Roth, Alvin E. "Local Justice: How Institutions Allocate Scarce Goods and Necessary Burdens", by Jon Elster (book review), Journal of Economic Literature, 31, 1993, 1445-6.
This ambitious book seeks to begin the task of establishing a theory of "local justice" by examining the large variety of non- market institutions by which scarce goods and bads are allocated. Some examples of the allocative tasks considered are; who should serve in the army in time of war (and who should be demobilized first at war's end), who should receive organs for transplantation, who should be allowed to immigrate, and who should be admitted to particular kindergartens or colleges. The main idea of the book is that the institutions which perform these tasks--draft boards, transplant teams and admissions offices for example--develop rules and procedures which are intended to balance considerations of efficiency and equity. By examining some of these rules, the book seeks to infer the principles which motivate them, and to interpret these as principles of justice.
The book begins with a description of a number of allocative tasks and the institutions which have grown up to accomplish them, mostly in the United States and Western Europe. (I found the descriptions fascinating, and regretted that they were not more detailed.) It then proceeds to classify allocative tasks as tasks of selection (which involves ranking individuals and allocating the scarce good from the top down, until it is exhausted), admission (which involves comparing individuals against some threshold, and allocating the good to all who pass, as in allocating "suffrage and salvation"), and placement (which involves matching individuals to heterogeneous units of the good), although many tasks involve combinations of these. Also classified are criteria which play a role in decisions, such as merit (as in selection to receive honors), need (as in selection for space in intensive care units), and seniority (as in layoffs in unionized firms), and notions of equity, from direct equalization (as in employment quotas), indirect equalization (as in retraining schemes), and compensation (as in unemployment benefits).
The book then proceeds to consider some of the intended and unintended consequences of these principles, and finally to compare the different notions of justice that may be held by professional decision makers, the general public, and philosophers of justice. As the author is quick to emphasize, this broad subject matter has not yielded any concise set of organizing principles.
One of the allocative tasks best suited to the author's purpose, not least because there is a professional literature on the subject that specifically deals with different notions of equity and their consequences for efficiency, is the allocation of organs for transplantation. The current system in the United States involves allocating points to individuals based on both medical criteria such as tissue typing and non-medical criteria such as time on the waiting list. Both the equity and efficiency issues here are complex, as in the tradeoffs between allocating scarce organs to those in the most need or to those with the most chance of recovery. The book describes some of the history of how this system developed.
One subject that I would have liked to see given more attention is the role of incentives in the evolution of such systems. In the context of organ transplants, most of the book's discussion of incentives focuses on whether it would be reasonable to consider behavioral issues (such as denying liver transplants to heavy drinkers), in the hope of promoting behavior that would reduce the need for transplants. (One useful version of this kind of consideration is reported in Singapore, where people are presumed to be willing organ donors unless they have recorded a specific objection, with objectors then being given only secondary access to organ transplants themselves.) However it seems likely that the incentive effects of particular rules on the decisions of doctors might have a larger and more immediate effect. For example, while I was preparing to write this review, it was reported (Michaels, Frader, and Armitage, 1993) that the rules for placing patients on the waiting list had been revised, because doctors had begun placing unborn fetuses on the waiting list, to accrue time and therefore gain priority. This adaptation to the existing rules, by doctors acting on behalf of their patients, caused the allocation of organs to change in unintended ways. (Part of the issue is that waiting time for most patients is correlated with a deterioration of their medical condition, but in many cases fetuses do not begin to suffer from organ defects until separated from the mother's circulatory system at birth.) Thus a set of rules that was intended to allocate organs among the candidates for transplantation caused a change in behavior which changed the pool of candidates, which caused the old rule to produce a different allocation. To the extent that this is a common phenomenon, it may be necessary to concentrate on histories of rule changes in order to infer what the rules are intended to accomplish.
This book complements the growing perception among economists that considerations of equity may impose some constraints on the behavior even of market processes. And apart from the ability of the non-market processes considered here to illuminate our understanding of justice, it well behooves economists to better understand allocative processes which shape lives (as in medical decisions) and careers (as in admission to elite educational institutions). The author indicates that he is embarking on a more empirically oriented project, to compare how similar allocative tasks are handled in different countries, and I for one will look forward to reading the results of these further studies, also.
Michaels, Marian G, Joel Frader, and John Armitage , "Ethical Considerations in Listing Fetuses as Candidates for Neonatal Heart Transplantation," Journal of the American Medical Association, January 20, vol. 269, no. 3, pp401-403.