Thursday, November 21, 2013

Infant Farming

Noah Smith shared my MIE post on selling babies to Twitter. Adam Blackstone objected to my proposition:
The argument he's making is this: prices send information to both buyers and sellers. People who know they can earn a profit by selling children have an incentive to increase production. Ex ante, producers (in this case, biological mothers) have little in the way of quality control and can produce lemons, for lack of a better term. In the agricultural industry, farmers can turn bad lemons into lemonade. There is no such mechanism for dealing with unsaleable children. Indeed, some kids might be so rotten that producers would have to pay adoptive parents to get their surplus inventory out of the warehouse.

Blackstone is dead on the money with this observation. Children are heterogeneous. To clear the market, so to speak, prices would necessarily have to be tailored to the product on offer. It would be more like a market in cut gemstones than one in rubber bands. And yes, some prices might have to be negative.

It's this price heterogeneity I think that would be fatal to my idea. It would be sufficiently unfair that certain types of children would sell for a hefty premium while others would be negative price duds, that well-intentioned folks would organize politically to shut down the venture before it ever started. The problem isn't that prices couldn't adjust to match children to homes, it's that voting constituents object to using the price system efficiently.

So okay, that's one thing. That's for children bred for the purpose of being sold. But does this same logic apply to surrogacy? Why or why not?

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Do you have suggestions on where we could find more examples of this phenomenon?