There Will Be Blood

Economists often reduce complex motivations to simple functions such as profit maximization. Writing in The Economist, Buttonwood ably criticizes such simplifications. Buttonwood is too quick, however, to conclude that simplification falsifies. For example, Buttonwood argues:

If there is a shortage of blood, making payments to blood donors might seem a brilliant idea. But studies show that most donors are motivated by an idea of civic duty and that a monetary reward might actually undermine their sense of altruism.

As loyal readers of this blog know, however, the empirical evidence is that incentives for blood donation actually work quite well. Mario Macis, Nicola Lacetera, and Bob Slonim, the authors of the most important work on this subject (references below), write to me with the details:

The decision to donate blood involves complex motivations including altruism, civic duty and moral responsibility. As a result, we agree with Buttonwood that in theory incentives could reduce the supply of blood. In fact, this claim is often advanced in the popular press as well as in academic publications, and as a consequence, more and more often it is taken for granted.

But what is the effect of incentives when studied in the real world with real donors and actual blood donations?

We are unaware of a single study of real blood donations that shows that offering an incentive reduces the overall quantity or quality of blood donations. From our two studies, both in the United States covering several hundred thousand people, and studies by Goette and Stutzer (Switzerland) and Lacetera and Macis (Italy), a total of 17 distinct incentive items have been studied for the effects on actual blood donations. Incentives have included both small items and gift cards as well as larger items such as jackets and a paid-day off of work.  In 16 of the 17 items examined, blood donations significantly increased (and there was no effect for the one other item), and in 16 of the 17 items studied no significant increase in deferrals or disqualifications were found.  No study has ever looked at paying cash for actual blood donations, but several of the 17 items in the above studies involve gift cards with clear monetary value.

Although many lab studies and surveys have found differing evidence focusing on other outcomes than actual blood donations (such as stated preferences), the empirical record when looking at actual blood donations is thus far unambiguous: incentives increase donations.

Given the vast and important policy debate regarding addressing shortages for blood, organ and bone marrow in developed as well as less-developed economies, where shortages are especially severe, it is important to not only consider more complex human motivations, but to also provide reliable evidence, and interpret it carefully. The recent ruling by the 9th Circuit Court of Appeals allowing the legal compensation of bone marrow donors further enhances the importance of the debate and the necessity to provide evidence-based insights.

Here is a list of references:

Goette, L., and Stutzer, A., 2011: “Blood Donation and Incentives: Evidence from a Field Experiment,” Working Paper.

Lacetera, N., and Macis, M. 2012. Time for Blood: The Effect of Paid Leave Legislation on Altruistic Behavior. Journal of Law, Economics and Organization, forthcoming.

Lacetera N, Macis M, Slonim R 2012 Will there be Blood? Incentives and Displacement Effects in Pro-Social Behavior. American Economic Journal: Economic Policy 4: 186-223.

Lacetera N, Macis M, Slonim R.: Rewarding Altruism: A natural Field Experiment, NBER working paper.


Tyler, when will you auction some of your blood? What type of auction will you use?

Oops, make that Alex - or let's see who's blood is worth more :)

There might be a little room for nuance here. The studies referenced offer material incentives, but they are non-monetary. This leaves open an interpretive question: do people interpret this as payment for goods, or as a gift as a response to their donation? An extra day off of work can be interpreted as a reward for good samaritans. The cash value of the day off of work can be seen quite differently. As a simple example, if my friends help me move, I'll buy them beer and pizza as a thank you. I can even take them to a bar and pick up the tab. In each instance, I'm sure my friends could work out the precise dollar value of my thank you gift. But were I to just cut them a check, fully believing that they are more able to spend that money in a way that maximizes their utility than I can, they would be insulted. After all, the $15 or $20 it would be would just mean that I'm paying them minimum wage for their labor. The money turns it into a market transaction in a way that the gift with monetary value does not. The beer and pizza is still a thank-you gift. Even a gift card, which is just restricted money, can easily be seen as a gift rather than a payment. It's once there is real money involved that I suspect that market motivations start crowding out other motivations. See 'A Fine is a Price' by Gneezy and Rustichini for a nice field study of how this crowding out can last even longer than the monetary incentive is in place.

To be sure, your point extends the theory, but even still, isn't it nice to see empiricism making a comeback?

Why not give a slice and a pint for donating blood. I think you are on to something here Ryan.

While we are espousing the role of markets why not get more bang for your buck by going eastwards?

The $20 that buy you a pint in the US will probably buy you a Liter in China or a Gallon in India! Markets in blood arbitrage?

This. I am baffled that people who consider themselves serious economists can so casually dismiss the real motivational differences between cash money and rewards that are conspicuously not cash money. Gift cards are the same as cash? Gift cards wouldn't exist if they were the same as cash. Gift cards are very nearly proof of the hypothesis that an offer of cash can sometimes be percieved as having negative value, and certainly a clear indicator of where you should be looking for such an effect.

And if anecdote is not the singular of data it is sometimes nontheless persuasive. I lost track of my lifetime blood donations - voluntary, through the American Red Cross - somewhere around ten gallons, and I still donate almost every two months. I sometimes take advantage of the freebies, if they interest me. If they start offering cash, either they offer $150/pint or I stop donating.

"Black Death", below, seems to have found hard data on the subject without too much trouble. If Marcis et al, and for that matter Tabarrok, couldn't be bothered to do the same, that is anything but confidence-inspiring.

Appears that Macis replied below and you're comparing studies of apples to studies of oranges.

What's interesting is that all of these modified studies still scrupulously persist in calling them "donations" and the people "donors".

It'd be funny to see the impact of putting up a "We buy blood" poster and referring to the people as "sellers".....

Don't sell yourself short. Your friends highly value your company. That's why they would be insulted if you gave them $15-20 instead of taking them out for beer and pizza. They would be thinking, "The only reason we helped this guy move is because we wanted to hear his thoughts about what he read on Marginal Revolution over some beer and pizza!"

Is there really any need to choose between free blood and paid blood?
In Scania in Sweden where I donate blood, the donors can choose between different ways to be compensated. The choices are, if I remember right:
Not at all - for the altruistic
Money card - for those who want compensation
A gift with no connection to blood donations - for those who just want the appreciation
Gift that clearly states that you are a blood donor (like a t-shirt with a print) - for those who want to show other people that they are altruistic blood donors.

I always choose the first one cause I think that a gift reduces my altruistic act of blood donation. And even if it is very little money I see no reason to deplete the health care system of resources without reason. But other people are free to chose otherwise.
Everyone's happy, right?

That's sort of what I was thinking. Unpaid blood donation is equivalent to (1) donating blood in exchange for cash, (2) donating the cash, and (3) neglecting to take a tax deduction (in the US) for the cash donation. Thus, contrary to the quote, "We agree with Buttonwood that in theory incentives could reduce the supply of blood," altruism cannot even in theory cause incentives to reduce blood donations. *Irrationality* could cause incentives to reduce blood donations, but not altruism.

Is there really any need to choose between free blood and paid blood? In Scania in Sweden where I donate blood, the donors can choose between different ways to be compensated. The choices are, if I remember right:

Not at all – for the altruistic

Money card – for those who want compensation

A gift with no connection to blood donations – for those who just want the appreciation

Gift that clearly states that you are a blood donor (like a t-shirt with a print) – for those who want to show other people that they are altruistic blood donors.
I always choose the first one cause I think that a gift reduces my altruistic act of blood donation. And even if it is very little money I see no reason to deplete the health care system of resources without reason. But other people are free to chose otherwise. Everyone’s happy, right?

Rejecting the gift or cash can actually increase the good feelings of altruism.

"We are unaware of a single study of real blood donations that shows that offering an incentive reduces the overall quantity or quality of blood donations."


I found a few:

"The supply of blood donors decreased by almost half when a monetary payment is introduced."
Mellstrom C, Johannesson M. Crowding out in blood donation: Was Titmuss right? J Eur Eco Assoc. 2008;6:845–63.

"Our results indicate that offering money or cash-equivalent incentives (such as tickets to an event) may have a negative effect on blood safety and blood donor contribution."
Asian J Transfus Sci. 2010 January; 4(1): 9–13.

" Several economic and psychological studies have shown the same results and proved that incentives have negative effects on prosocial behaviors like blood donation.
Frey BS, Jegen R. Motivation crowding theory: A survey of the empirical evidence. J Econ Surv. 2001;15:589–611.
Ariely D, Bracha A, Meier S. Doing good or doing well? Image motivation and monetary incentives in behaving prosocially. Am Econ Rev. 2008;99:7–9.

This is our point about being careful. Our claim is on "actual donations." Mellstrom and Johannesson did not look at blood donations, but at whether someone would take a health test to qualify to become a donor. They do not report subsequent effects on donations. And it is worth noting that their results only are with regard to female college students. In their study, they found no effect overall, and no effect among men. NL, MM, RS

To me, the amount of compensation or gift would matter.

If you offer me $1 for something to participate - and it's something I've never participated in and have no familiarity with - I'm almost certainly not going to sign up and probably won't even take the time to hear a pitch for why I might instead participate gratis out of a sense of altruism.

If you offer me $100,000, I almost certainly will participate with or without a sales pitch.

If you pitch me to donate for free, I'll likely at least listen, unlike if you're offering me some token amount (anything less than say $10).

I may be the exception rather than the rule.

Some, if not most of the rewards in that experiment would seem to cost quite a bit more than a real blood center would be prepared to offer. (A blood center is going to pay for a full day of work in exchange for a pint of my blood?)

So sure, pay people *enough*, and they'll participate. How much is enough? Is that amount too expensive for a blood center to pay? Will the blood center alienate enough people with low-ball offers as to decrease donorship?

I think the idea is that an employer would hold a blood drive, offer all employees who donate the rest of the day off, then write off the lost time as a donation.

I used to donate regularly, and i don't think incentives would have made a difference. I'd always get a call from the blood bank shortly after I became eligible to donate again (there's a minimum time between donations), and they'd say there was a major surgery or something for which they needed blood -- after the second time I heard that story, I assumed it was just some line they always used. Those calls never got me to go when I otherwise wouldn't because of their reeking insincerity, but if there was some truth to it, maybe that would work. If I knew something about who was going to get my blood, that probably would be motivating. This might be a good application for social networks.

Now that I know more about the blood industry, however, I feel much less inclined to donate. It's just another part of the medical business. Whether or not it affects donation rate or quality, I think it's only fair to pay donors for their blood at a level commensurate to what the blood industry makes from it. The system as it stands now is taking advantage of people's altruism to get their raw material for free, which is then sold at exhorbitant prices to those who need it. The same is true of tissues taken from cadavers for grafts. If the donors aren't paid, the blood banks should be taxed for the value of the blood they are collecting -- the same way oil companies are taxed on the oil they pump from the ground and fishermen are taxed for the fish they collect from the ocean.

This is a good point. The reason that it is altruistic is the people in the business probably help make the market illegal. Maybe it would reduce blood donation to use a monetary incentive, but probably not at the right price.

Just like an economist to vary or introduce Price but not ask whether that will change Quality.

My daughter, a pathologist, maintains that you would change the composition of the blood pool givers by introducing pricing, and would end up with more problems with the blood supply by attracting blood from more drug addicts, etc.

Just like Bill not to read that the economists carefully examined quality.

Drug addicts need blood transfusions too. Market segmentation.

"Do you ever use needles? Yes? Well right this way, sir..."

My great-grand-uncle, a biochemist, maintains that he analysed the blood-quality, and it did not.

That is a widely held belief, but experience during the early stages of the AIDS crisis suggests otherwise. Blood banks eager to hold on to faithful volunteers were less cautious about screening than places buying plasma. Unfortunately because of lack of a good test, both supplies ended up tainted. See Kieran Healy "Last Best Gifts" for more detailed analysis

Buttonwood rejects a theory based on sound economic theory and advances a theory of altruism based solely on high minded BS.

Making the argument that payments might lure lower quality blood into the system is one thing. Claiming that current volunteers would sneer at a payment is ridiculous. Buttonwood is confusing choices of individuals with choices of the market.

And as others have amply pointed out, research supports the idea that blood supply and quality do not go down with payments. Theory and empirics need to be mutually supporting.

I am someone who happily donated a pint of blood every three weeks when I studied in Germany. I got paid about $25 each time - an incentive for me to return, since they didn't use my most recent donation until I came in again and all my tests were clear. This guarantees one of the absolute safest blood supplies in the world, and keeps guesswork and overheads low. And believe me, the sense of civic duty is still even stronger if you also get paid.

When I tried donating blood to the US Red Cross, the situation could not be more different. Suddenly I was given the third degree about details of my personal life, including my travels, the drugs I have taken, my sexual history and the last time I had anal sex with a man! I found this deeply insulting! The truthful answer to the last question in my case is never, and I was allowed to donate, but to this day I regret that I didn't answer "FUCK YOU!!!" and leave. Seriously, FUCK YOU, RED CROSS! I have gay friends who have lived in monogamous relationships for decades, and who have recently been tested for HIV just to do it. To be frank, they are a lower HIV risk even than most donors, including me. But their blood isn't good enough, even if they were offering it as a gift to the Red Cross. Of course, the Red Cross can't test whether you have ever had sex with a man, so the men who have experimented with homosexual sex at some point know they simply have to lie when they donate blood. The "screening" is just theater. But it's a kind of theater that's designed around degrading people who have chosen different lifestyles. They are told that *their very blood* is not good enough for the moral police, no matter how monogamous they have been, or careful, or how many times they've been tested since their encounter. Seeing this sickening discrimination, I realized that the Red Cross doesn't deserve my blood, especially not as a donation (which they *sell* to hospitals at a huge profit). If I ever donate blood in North America, it will be to hospitals directly, not to the the bigoted Red Cross.

Do you have any insight as to why the waiting time between donations is EIGHT weeks, not three weeks, in the US?

Fifteen years ago I donated every eight weeks. At the time I ate very little red meat, but I did eat fish. One fine day after a donation I noticed I couldn't keep up with my running partner, so I went to my doctor who measured me as anemic, about 11% hemoglobin [it's supposed to be between 13.5% and I think 16%]. I got referred to a GI specialist who did a colonoscopy, since they have to rule out a bleeding polyp [I have a family history]. Fortunately that turned out clean. The main, and very helpful, medical intervention was a suggestion that if I'm gonna donate blood six times per year I should consider eating some red meat.

This solved the problem. I still donate every eight weeks [the minimum in the US], but I eat red meat a couple of times a month. Problem solved.


I do not get the point of this post honestly.

There is Buttonwood comment about the unclear effect of incentives and the role of simplifications in Economics.
There is a study showing that the overall effect is still positive.

Of course those two sentences are not exclusive, they can both be true. The fact there are people unaffected of counter-affected by incentives is not in opposition to the fact the aggregate is still positive. The point is that, until we test it, we do not know. Economic theory still does not help, empiric evidence does.
The Buttonwood point is still valid.

So economists often point out that the price system is a useful way to allocate resources, in part by communicating relative costs and values that would otherwise be obscure. So if lots of donors are under the illusion that their blood is much more valuable than it actually is (after all you are "saving a life"), then putting a price on their blood donation could cause some to say, "Oh, didn't realize my blood wasn't so important maybe I will go golfing instead." This can be both rational on the individual level and optimal on the societal level.

Two other points:

1. If you remove the altruistic component of blood donation by paying for it, people may substitute into other, possibly more efficient, forms of altruism like donating more money to charity. None of the studies are capturing this effect, if it exists.

2. There are two debates here: A. Should blood compensation be legal? and B. Does compensation induce more giving of blood? Why not make it legal and let the market test determine which form of compensation is best? If paying donors does indeed reduce donations, then private firms will continue to rely on altruistic appeals.

It is legal to sell plasma in the U.S., a process slightly more time-consuming than donating blood, and with more slight deleterious effects (i.e. you can sell plasma several times per week), but otherwise very similar (i.e. you lie on a bed, have needles injected and bodily fluids removed.) I used to do it regularly during college to pay for CDs and beer. (NB: I have donated whole blood exactly once, ever.) I would think one could plausibly construct a study that made some comparison of plasma vs. blood donor behavior re: the effect of compensation.

Libertarian economists have no mental construct corresponding to a normal person's concept of altruism. It is merely a puzzling parameter needed to fit their beautiful equations to empirical data.

Way to dehumanize those who may disagree with you! Clearly they are devoid of empathy, while you are a paragon of tolerance and compassion!

Let them compensate blood donors.

I used to work in a hospital generating patient surgery billing. Blood and blood products - especially enriched platelets used in cardiac surgery - were the most expensive items on any bills. They were even more expensive than bone graft and other implant items used for spinal surgery.

Most people just donate just give it away. Blood has value. Let those who want to be compensated have it.

Now that's very interesting: How does a product that started out essentially "free" end up being the most expensive item on the menu?

Is it all processing costs or is someone along the chain skimming off the cream?

Just because someone donated the blood doesn't mean that it's not highly valuable and in short supply. I think that's the point of contemplating paying blood donors: to increase the supply of blood so that it will be less expensive.

What was the one item out of the seventeen that no-one wanted?

A free cholesterol test (see Goette and Stutzer’s paper). It was found to have no effect on actual donations, in contrast to what suggested by previous survey evidence (confirming that stated and actual preferences do not always coincide).

Buttonwood got his/her blood donation example most probably from Michael Sandel's (2012) 'What Money Can't Buy' (p 122 and following). Sandel himself refers to a 1970 (!) book by Richard Titmuss, 'The Gift Relationship', and calls it "perhaps the best-known illustration of markets crowding out non-market norms".

The claims in Titmuss' book are not evidence-based in that he did not rely on empirical evidence. It was more of a theoretical or moral point. Interestingly, immediately after the publication of the book in 1971, Nobel laureates Bob Solow and Ken Arrow wrote two separate pieces in response to the book, calling for empirical evidence to corroborate or contrast that claim. The evidence form actual donation behavior over the 40 yrs since the publication of the book appears in favor of a positive effect.

These studies did not look at cash payment for blood?? That is the whole point.

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