Financial incentives for kidney donation: A comparative case study using synthetic controls

Although many commentators called for increased efforts to incentivize organ donations, theorists and some evidence suggest these efforts will be ineffective. Studies examining the impact of tax incentives generally report zero/negative coefficients, but these studies incorrectly define their tax variables and rely on difference-in-differences despite likely failures of the parallel trends assumption. We identify the causal effect of tax legislation to serve as an organ donor on living kidney donation rates in the U.S. states using more precise tax data and allowing for heterogeneous time-variant causal effects. Employing a synthetic control method, we find that the passage of tax incentive legislation increased living unrelated kidney donation rates by 52 percent in New York relative to a comparable synthetic New York in the absence of legislation. It is possible that New York is unique, but our methodology does not allow us to measure accurately effects in other states.