Business

Nobel Prize winning economist to speak at University of Iowa

Economist to talk about who gets what

Alvin Roth

Stanford University
Alvin Roth Stanford University

IOWA CITY — Alvin Roth is a match maker. And while he may not help singles find love, he does use economics to solve real problems — helping school systems be better at matching students with schools and even spearheading a system that pairs those in need of a kidney with a compatible donor.

Roth, winner of the 2012 Nobel Prize in Economics, will visit the University of Iowa Sept. 17 and 18, and give a public lecture at 3 p.m., Sept. 18, in the Pappajohn Business Building.

The Stanford University economics professor’s work revolves around matching markets — in which price alone can’t be the only deciding factor, such as in the labor market, in which job seekers must apply, be interviewed and be selected by an employer.

“You can’t just choose what you want. You have to be chosen,” Roth explained. “the University of Iowa can’t just raise the tuition enough until only the right amount of students who can afford to go matches the number of seats.”

His new book, “Who Gets What and Why,” looks at these types of markets — from applying to college to being asked out on a date — and he plans to discuss how people can better understand these markets and participate in them, he said.

It’s that interest in matching markets that allowed him to design widely used systems such as matching medical school graduates to residency programs.

Young doctors must go through a clearing house of sorts to be assigned to a residency program, he said, where the doctors go on interviews and ranked their top choices while the hospitals did the same. A program then matched the candidates to the hospitals.

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But the system that was in use since the 1950s — when there were no female medical school graduates — had become out of date. It didn’t take into account that couples would be graduating from the same class in the same year and could need two jobs in the same region.

“It was a complicated but very interesting problem,” he said.

So Roth and his colleagues helped redesign the system, which now matches about 18,000 graduates a year.

He also helped the New York City Department of Education design a program to match eighth-graders with the best high school choice. It’s a system that a handful of other large cities have adopted, including Boston, Denver and Washington, D.C.

“We had to make the system safe for parents,” he said, explaining that parents would rank their choices — but many times, if their child didn’t get his or her first choice, all the spots in the second choice would be full.

“Now your chance to get your second choice is the same as if it were your first choice.”

But it was Roth’s work behind the kidney exchange that got him the Nobel Prize. The exchange created an option for transplant candidates who have a living donor who is medically able but can’t donate a kidney due to incompatibility by pairing them with another couple in the same situation.

“People hope I have a touching human-interest story,” he joked. “But I got into it because of the mathematics.”

When Roth was first starting out his career, he read and was very interested in an article — co-authored by Lloyd Shapley, with whom he later shared his Nobel Prize — about how to trade indivisible goods when you can’t use money. Say that object is a house, he suggested, and you only can barter to get the house I want — how would trade work?

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Later in life he took a teaching job at the University of Pittsburgh, which has a large transplant center, and he started thinking about that theory in which a kidney was the object that needed to be traded rather than a house.

The first U.S. paired kidney exchange took place in Rhode Island in 2000, Roth said, which further interested him, and he started thinking about a kidney exchange on a larger scale. He then worked to put that theory into practice, which was difficult, he said.

“We wrote a paper and sent it to many surgeons,” he said. “Only one responded.”

Roth had a lunch meeting with the surgeon from Massachusets General Hospital and that lead to the New England Program for Kidney Exchange.

“It caught on after that,” he said.

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