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Published on 12/18/2019 additional information available

One of the year''s most important studies on poverty

#increased since 1995
#economist Benjamin
#National Living Donor Assistance Center’s (NLDAC)

Happy week! Here are some things that have been rolling around in my brain this week.


1) One of my most-anticipated research papers of the year — one I wrote about in this newsletter all the way back in May —  is finally out. David Brady of UC Riverside and Zachary Parolin at Columbia estimated changes in deep poverty (defined as living on less than 20 percent of median income) and extreme poverty (less than 10 percent of median) from 1993 to 2016. They found about 2.6 to 3.7 million people were extremely poor in 2016, and the number of people in deep poverty and the number in extreme poverty have increased since 1995.

This increase is concentrated in childless families, not ones with children. That complicates the argument that welfare reform (which mostly affected families with kids) increased extreme poverty. I wrote about this in a long explainer back in June.

You'll hear more on this from me on Future Perfect in the coming weeks.

2) In 1969, a backlash against the Ford Foundation's political activities and perceived pro-Democratic bias led Congress to crack down on foundations by increasing reporting requirements, capping the amount of stock they could own, limiting political activity, and requiring foundations pay out at least 6 percent (since reduced to 5 percent) of their endowment every year. 

University of Illinois economist Benjamin Marx has a nice paper showing that the 1969 reforms led to substantial reductions in charitable giving by foundations. The reforms appeared to have reduced abuses by foundations too, but they dramatically increased administrative costs, especially for foundations that had low overhead going into the reforms.
3) Michigan is weighing a bill that would offer a tax credit of up to $5,000 for kidney donors. This is actually a fairly common policy at the state level; a bunch of states, like New York and Wisconsin, allow you to deduct from your state income tax bill costs of travel, lost wages, etc. related to kidney donation; a few states, like Louisiana and Utah, offer a credit, allowing you to reduce your tax bill dollar-for-dollar.

The problem is that (a) deductions don’t cover the full cost for anyone and aren’t particularly useful and (b) non-refundable credits like the one proposed in Michigan, while much more useful, don’t cover the full cost for people with low income tax bills. They effectively exclude low-income people who want to donate.

A cleaner approach would be to just cover all related costs upfront. There are a few efforts underway to do that. 

The Trump administration issued an executive order that will expand the National Living Donor Assistance Center’s (NLDAC) ability to refund lost wages and other expenses; it’s currently stalling and hasn’t issued a regulation due on October 10, much to the frustration of many people in the kidney world. The National Kidney Registry, a nonprofit, has started reimbursing for lost wages too.

I’d also add that a $5,000 credit is way too little. The total amount of disincentives faced is closer to $38,000 per donor, per a recent paper.  A simple, if probably unrealistic, solution would have Medicare or NLDAC simply write a check for $38,000 to each donor. That would, per the paper, triple donations by living donors, adding 11,517 donations every year and cutting the waitlist in half.

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