Wednesday, September 06, 2006



A new Reason Magazine article talks about the "grey market" of goods. Specifically, they talk about ovas. Although you don't have online access to the article yet, I think you can get your hands on a free sample or article here.

So, I was thinking about the market for human organs and reproductive cells.

What about sperm banks? What is that market like?

Since there is apparently little problems with scarcity, how do they allocate the resources efficiently? Is it efficient? How does the pricing mechanism work to "clear" the market for sperm?

Has anyone ever seen anything on this?
Here's a little discussion by future pundit and core econ and an unusual discussion.

Quoting Chris: Since there is apparently little problems with scarcity, how do they allocate the resources efficiently?

There are always problems with scarcity. Even though a resource like sperm is apparently abundant, there are still trade-offs and choices to be made in obtaining it. Sperm is just very cheap compared to other goods. I don't know why we should expect it to be allocated inefficiently.
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Well, if there are no problems with scarcity (if it was something like air or sunshine), then we wouldn't need to worry about efficient allocation. In fact, we wouldn't have to worry about allocation at all, there would be "plenty to go around" no matter how much anyone "used".

But I would imagine that Jenna is probably right about sperm being scarce (for less verile men than myself anyways, ZING!). So it probably has to be "rationed" in someway.

However, I think you raise a good question. Is sperm allocated using market driven prices? I know sperm has a price, but is that price determined by the market?
I know this is a sticky subject (bah zing!), but I think there is only artificially created scarcity in this market, for a variety of reasons.

Of course there is scarcity, like all things that have a price. It just seems that it is rather abundant (given the variety of "capture" opportunities for someone so desiring this resource).

There are trade-offs, and price is not the only allocation tool.

We can talk about DNA preference, sexual risks, and control of the markets by the banks. All of these likely lead to a less than efficient market outcome, if such a thing exists...
There are several obvious sources of artificial scarcity in the market. First, the illegality of prostitution prevents women from simply paying a chosen donor and obtaining that person's sperm by the traditional method.

(Also, I assume potential donors would want a iron-clad contract stating that they would bear no paternal responsibilty. I would be surprised if such a contract is possible as long as prostitution is illegal.)

The fact that this method (however weird) is forbidden by government means that IVF, etc is more expensive.
I should sell while the price is high.
The article by future pundit makes me think of Gattaca. I like the idea that more information can be gleaned from the human genome, but there are scary places that society could take that information.

The Handicapper General would have a heyday with that kind of personal information about her subjects.

And Travis, I wouldn't stake your future financial security on the DNA market. I think the suppliers of the genetic material in question aren't compensated so well. I've always been under the impression that male donors all get paid the same, regardless of the quality of the material. Kind of odd that a MD and a garbage man get paid the same.

Any guesses as to why?
"I've always been under the impression that male donors all get paid the same, regardless of the quality of the material."

I hope your impression is wrong, Jenna, because I was banking on being in demand. Oh well. I always have my career as a professional rap artist to fall back on. Do you know of any way to verify your assertion? Do we know anyone who has sold sperm in the past?

Apparently, selling sperm is harder than one would think. According to, up to 95% of potential donors are disqualified for various reasons.

So, bankable sperm actually are scarce - in more than just the economic sense of the word.

eHow explains that donors are paid $35 to $900, but doesn't explain what causes the variation in payment. (Hopefully, it's somehow tied to the demand from the banks customers.)
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