fully outstretched arm, taking no chances.)

David Cameron: Utterly denied by SamCam after his Tory conference speech in October 2015. Lord Grantham says in Downton he spent most of Eton avoiding the kisses of other boys; clearly, the Prime Minister didn’t get much practice while at school.

Angela Merkel: In her first meeting with Nicolas Sarkozy, out she came with a businesslike German handshake just as he ducked for the Gallic kiss. In a moment of British romantic awkwardness last May, during Cameron’s EU reform tour, we saw the Prime Minister lean in, short of closing the deal, as she pulled back and possibly searched for some new regulations to beat him away with.

Hillary Clinton: Is said to enjoy kissing babies. Is said not to enjoy kissing Bill, as in the 2008 Correspondents’ Dinner when she expertly ducked one from him.  And scored one from Obama instead. But maybe she ought to lay off the baby-kissing: a journal article in Political Psychology suggests voters are 15 per cent less likely to vote for women candidates when their adverts evoke female gender stereotypes.

Donald Trump: In August, his baby-kiss in Alabama went viral – the baby’s mother just a bit too keen, the baby’s confusion mingled with slight fear reflecting the views of many of us. “That baby is us,” wrote blogger Stassa Edwards.

It’s a long road from here to the US election in November. And Cameron can look forward to kissing up to Merkel and a hot summer of Italian, Dutch, and even French kisses too.

So this Valentine’s Day, spare a thought for the babies. And the bureaucrats.