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The Business of Babies
by Debora L. Spar We prefer to think of babies as cuddly bundles of joy, but they are also products at the center of a multibillion-dollar market in adoptions and scientific conception, a market that few people acknowledge and that functions like no other. "Morality surrounds this market to such an extent that some observers suggest it can't become a commercial business,". "I think this is wrong. The demands of the parent will outweigh political and moral opposition." However, those who want to succeed in the market need to fight to shape property, privacy, and contract laws. It's also a business that many people wish not to see. "We have a business that doesn't feel like a business,". "Nobody wants to acknowledge the extent of commercialization." Yet Americans alone spent $2.7 billion on fertility treatments in 2002. Procedures such as egg and sperm donation, in vitro fertilization (IVF), surrogacy, and adoption demand payments of $10,000 and up. The largest demand in this market consists of infertile couples. Last year, some two million U.S. couples underwent fertility treatments. Additional demand includes same-sex couples, those at risk of passing on genetic defects to their children, single parents, fertile adopters, and "gender selectors" who want a baby boy (or girl) at any cost. "We're not talking about demand for potato chips,". "This is the kind of demand that becomes an obsession. Price is less of an issue than it is in other markets." There are both low- and high-tech supplies of children. With ten million AIDS orphans in Africa and more than 500,000 U.S. children in foster care, the vast number of children available for adoption is the most obvious "low-tech" solution to satisfy demand. However, this availability is complicated by racial preferences (most people want children who look like them), information asymmetries (such as white couples who adopt Chinese babies), and international restrictions and legislation concerning adoption. High-tech measures include IVF, artificial insemination, surrogacy, gamete interfallopian transfer (GIFT) in which the sperm is injected directly into the fallopian tube, preimplantation genetic testing (PGD), in which fertilized eggs are tested for defects before being implanted in the uterus, and, on the extreme end, cloning. A market unlike any other But while there is a clear market here, everyone involved will insist it isn't so." Eggs, for example, are said to be "donated," yet donors are paid according to the desirability of their physical and mental qualities—at least $2,500, but sometimes much more. Sperm donations normally fetch $200 to $300. Despite the classic components of supply, demand, advertising, and differentiation, this market does not function normally:
Another determinant of success in this market is the ability to sell—and deliver on—hope. Providers are selling the promise of a child, the dream of a family, but at some point they have to come through. Privacy is a factor as well. "This is an intimately personal transaction, yet in many instances, people don't want to be involved with the ultimate suppliers. It's a market suited to intermediaries such as brokers, lawyers, and agents." The emphasis in donor profiles on intelligence and physical attributes also raises the specter of eugenics, the science of creating a superior race through selective genetics. In order to succeed, providers will have to walk a fine line between making the customer happy and avoiding controversy.
You can't be politically naïve and do well in this business.
About the Author Debora L. Spar is a professor at Harvard Business School, where she works on issues of business-government relations and the political environment of international commerce.
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