Wednesday, January 28, 2015

Is the medical match fair?

MIT News reports on a forthcoming paper by Nikhil Agarwal:

An Empirical Model of the Medical Match | Online Appendix
American Economic Review, forthcoming
(NBER Working Paper 20767 - includes analysis of government interventions for rural programs)

Here's the MIT News report:

Is the medical match fair?

Study finds the demand for positions strongly influences medical residents’ salaries.

When medical-school graduates apply for their residencies, they use a centralized clearinghouse that matches applicants with jobs. This system has sometimes been challenged, such as in a lawsuit several years ago that claimed salaries of residents were reduced by this centralized matching method.
But a forthcoming study by an MIT economist indicates that demand for a limited number of desirable residency positions can keep salaries low — and introduces a new way of assessing that demand despite incomplete data that has previously restricted analysis of the issue.
“Salaries will likely remain low unless residency programs can increase the number of positions,” says Nikhil Agarwal, an assistant professor of economics at MIT, and author of the paper on the subject.
On average, Agarwal’s study finds, salaries of medical residents are lowered by an average of $23,000 due to the demand for slots. As the study puts it, residents are willing to accept an “implicit tuition” in their wages in return for experience and prestige. In the long run, residencies may be a worthwhile tradeoff for doctors establishing themselves in the profession, even with seemingly reduced wages.  
Determining demand
Agarwal’s paper, to be published in the American Economic Review, is based on data from 2003 to 2011 gathered by the National Graduate Medical Education census.
The central clearinghouse — the National Residency Matching Program (NRMP) — matches about 25,000 medical residents annually. Incoming residents rank the positions they would most like to have, and an algorithm matches these choices with the ranked preferences of the medical programs.
A 2002 lawsuit asserted that the residents have limited bargaining power because they are assigned to positions and cannot receive multiple job offers, unfairly lowering their compensation. That suit was eventually dismissed in 2004, a few months after Congress passed an antitrust exemption for the NRMP system.
But that resolution of the lawsuit did not resolve the question of whether or not the clearinghouse does affect residency salaries. As of 2010, residents had a mean salary of about $47,000, compared to $86,000 for physician assistants, who do comparable work. Medical residents also have notably long workweeks and shifts, which themselves are the subject of intermittent public debate.
Agarwal’s study finds a new way of analyzing the compensation issue in the face of limited information. He did not have access to the ranked lists of jobs that applicants submit to the NRMP, nor to the lists of preferred candidates that medical programs submit. Even so, Agarwal was able to study the matched pairs of residents and positions, along with some additional descriptive data, such as geographic location, and determine demand on that basis.
The key to the analysis, Agarwal says, is “the fact that there are multiple residents in the same program. That tells you a lot about the residency program’s preferences for residents. Once you figure out that side of the market, you’re in business.”
For instance, Agarwal adds, “If a program [decides] to hire residents from [highly ranked] medical schools with similar licensing-exam test scores, then everybody it’s matched with will be similar on those characteristics. But if it doesn’t care about prestige of the medical school as much, there might be people from all kinds of medical schools, but their licensing-exam scores will be similar.” Partly by building a picture of those preferences and measuring it against the characteristics of the class of applicants, it is possible to estimate how many qualified applicants are available for residency positions.
An ‘imperfect’ market
An underlying implication of Agarwal’s conclusions is that the idea of a perfectly competitive, uniform market driving salaries does not ultimately hold up to scrutiny when it comes to medical residencies. There appear to be clumps of jobs considered particularly desirable, leading to uneven relationships between supply and demand within the overall residency job market.
“In [my] theory, you get a situation where people are not indifferent” in terms of job preferences, Agarwal notes.
For his part, Agarwal, who focuses on the growing field of market design, believes this method of determining preferences can be applied to other domains as well.  He is continuing to do research in the area of school choice, among other topics.

Tuesday, January 27, 2015

Choice prediction competition:

From Anomalies to Forecasts: Choice Prediction Competition for Decisions under Risk and Ambiguity 

Supported by the Max Wertheimer Minerva Center for Cognitive Processing and Human Performance
Organized by: Ido Erev, Eyal Ert, and Ori Plonsky
Submission deadline: May 17th, 2015  |  Early registration until April 1st, 2015

Here is your chance to show how to model choice behavior better than anyone else.

Ido Erev writes:

"Dear colleagues and friends,

I write to invite you to participate in a choice prediction competition that Eyal Ert, Ori Plonsky and I organize.  The goal of this competition is to facilitate the derivation of models that can capture the classical choice anomalies (including Allais, St. Petersburg, and Ellsberg paradoxes, and loss aversion) and provide useful forecasts of decisions under risk and ambiguity (with and without feedback).

The rules of the competition are described in  The submission deadline is May17, 2015.  The prize for the winners is an invitation to be a co-author of the paper that summarizes the competition (the first part can be downloaded from

Here is a summary of the basic idea.  We ran two experiments (replication and estimation studies, both are described in the site), and plan to run a third one (a target study) during March 2015.  To participate in the competition you should email us (to a computer program that predicts the results of the target study. 

The replication study replicated 14 well-known choice anomalies. The subjects faced each of 30 problems for 25 trials, received feedback after the 6th trial, and were paid for a randomly selected choice. The estimation study examined 60 problems randomly drawn from a space of problems from which the replication problems were derived.  Our analysis of these 90 problems (see shows that the classical anomalies are robust, and that the popular descriptive models (e.g., prospect theory) cannot capture all the phenomena with one set of parameters. We present one model (a baseline model) that can capture all the results, and challenge you to propose a better model.  The models will be compared based on their ability to predict the results of the new target experiment. You are encouraged to use the results of the replication and estimation studies to calibrate your model.  The winner will be the acceptable model (see criteria details in the site) that provides the most accurate predictions (lowest mean squared deviation between the predicted choice rates and the choice rates observed in the target study)."

Benefits--and risks--of nondirected living kidney donation

Here's a news article focusing on nondirected donation in Canada:

Desperately needed organs from anonymous living donors are saving lives but raise ethical concerns

"Ms. Vanneste’s gesture is part of a developing trend in transplant medicine: anonymous donors of kidneys or liver parts who are expanding the pool of desperately needed organs but also generating controversy.

"Some critics worry that living donors generally receive too little information about the potential risks, and that the long-term effects have not been properly studied, issues that arguably become more acute when there is no relationship with the recipient.

"The promise is alluring, though, given that the alternative — taking organs from recently expired bodies — can never come close to meeting the huge demand.
"Living donation has taken place since 1954, initially restricted to close family members, later expanded to include friends. Then came “chains,” where people who were not a match to a sick relative donated to another patient, and their loved one received an organ from someone else. The number of live donors in Canada now exceeds that of dead people whose organs are used.

"The transplant world used to stop short at taking an organ from living people who had no link to the eventual recipient, and some U.S. hospitals still refuse to do so. Yet dozens of volunteers a year have been approaching transplant centres across Canada about donating an organ to people they do not know.
"On the surface, at least, the practice seems to violate one of health care’s fundamental tenets — the Hippocratic pledge to “do no harm” — because it’s a procedure that, for the donor, is all hazard and no benefit.

"Doctors argue, however, that the risk to donors is minimal and the benefit to those suffering end-stage kidney or liver disease enormous, helping chip away at transplant wait lists on which thousands of patients languish — and many die.

"Kidneys from living donors also work better and longer than those from people who have died.

"Still, surgeons such as Dr. Robinette acknowledge they owe a special duty to people like the Vanneste sisters, unique among OR patients in that they have no medical issues themselves.
"As for the physical risks, specialists call them almost negligible. A 2010 study based on decades of data — only partially reflecting ongoing improvements in surgical technique — suggested just three living kidney donors out of 10,000 die within 90 days of the operation, and long-term mortality is no higher than among non-donors.

“That’s a very tiny risk,” says Dr. Ghanekar. “That’s much less than a lot of other things people do, like getting in a car and driving on the [freeway].”

"According to Statistics Canada, the death rate in traffic accidents for the general population in 2011 was actually somewhat lower, about .6 per 10,000, though that would encompass people who rarely travel by road.

"Other, recent research suggests that donating a kidney is generally safe, but not completely risk-free. A Johns Hopkins University study last year estimated that the rate of end-stage kidney disease among living donors was 30 per 10,000 — small, yet about eight times the rate among equivalent non-donors. A 2014 study by Ontario’s Institute for Clinical Evaluative Sciences indicated that women who donate a kidney have a one in 10 chance of developing high blood pressure during pregnancy, twice the risk among non-donors.

"The equation is somewhat less favourable for those who donate a piece of their liver. Though the organ has a unique ability to regenerate, about one in 300 living donors dies.

“The magnitude of risk is so much greater with [donating] livers than with kidneys, it raises a concern about the ethical soundness of the procedure,” argues Elisa Gordon, a medical anthropologist at Chicago’s Northwestern University who studies the field.
"Even for kidney donors, there is a general paucity of long-term data on safety, she says. And Prof. Gordon says interviews she and others have conducted with donors suggest many are not adequately informed before consenting to the procedure.

Risk, for instance, is sometimes not clearly communicated, while some donors complain they received little advice on how to protect their health following the operation, she says.

Help after the fact is generally scant for donors, echoes Cristy Wright, who gave up a kidney for her sister five years ago. When the organ failed in her sister’s body, the Ohio donor suffered an emotional fallout that left her in therapy for two years.

“There’s a lot of things on the back end that people are not prepared for,” says Ms. Wright. “Donors experience depression, they do grieve a lot of times for their lost kidney. … They experience anxiety and anger.”

"And beforehand, the pressure some face, coupled with vocabulary that tends to characterize them as “heroes,” makes it difficult to back out if they have doubts, she says."

Monday, January 26, 2015

Boxing becoming legal in Norway again (but still not in Iceland)

The Economist has the story: Laws on boxing--Bouncing back

"More countries are allowing professional boxing, despite the risks

FIRST Sweden in 2007, then Cuba in 2013, and now Norway have left the small club of countries that ban professional boxing. The centre-right coalition in power since 2013 promised to cut taxes and red tape—and to let Norwegians indulge in pastimes its predecessors deemed too dangerous, including cheaper wine and spirits, jetskis and Segways. And last month 33 years without pro boxing came to an end, leaving Iceland with the Nordic region’s sole boxing ban.

Health concerns lay behind the Norwegian ban. (Cuba had considered the violence—and prize money—incompatible with Marxism.) The World Medical Association has long called for the sport to be outlawed everywhere. But Norway’s pugilists are delighted, as they can fight at home and earnings will rise."

HT: Mike Ostrovsky

Sunday, January 25, 2015

Domino liver transplants

At the University of Maryland, a woman who received a liver transplant from a deceased donor was nevertheless able to donate her liver to another patient...The Baltimore Sun has the story.

Rare domino liver transplant saves two lives

"The 52-year-old suffered from a rare genetic disease, familial amyloid polyneuropathy, that caused her liver to produce a protein that travels to other organs and sickens them. She had a stroke after the protein had begun to deposit in her heart, and she also had trouble walking.
?Dzielski underwent a lifesaving liver transplant in October. And although her old liver threatened her life, in the end it saved someone else's.

"During a nearly five-hour procedure at the University of Maryland Medical Center called a domino liver transplant, Dzielski received a liver from a deceased organ donor and then gave her liver to an Owings Mills woman.

"Other than the protein defect, Dzielski's liver was healthy, so it could be transplanted into someone else. But it needed to be an older person who likely wouldn't live long enough for the symptoms of familial amyloid polyneuropathy to appear. It typically takes years for the disease to show, which is why Dzielski didn't have problems until her 50s. In domino procedures, these livers are given to people at least 60 years of age."

Saturday, January 24, 2015

Compensation for donating eggs is (taxable) income

Kim Krawiec at the Faculty Lounge finishes the story of the woman who claimed in tax court that her income from donating eggs for infertile couples was not taxable income, but rather payment for pain and suffering:

Taxing Eggs: The Decision

Regular Lounge readers may recall the Taxing Eggs Mini-Symposium we held here last February, which gathered a number of tax experts to discuss Perez v. Commissioner, No. 9103-12 (Feb. 14, 2014) (Holmes, J.), the first case addressing the inclusion in taxable income (and perhaps the proper characterization) of compensation received for the sale or donation of human eggs and related services. 
The decision was filed today and, as predicted by our panel of experts, held that the money received by Perez was not “damages” under I.R.C. section 104(a)(2) and must be included in gross income. Because both parties agreed that the payment was for services, however, the case doesn't address any capital gains issues.  
From the opinion, which is available here
We see no limit on the mischief that ruling in Perez’s favor might cause: A professional boxer could argue that some part of the payments he received for his latest fight is excludable because they are payments for his bruises, cuts, and nosebleeds. A hockey player could argue that a portion of his million-dollar salary is allocable to the chipped teeth he invariably suffers during his career. And the same would go for the brain injuries suffered by football players and the less-noticed bodily damage daily endured by working men and women on farms and ranches, in mines, or on fishing boats. We don’t doubt that some portion of the compensation paid all these people reflects the risk that they will feel pain and suffering, but it’s a risk of pain and suffering that they agree to before they begin their work. And that makes it taxable compensation and not excludable damages. 
I note that the case includes citations to articles by three of our Taxing Eggs participants: Bridget Crawford, Lisa Milot, and me. 
 (Oh my, this post does contain the three cardinal sins of blogging: content links, use of the first person, and self-promotion. Oops, I just did it again).
(HT: Lisa Milot)

Related Posts:

Friday, January 23, 2015

Compensation for kidney donors; overcoming repugnance, in the Atlantic

Some more discussion, in The Atlantic:

Is There a Moral Way to Fix America's Kidney Shortage?
"Legalizing the sales of organs would require a shift in public opinion—which might be more malleable than previously thought." by Bourree Lam

For those who need a transplant, the wait for an organ in America is growing longer: As Nobel economist Gary Becker lays in out in a recent op-ed for The Wall Street Journal, 95,000 Americans were on the waiting list for new kidneys in 2012, but only 16,500 kidney transplants occurred that year. Today, there are over 78,000 candidates waiting for an organ transplant.

"The exchange of kidneys represents what economists call a repugnant market: It could be made more efficient if people were allowed to pay for them, but there are ethical concerns about introducing money into the equation. As demand far outstrips supply—the average wait for a kidney has climbed to 4.5 years—there’s an increasing call for establishing a regulated organ market.

"A new NBER paper explores whether information—such as the depressing numbers above—affects people's attitudes toward an organ market. The researchers were interested to look at how morals about markets play out, and to measure how people respond to new information about a charged issue.

"First, they surveyed a control group on their attitudes about a regulated organ market—52 percent expressed a positive opinion. Next, a treatment group was required to read about the dire situation in the kidney transplant system in America. They were then asked to respond to various statements, including one about supporting a regulated organ market for live donors and families of deceased organ donors. Support for "regulated monetary payments for organ donors" for that group was 72 percent, significantly higher than the control group.

"Overall, they found that liberals and moderates were more sensitive to new information than conservatives. Perhaps unsurprisingly, those self-reporting lower income than the national median and those with a religious affiliation were both less in favor of payments for organs. And while the hope is that an official marketplace for organ would reduce organ theft, another huge concern is that allowing such transactions would expose cash-strapped individuals to exploitation.

"Solutions in recent years to the kidney shortage problem have included a matching system devised by Al Roth, who won a Nobel in economics for market design. In Roth's system, those who wanted to give a kidney to a loved one but couldn't because their blood types don't match, could be paired with another couple with the same problem. This program, the New England Program for Kidney Exchange, increased the number of matches. Another method is being pioneered in Israel to increase supply: You move up in the transplant waiting list if you've signed a donor card, or if a family member has donated an organ before.

"In both cases: No money changes hands, not as many problems. But as the organ-shortage problem persists, money seems to not only be the easy and extremely hard-to-swallow option—but also a last resort."

Thursday, January 22, 2015

Payday loans

The NY Times has a discussion of payday loans, and whether and how they might be regulated. (See also my previous posts on payday loans.)


payday loansKevin J. Miyazaki/Redux for the New York Times
In his State of the Union address, President Obama presented a series of initiatives aimed at the middle class and the growing income inequality in the United States.
One thing on the minds of many working-class Americans is greater federal regulation of payday loans, the small, short-term high-interest loans that are currently under state jurisdiction. Critics of payday loans say they lead to a cycle of ballooning debt for consumers, who can rarely afford to pay them back and must take out more loans to stay afloat. But payday lenders say that strict rules would eliminate the industry and with it, the only viable lending option for people with bad credit.
Should payday loans be federally regulated?