3 Takeaways - Why Doing the “Right Thing” Can Make Everything Worse (#316)

Episode Date: August 25, 2026

What can we do when doing the morally “right” thing produces worse outcomes?And what if some of society’s strongest moral instincts are preventing us from solving problems we all agree are terrible?Alvin Roth is a Stanford professor and Nobel Prize-winning economist whose work has helped redesign real-world systems, including kidney exchanges and the way doctors are matched with hospitals. His new book, Moral Economics, tackles a harder category of problems: markets and behaviors we find morally objectionable, even when banning them may create consequences we don’t want.He discusses:Why nearly 100,000 Americans can be waiting for a kidney What prohibitions of alcohol and heroin can teach us What happened when Rhode Island accidentally legalized indoor prostitutionWhether paying kidney donors could save lives without creating an ethically unacceptable marketWhy evidence becomes especially important when reasonable people disagree about moralityWhether performance-enhancing drugs could eventually become as ordinary as coffeeSome policies sound obviously right when judged by their intentions. But what happens when you judge them by their actual consequences?Roth pushes into the uncomfortable territory between those two questions: when banning something creates a black market, when changing a rule may save more lives than inventing a new technology, and what we should do when the outcome we believe is morally necessary turns out to be something we cannot actually achieve.

What if one small change could save thousands of lives? Hi, everyone. I'm Lynn Toman, and this is three takeaways. On three takeaways, I talk with some of the world's best thinkers, business leaders, writers, writers, politicians, newsmakers, and scientists. Each episode ends with three key takeaways to help us understand the world and maybe even ourselves a little better. Today, I'm delighted to be with Alvin Roth.

Al received the Nobel Prize for work that has helped save thousands of lives through kidney exchange. He's a professor at Stanford and his latest work and new book, Moral Economics, explores some of society's hardest questions. When should we ban something? When should we regulate it? And when did the rules themselves become the problem? Al, welcome to three takeaways. Thank you.

It is my pleasure to have you as a guest. There were two families, each desperately wanted to save someone they loved. Each had a willing kidney donor, and yet neither transplant could happen. And then you realize something that changed thousands of lives. Tell us that story. If someone you know has kidney failure, which is fatal, it's possible to, give someone you love a kidney because healthy people have two kidneys and can remain healthy with one. But kidneys have to be well matched to the patient. So you might be healthy enough to give

someone a kidney and willing and ready to do so, but you can't give a kidney to the person you love because your kidney doesn't match them. Kidney exchange in its simplest form would have me give a kidney to your patient and you give a kidney to my patient so that each patient can get a compatible kidney, a well-matched kidney from another patient's intended donor. And that's a simple idea that was floating around for a while. But only in the year 2000 did an American hospital do the first United States kidney exchange. And after that, my colleagues and I helped figure out ways to scale that up so it could involve lots of hospitals all around the country and big chains of exchanges. So phenomenal. So you didn't invent a new way of treating patients with

kidney failure, you essentially redesigned the system. Yes. Close to a million Americans and even more around the world suffer from kidney failure. Many are waiting for a kidney transplant and thousands or tens of thousands die every year. Why aren't there enough kidneys for transplant? Well, that's a good question. There are 130,000 new cases of kidney failure each year in the United States, but we only do 30,000 transplants. And in the U.S., that's due to the real shortage of kidneys. And when economists see

long lines of people, you know, there's almost 100,000 people on the waiting list to receive a deceased donor kidney, when we see the long lines of people waiting for scarce resources, we suspect that prices aren't being used to increase the supply. And indeed, that's the case. It's against the law almost everywhere in the world to pay a kidney donor for a kidney. So there aren't as many as there could be. One thing that strikes me about your work is that you don't try to change people. You change the rules. Is that the real lesson? Well, rules are important. I'm a market designer. That's the name that's been attached to the kind of economics, my colleagues and I do now. But market design grows out of game theory, the mathematics of rules and how they affect behavior

and how they determine outcomes in markets, for instance. So rules are very important. And Changing people is hard. Kidney exchange is one example, but you've also helped redesign the way new doctors are matched with hospitals and influence school admissions. Once you learn to look at the world this way, do you start seeing broken systems everywhere? There are lots of broken systems in the world, lots of markets that don't work as well as we would like. But they're going to be hard to fix because we can't agree on what we want those markets to do. So I think there are plenty of broken markets, but only a few that lend themselves to overhaul

in a way that can gather the necessary consensus to make them work better. What's really fascinating to me is that many people attribute many of our problems to bad people, but you're essentially arguing they're caused by systems that weren't designed as well as they could be. It's such an empowering idea that sometimes solving a problem doesn't require changing human nature. It just requires changing the system that people operate in. Our instinct is simple. If something is harmful, ban it. You believe that's sometimes exactly the wrong thing to do.

Why? One place where there's lots of agreement is that heroin and heroin addiction are harmful. We would like there to be no heroin. And in much of the world, including the United States, we have very tough laws about drug dealing. But there's a lot of heroin. It turns out we can't even keep banned drugs out of our prisons. So the chance that we can keep them off our streets by purely police and military means seems vanishingly small. So a ban doesn't necessarily eliminate demand.

Often it pushes an activity underground where there's less transparency, fewer protections, and greater opportunities for abuse. Absolutely. And, of course, we have experience of this in the United States with prohibition of alcohol. In the 1920s and early 30s, we prohibited the manufacture and sale of most alcoholic beverages. And that didn't work very well.

There was still lots of alcohol, but there were also criminal organizations, often violent criminal organizations that tried to control the market for illegal alcohol. And so in the 1930s, we reamended the Constitution to put alcohol regulation back to the states. And since then, alcohol has become legally available in most of the United States. There are still a couple of dry counties in a few states.

And legalizing alcohol has not solved all the problems of alcohol. We still have alcoholism and drunk driving and organizations like Alcoholics Anonymous that try to help people with alcohol addiction. So having the regulated market doesn't make everything work wonderfully with alcohol, which remains a complicated thing to consume. But one thing that has changed since the repeal of prohibition is you can no longer buy moonshine whiskey from gangsters. You now have to go to fancy liquor stores

and you buy scotch whiskey that was aged in American oak and is expensive. So we did get rid of the big support of organized crime that was supported by alcohol when it was prohibited. And of course, we're seeing that kind of organized crime associated with heroin and fentanyl and other addictive drugs today at an even bigger international scale. So the question isn't just, is this right or wrong? It's also what actually happens after we ban it. Absolutely. I'm perfectly willing to agree that heroin and its sale and use are wrong,

but we can't ban it as effectively as we would like. We've tried hard. And so one of the important principles of moral philosophy is that things that you are, morally obligated to do have to be things that you can do. I understand the argument that we're morally obligated to not have any heroin, but it turns out we're not able to not have any heroin. And so we have to think about what should we do, given that we can't completely eliminate heroin. One of the most surprising examples to me comes from Rhode Island, where indoor prostitution was accidentally legal for several years. What happened? Let me explain it a little bit.

How do you accidentally legalize prostitution in a state? And the way they did it was they revised their ban on prostitution. And in the ban, they inadvertently characterize prostitution as streetwalking, as outside solicitation. For a while after that, the police kept cracking down on massage parlors that were actually brothels, things like that. But then one of them went to court with a lawyer who said, we don't dispute that an undercover policeman was offered sex at the massage parlor that he investigated, but read the law. It's not against the law. It's indoors. There was no street solicitation. It took six years for Rhode Island to change the law. And so there was a period of time where it was well understood that indoor

prostitution was legal in Rhode Island. And two economists studied what happened compared to similar neighboring states like Massachusetts. And what they discovered, both sexually transmitted diseases and sexual assault went down when indoor prostitution was legal in Rhode Island. But not to worry, the Rhode Island legislature filled in that loophole, so indoor prostitution is no longer legal in Rhode Island. But the result was that violence and rape of women went down and sex increased. Yes, the market for purchasing sex increased. They judge this by looking at the newspapers and websites that support that market.

But sexually transmitted diseases and assaults went down. So you could argue that it was a good thing to have legalized prostitution in Rhode Island. But other people, including the legislators in Rhode Island, think that prostitution is morally wrong and ought to be against the law. And it once again is in Rhode Island. The lesson to me is whether or not someone approves a prostitution. It shows that policies can have consequences. is very different from what we expect.

And essentially, you're not asking people to approve a prostitution. What you're asking them to look at, honestly, is what different policies actually produce in terms of results. Right. Now, remember, in fairness to people who think prostitution should be illegal, there are other consequences that we might not have measured, not just sexually transmitted diseases and sexual assaults. I think the conservative view about being more permissive about markets is that we're at a delicate social equilibrium that we don't understand very well.

And relaxing some of the guardrails might lead us onto a slippery slope that will cause society to dissolve some of its boundaries and lead us to live in less desirable societies than we would like. These issues are definitely not as black and white as most people assume. When people first hear the idea of paying kidney donors or paying for organ donation, their reactions are absolutely not. But this is a market that you know well, you've studied well. How do you think about paying kidney donors? We have this persistent, vast shortage of kidney transplant. So, as I said, there are 130,000 new cases of kidney failure each year in the U.S.

There are half a million people on dialysis in the U.S., but we only do fewer than 30,000 transplants a year. So I'm in favor of experimentation. And one way to experiment is to try with limited legislation giving some donors more incentive to donate. So there's an act being introduced into Congress this year with the sort of grand name of the End Kidney Deaths Act. But it actually has pretty modest aims. What it says is presently there are about 500 non-directed donors of kidneys each year in the United States. A non-directed donor is someone who wants to give a kidney to someone and doesn't care to whom

it goes. So purely altruistic act, they donate anonymously. And they're very effective in starting long chains of kidney exchange transplants. So they do a lot of good. And what the End Kidney Deaths Act says is, why don't we, as an experiment for a 10-year period give each non-directed donor an income tax credit over a period, I think, of five years to thank them for and to make it easier for them to do this very good thing. And if the number of non-directed donors went from 500-some odd a year to 700 some odd a year, that would first

all be very good. It would save a lot of lives. And second, it would show that this is a market that we can address the way markets are often addressed by letting prices work. So I would find that very encouraging if it happened. Al, what are the three takeaways you'd like to leave the audience with today? The first is that to work well, markets need social support. The second is that to work well, bans on markets also need social support. And without social support, bans on markets can give rise to active black markets run by criminals. And the third is that lots of discussions that are framed in moral terms are about things that we don't really know how to achieve. And so we actually are compelled to consider the tradeoffs among the different ways we might fail to achieve what we

would like. And that changes many discussions from moral contests to practical considerations of consequences for which we need to gather evidence, do experiments, make observations. Your three takeaways are not what I was expecting. What I was expecting, sometimes changing a rule can save more lives than inventing a new technology. Second, we should judge policies not only by our intentions, but by their consequences. And third, when good people disagree about difficult moral questions, experiments and evidence is the best place to begin. I would say the first two of those are so much a part of. the way economists think that I don't think of them as novel takeaways. But the third one that you just said, that when people disagree over moral consequences, experiments are important in

evidence, I think that's very much related to my third takeaway, because often people say, I don't need evidence to talk about what's moral and not. Thank you, Al. This has been wonderful. I really enjoyed your book, Moral Economics. Well, thank you. I enjoyed writing it. If you're enjoying the podcast, and I really hope you are, please review us on Apple Podcasts or Spotify or wherever you get your podcasts. It really helps get the word out. If you're interested, you can also sign up for the Three Takeaways newsletter at Three Takeaways.com, where you can also listen to previous episodes. You can also follow us on LinkedIn, X, Instagram, and Facebook. I'm Lynn Toman, and this is Three Takeaways.

takeaways. Thanks for listening.