European Economic Perspectives 28

Brave New World?

With human cloning seemingly just around the corner, to what extent will market forces create an incentive to use this new reproductive technology and what are the likely economic consequences? Gilles Saint-Paul speculates about these issues in CEPR Discussion Paper No. 2674 (January 2001). He suggests that there will be strong incentives to clone people of exceptional labour market value – top entrepreneurs, surgeons and scientists. But the extent to which the market ‘internalizes’ this economic value will depend on how much of the return to the clone’s genes can be appropriated by the people who invest in creating the clone, notably the clone’s original model.

If clones are treated as products, they could be patented, effectively enslaved. Those who fund production of the clones could then reap all the returns to their genes by forcing them into high return occupations and expropriating their income. But as human beings, clones are likely to have the same civil rights as other individuals. They could then appropriate all the returns to their genes, reducing the incentives for cloning.

But as Saint-Paul points out, there are alternative mechanisms for appropriating the value of clones. One is ‘information retention’: a cloning firm could buy some DNA from a top ability individual and produce a clone about which the model knows nothing. Then when the clone reaches his legal majority, the firm would sell him information about the model. Learning that he is the clone of a top ability worker, he would be willing to pay substantial amounts to know whether he is the clone of a violinist or a surgeon.

Clearly, such mechanisms are far weaker than slavery and they imply a level of cloning much lower than if clones were granted fewer rights than original human beings. But if clones’ expected incomes are very large, they may make cloning a profitable operation even at relatively low levels of appropriability, thus creating a market. Saint-Paul analyses the likely outcomes once that market has emerged. His results suggest that only the most talented people will be cloned, while women at the bottom of the ability distribution could increase their income by acting as surrogate mothers for the clones. This implies that in the short run, cloning reduces inequality.

What about the long-run consequences? These depend on both fertility and how children’s abilities are related to their parents’ abilities. If fertility is uncorrelated with ability and if the ability distribution among natural children is the same as among their parents, cloning leads to a situation where everyone is top ability and cloning eventually disappears. If the distribution of genes, rather than abilities, is preserved by sexual reproduction, then cloning eliminates ability-reducing genes but does not necessarily eliminate inequality. But if fertility is negatively correlated with ability, cloning eventually produces a two-class society, with top ability people who are typically cloned and bottom ability people who form a reproductive caste.

This final scenario is the opposite of that described in Aldous Huxley’s Brave New World, where clones are at the bottom of society. Rather, clones are made from an elite, who sell their precious genes to the market. The explanation is simple: the value of cloning is highest for top ability people, and this maximum value determines the market price for clones. More fundamentally, there is no economic value in producing low ability people via cloning rather than by standard means.

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