Kidney Donations

This new published paper by Fernandez et al., investigates the relationship between cadaveric kidney donations and living kidney donations. They authors explain:

Transplantation is notable for the degree to which resources are allocated via administrative rather than market mechanisms. However, non-monetary incentives still permeate the system. Using instrumental variable regression, we estimate the substitution patterns between cadaveric and living kidney donations in the United States from 1988 to 2008. On average, a decrease of two to five cadaveric donations causes living kidney donations to increase by one. Disaggregating living donors into blood-related and non-blood-related donors, the strongest effect is found among non-blood-related donors known to the organ recipient. A 1% increase of cadaveric donations decreases living donations from this group by 1.54%. 

Instrumental variable 

Currently, the organs market is regulated such that trades take place at the price of zero. For a market to exist at this price there needs to be a population of altruistic individuals willing to donate. Therefore, both living and cadaveric donations are positively correlated with altruism. The potential of an econometric bias when estimating the effect cadaveric donations on living donations exists because altruism is unobserved by the econometrician. Failing to control for altruism may lead researchers to conclude that the number of living donors and cadaveric donors are positively correlated. We propose using traffic safety laws as instruments for the supply of cadaveric donors. Many of these laws are initially adopted by states because the federal government tied federal highway maintenance/construction funds to these laws. Therefore, these laws were neither adopted to affect altruism levels in the state, nor to manipulate the supply of cadaveric/living organ donors.

The paper can be downloaded here.