WHO GETS WHAT—AND WHY

The co-recipient of the 2012 Nobel Memorial Prize in Economic Sciences introduces what he calls the new economics of matchmaking and market design.

Roth (Economics/Stanford Univ.; co-author: The Handbook of Market Design, 2013, etc.) is recognized around the world as a leader in both the theory and practical applications of matching. Different than profit-driven commodity markets, markets that make matches are fulfilling wants and needs that benefit individuals as well as society at large. “Money” he writes, “may play little or no role.” He traces the evolution of the kidney exchange system, which his work helped form, to identify how this approach has increased both the number of potential donors and matches with those needing new kidneys. Over time, solutions have been developed to deal with the associated logistical problems—e.g., surgery scheduling and operating facility availability. The author bases his economics on the application of mathematical algorithms designed to improve chances of making matches successfully. He discusses how he helped both the New York City and Boston school systems find ways to improve matching students with desired schools while minimizing strategizing and gaming of the systems. Another examples is the NCAA, which is in the process of using Roth’s methods to create improved methods for selecting participants in end-of-season bowl games that will better reflect actual national team rankings. The skills of the matchmaker are not necessarily a new phenomenon, but Roth’s case studies illustrate how problems that obstruct successful matches can be identified economically and overcome. Markets designed to be “thick, uncongested, safe and simple, and efficient” are the most effective, and the kidney exchanges provide the proof.

An exciting practical approach to economics that enables both individuals and institutions to achieve their goals without running afoul of the profit motive.