Academically speaking, Roth is a pioneer of so-called market design: finding situations where a market is failing — often, a place that most people wouldn’t even recognize as a market — and making it work better. Roth has influenced a cadre of young, energetic market designers, many of whom have taken up prominent positions at top universities. Inspired by Roth’s work, these rising economists are also setting their sights on real-world problems. Some are looking at dating websites; others are interested in how universities could do better at scheduling their students’ classes. Like Roth, all of them envision a world in which economists, as unlikely as it may seem, are recognized as society’s mechanics.Michael Giberson at the Knowledge Problem blog makes a point worth remembering with regard to market design,
Sitting in his office last week, Roth talked about how it was time for economics, as a field, to turn a corner — how merely describing markets as they naturally occur was no longer enough. Instead, he said, economists have to make themselves useful by fixing broken systems in which people aren’t getting what they want.
Roth had noticed instability in the National Resident Matching Program, and soon started seeing it all over the place. In 2003, he helped redesign the process by which kids were assigned to schools in New York, making it more likely that kids were sent where their parents wanted them to go. A few years later, he repeated the trick in Boston, and around the same time, he helped establish the New England Program for Kidney Exchange. He has also helped redesign the job markets for gastroenterologists and economists.
It’s not always easy, bringing economics into the real world like that. Bureaucracy gets in the way a lot, and so do political pressures. But as Roth has learned over the past decade and a half, sometimes the biggest hurdle is that the people he and his fellow economists are trying to help are not totally eager to be helped. People tend to be a little territorial about their problems, Roth said, and they don’t always understand why someone who works at a business school is sticking his nose in. At his first meeting with officials from the Boston public school system, Roth recalls, an administrator asked whether he and his fellow academics knew what they were dealing with.
“We’ve given our spiel, and in the question and answer session, one of the guys says, ‘Professor, you know, the school system is...complicated,’ ” Roth recalled. “His point was there are lots of details in a school system — that it’s not some abstract thing.”
That kind of skepticism is just par for the course, Roth said: People have pretty fixed ideas about what economists do, and some of those ideas don’t really apply to him and his fellow market designers.
Roth’s most recent project is helping to set up a nationwide kidney exchange, which would make it possible to find even more matches than the existing regional networks can find on their own. Running this national network has been a bureaucratic nightmare, and since it opened for business last fall, only two transplants have actually been carried out under its auspices. The problem is that depending on blood type, it can be hard or easy to find someone a compatible kidney. And when a hospital has an easy-to-match patient, its administrators are more likely to withhold that information from the other hospitals in the network because they’d rather do the transplant themselves, and get the business.
But this practice hurts the system, and ultimately cuts down on the number of transplants that get done. The way to fix it, Roth argues, is to assure hospital administrators that they will be given credit down the line for every transplant they give up as a result of sharing information. “Many of them will not understand right away, and we’ll have to say it louder,” he said.
Some market-oriented people will react negatively to the idea of “economists … as society’s mechanics,” but the negative reaction is based on a misunderstanding. Roth is no central planner. The point is to rework organizations so that participants in those organizations can more effectively achieve their goals.