Material Incentives and Voluntary Blood Donor Supply

Introduction: The Law of Supply and Prosocial Behavior

The law of supply in economics states that, all else unchanged, an increase in the price of a good or service will increase the quantity supplied. The quantity supplied is the level of supply that producers are willing to bring to the market for sale. Suppliers are assumed to be rational, meaning they seek to maximize utility for themselves. As such, they will supply more of something if they expect to receive a higher price for it. However, does the law of supply apply to prosocial activities such as blood donation?

The World Health Organization in 1975 passed a resolution encouraging countries to target 100 percent voluntary non-remunerated blood donations by 2020. This meant filling blood banks with donations collected from unremunerated volunteers. However, developed nations such as the United States have begun offering material incentives to blood donors to encourage more people to donate blood to national blood banks. The incentives offered include gift cards, cash, community service credits for minor offenders, ticket vouchers, blood assurance program memberships, and paid time off work (Abolghasemi et al. 10).

Based on the law of supply, one would expect the supply of donors to increase with the introduction of material incentives. However, findings from conducted studies show that cash incentives discourage seven percent of donors from donating again, while other incentives discourage nine percent of donors from returning (Abolghasemi et al. 10). Studies conducted to compare findings from different locations found that the introduction of monetary incentives reduced the supply of donors at religious sites by almost half and increased donor supply in schools and universities, although the increase was minimal (Abolghasemi et al. 10).

Case Study Questions and Findings

Blood donors in the US receive a number of material incentives for their donations. The most common ones include opportunities to win prizes such as vehicles and television sets, event and movie tickets, branded t-shirts, blood credits, cash, paid time off work, and blood assurance program memberships (Abolghasemi et al. 10). Items of appreciation, such as t-shirts, are the most common incentives for blood donors in the US, while cash is the least common (Abolghasemi et al. 10).

Generally, the introduction of monetary rewards reduces the supply of voluntary blood donors. Cash incentives reduce the number of voluntary blood donors returning for another donation by 7 percent, while other incentives reduced blood donor supply by at least 9 percent. The greatest decline in supply was reported among donors at religious sites, where the introduction of incentives discouraged approximately 50 percent of voluntary donors from returning.

International Evidence on Incentives and Donor Behavior

Studies conducted outside the US have yielded varying results. Mellström and Johannesson (845) conducted a study to determine the effect of monetary incentives on the supply of Swedish blood donors. Participants were divided into three groups: those in the first group received no incentives to donate; those in the second group received a cash incentive of $7; and those in the third group could choose between donating $7 to charity and receiving a cash incentive of $7. The findings showed no significant differences in supply across the three groups for male participants. For female participants, however, the introduction of incentives reduced the supply of blood donors by almost half (Mellström and Johannesson 861).

In another study carried out in the United Kingdom, researchers divided 10,490 blood donors into three categories. The first category received free cholesterol tests, the second received a lottery ticket, and the third received no incentives (Goette and Stutzer 12). The study found no evidence that the introduction of material incentives crowded out blood donations. The findings showed that the free medical test alone had an insignificant effect on blood donations, while receiving a lottery ticket effectively increased the supply of voluntary blood donors (Goette and Stutzer 12). The study thus concludes that incentives did not crowd out blood donations as widely suggested in the literature.

Intrinsic Motivation and the Crowding-Out Effect

To explain the negative relationship between material incentives and blood donor supply, researchers invoke the psychological concept of intrinsic motivation. Intrinsic motivation is a developmental psychology concept referring to behavior driven by internal satisfaction and enjoyment rather than external elements such as rewards or external pressures (Thomas 48). Blood donors choose to donate blood out of an altruistic motivation to help others. As such, blood donation is a prosocial activity (Abolghasemi et al. 11). The primary reason people engage in such activities is to be regarded highly by society (Abolghasemi et al. 11). Material incentives, however, undermine this altruistic motivation by commercializing the act of blood donation (Abolghasemi et al. 11).

In doing so, incentives undermine the very foundation of prosocial acts, in turn discouraging individuals from participating (Abolghasemi et al. 11). For individuals engaged in prosocial activities, the behavior of other agents in society is crucial. Individuals may only be willing to engage in prosocial activities if they perceive other agents to be selfless (Abolghasemi et al. 11). The introduction of material incentives may be perceived as an act motivated by selfish goals, which can discourage voluntary blood donors from contributing (Abolghasemi et al. 11).

The differences are most likely due to variations in the levels of intrinsic motivation between donors in schools and those at religious sites. Donors at religious sites are typically older and are more likely to perceive material incentives as a means for other parties to pursue selfish gains. As such, they are likely to find incentives unattractive. Donors in schools, on the other hand, are mostly young and are more likely to respond positively to incentives (Abolghasemi et al. 10).