Alvin Roth on 'Repugnant Markets': Why Banned Transactions, From Kidneys to Prediction Bets, Persist and Matter

Alvin Roth, the Nobel Memorial Prize–winning economist, is urging policymakers and the public to take seriously the idea of "repugnant markets"—exchanges that many people would willingly engage in but that broad social sentiment deems unacceptable and therefore illegal. In a recent interview with Reason's Nick Gillespie, Roth used several contemporary examples to show how prohibitions can create or perpetuate suffering, often far beyond their intended moral protection.

Roth began with the most visceral example: kidneys. Tens of thousands of Americans with end-stage kidney disease spend years waiting for a viable transplant, which are rare and mostly come from deceased organ donors or patients' family members. But as Roth put it, "there's not really a shortage." "You have two. You only need one. There's a failure of price mechanisms," he said. If people were permitted to sell kidneys, Roth argues, those in need could buy extra organs from willing sellers and waitlists—and the associated deaths—would decline dramatically. Under current U.S. law, however, the kidney trade is taboo and banned, a prohibition Roth classifies squarely as a repugnant-market restriction.

Roth defines repugnant markets as those made up of transactions "that some people would like to engage in, and other people who aren't obviously harmed by [them] think they shouldn't be allowed to." When the latter group prevails, governments typically step in to shut down the market. That intervention, Roth warns, can yield a range of unintended consequences. He points to the continuing illicit heroin trade as an extreme case: "I'd love to eliminate heroin entirely," says Roth, "I'm happy to concede that heroin is immoral." But, he adds, decades of criminalization have not eliminated demand; instead they have produced a violent black market that contributes to overdose deaths, community disruption, and lost human welfare.

The debate extends beyond drugs and organs. States have recently moved to restrict prediction markets—platforms where users bet on the outcomes of events—on the grounds that they constitute gambling. Last Monday, Gov. Tim Walz (D–Minn.) signed a bill banning prediction markets like Kalshi and Polymarket in his state. Under the new law, anyone caught hosting, advertising, or assisting in the operation of a prediction market could be charged with a felony. Supporters of such bans argue that gambling is a vice that can destroy lives, but Roth notes the possibility of unintended effects: former users may migrate to unregulated bookies or offshore platforms that offer less consumer protection and greater risk.

For Roth, the central policy question is how to weigh moral concerns against tangible harms produced by prohibitions. Banning transactions that would otherwise be voluntary exchanges often creates losses in human welfare—lost lives when organs are inaccessible, dangerous black markets when drugs are prohibited, and precarious alternatives when legal platforms are shut down. To overcome those losses, he says, a repugnant market must gain not only legal authority but also broad social support. That dual legitimacy helps ensure the market both remains lawful and attracts enough participants to function.

The path from taboo to acceptance is not unprecedented, Roth observes. Social views and legal regimes that once forbade gay marriage have shifted dramatically: early public favorability for same-sex marriage lingered below 30 percent into the 1990s, yet today same-sex marriage is legal and broadly accepted across the United States, with opposition under 30 percent according to Gallup. Technology can also alter the practical landscape for contested practices—Roth cites abortion pills as an example of how new modalities can change access and social experience following the Supreme Court's Dobbs decision.

"Like a lot of things," he says, the consensus-building process "moves slowly." Yet Roth cautions that the end of that process can arrive suddenly. Changes that once seemed politically impossible or morally unacceptable can become normalized when enough people shift their views or new institutional arrangements reduce harms. The question for policymakers, then, is whether current prohibitions are actually protecting social welfare or merely displacing harm into harder-to-control forms.

Roth's analysis does not prescribe immediate legalization across the board. Instead, it reframes the issue: for each controversial practice, society must weigh moral reservations against measurable consequences. In some cases, such as organ shortages, the costs of prohibition can be quantified in lost lives; in others, like prediction markets, the trade-offs involve risks to consumers and the integrity of civic discourse. Whatever the realm, Roth emphasizes that discussions about repugnant markets should be grounded in both ethical considerations and empirical evidence about the harms and benefits of prohibition versus regulated legalization.