Review of Who Gets What - And Why
Marketing and Business Administration
Alvin E. Roth is the Cupid of economics in his book Who Gets What - And Why. Scientific validity has always plagued economics, and Roth seeks to quantify the scientific value of economics in a particular market he excels at; matchmaking. Roth does an excellent job describing what makes markets function well, what hinders them, and how market design matters, all while creating an interesting read.
Of all the economists in the field, Roth appears to be the most qualified to talk about designing and modifying markets. Who Gets What - And Why follows a similar pattern to other books on economic theory, such as beginning with an anecdote from Roth’s career, which then carries into memoirs about markets Roth successfully managed. The book can be divided into four parts, with the first giving a background on what markets work, as well as an introduction to failed market models, and how Roth made broken markets work. The second section covers what makes models fail, according to the author. Roth justifies his view, mostly that markets fail due to perceived risk, by giving incredible real-world examples such as how football conferences were chosen in the past. Third, Roth covers what can be done to fix markets, citing issues as well as potential solutions. In this section, Roth proves himself as an economist by discussing solutions he and others implemented to solve problems in different markets, from matching students with residencies to matching kidney donors with those in need. In the final section, Roth details social problems to consider when dealing with markets as well as the issue of free markets.
Free markets pose an interesting question for someone who specializes in making markets work, but the author provides an excellent answer. According to Roth on page 226, markets, “...need effective rules in order to work freely.” Along with that quote, Roth also includes the caveat that, though markets might need regulation, public entities often do a poor job regulating them because good market designs are constantly moving targets. A popular alternative to regulation is to let private companies and the market decide, but as is seen in Roth’s example of judges’ and doctors’ intern programs, letting the market regulate itself can fail too. As a result, there is a need for economists, and society as whole, to recognize and fix issues in markets. However, I disagree with Roth on this point. Roth admits that many of the issues that arise in markets come from established traditions or methods not adapting with change. I understood this to mean that if markets remained unrestricted by old traditions and ideas, then there would be no need to restructure markets. Roth’s idea that markets need fixed rings true to me, but his method of fixing is treating the symptoms of a restricted market, not a cause. While Roth’s ideas might not be against the idea of free markets, they, at first glance, do not address why the market is not free in the first place, but Roth gave two examples where tradition was to blame for the issues in markets. Regulation does not always arrive from public entities imposing restrictions. After realizing that tradition, was to blame for congestion in markets, it seems truly free markets might never exist because tradition has always existed, and likely will always exist, and validates the role economists have in trying to fix markets. As a result, when Roth attempts to guide markets, which consists of placing rules on and restricting markets, he is not working against economic freedom, rather working on reducing the impact of restrictions that may never go away.Who Gets What - And Why was an interesting read that created a new insight into markets. Roth’s anecdotes were intriguing, and his ability to relate the economic principles he discussed to current events was refreshing. Whenever an economist claims to know how to fix a market, I get a little nervous. In the case of Roth’s book, there was no such nervousness. His background lent him authority on the subject, and he limited himself to matching markets, not complicated global markets. Something that I particularly appreciated was Roth’s acknowledgement that computers and the introduction of the Internet into markets has significantly impacted the markets. Perhaps my appreciation comes from being younger than the Internet, but Roth’s analysis and theories about markets in a digital age was fascinating and insightful.