Blood is a vital resource, But one that cannot Be manufactured or reproduced com- mercially in an effective manner. With donations as the only method of supply, We often see dangerous imBalances BetWeen supply and demand, Which poses a serious threat to the lives of many people. many policymakers Believe that this issue can Be managed more effectively through offering incentives for Blood donations, there- By helping Blood Banks regulate supply. hoWever, others find moral and ethical is- sues With paying Blood donors, and have concerns aBout hoW this could compro- mise the safety of donated Blood. to explore the effectiveness of incentive programs, this article Will examine several studies, and argue that the most effective method to improve the market for Blood in the united states is expansion of non-monetary incentive programs. Blood Money A Comparison Between Altruistic and Incentivized Blood Donations mattheW saBal introduction Ever since the science of blood circulation was first described, scientists have been attempting to create artificial blood. However, none of these artificially- developed products meet all the required functions of blood. Commercial production of a liquid that mimics all functions of natural blood is still a scientific dream, as no oxygen-carrying blood substitutes have been approved for use by the Federal Drug Administration (FDA). Although scientists have made breakthroughs in the creation of artificial blood in recent years (such as ErythroMer, a powdered version of blood that can temporarily extend transfusion therapy, and a line of immortal red blood cell producing stem cells), artificial blood is still at the preliminary stages of development, with many hurdles to clear before we can routinely transfuse artificial blood into human vessels (Gammon, 2017). Some of these hurdles include the risk that the artificial cells could mutate and cause cancer, short cell half-lives, extremely high costs, and the need for blood to match a patient’s blood type. Researchers at the United Kingdom’s National Health Service say that even if a viable blood substitution product were created, blood donations would still be necessary in the future. Blood substitutes would primarily be used to help people in acute situations of trauma, as well as special medical cases. “It would be unfeasible to make blood in the lab for everyone…but we could make blood for people with very rare blood types or who have reacted to donated blood and so are difficult to match,” according to Ash Toye, a biochemist at the University of Bristol (Gammon, 2017). Lab-grown blood cells are not meant to replace blood donors. To fill a national blood service, or even supply a single hospital, will require another major leap in research. Transfusion from donor blood will be much cheaper, readily available, and safe in the foreseeable future. There are two types of blood donations: the traditional do- nation of whole red blood cells and the donation of plasma. In the United States, paying for blood of either form is le- gal; it is a common misconception that any laws ban pay- ing for blood. The law only requires that blood from paid donors be labeled that way. However, the Red Cross and hospitals across the country refuse to accept blood that has been paid for. According to Mario Macis, an economist at Johns Hopkins Carey Business School, “even though it’s legal, it’s still considered not totally moral or ethical to pay cash to blood donors” (Preston, 2016). Aside from the eth- ical issue of literal blood money, the FDA fears that incen- tivized donations may lead to falsified information about health or risk behaviors, and, therefore, a higher risk of infected blood. The science behind this claim is disputed, but the World Health Organization (WHO) finds it con- vincing enough that they heavily discourage countries from paying blood donors. The risks associated with HIV in the 1980s has made the safety of the blood supply the most prevalent concern for all blood collection today. Many plasma donations, on the other hand, are paid for and not required to be labeled because proteins in the plasma are processed and broken down to create various pharmaceu- ticals by for-profit corporations (Timmermann, 2017). These proteins are processed several times to remove or kill any viruses, so the risk of infection is much lower. Whole red blood cell donation and plasma donation are distinct and separate industries; this paper will focus on the former. Amongst the most well-known literature on this topic, Richard Titmuss’s 1971 book The Gift Relationship came about from the ongoing debate in the 1960s and 1970s about paying donors for blood. Titmuss argues that paying donors would attract higher-risk donors, thus compromis- ing the safety of the blood supply as well as reducing over- all donations because volunteers donating for altruistic reasons would be less willing to donate if paid. This book influenced the WHO to issue the guidelines which are still in place today, urging countries to have exclusively volun- teer donations. While these guidelines aren’t legally bind- ing, they have greatly reduced the frequency of incentives for blood donations in most high-income countries today. background Every day in the U.S., approximately 36,000 units of red blood cells are required in hospitals and emergency treat- ment facilities for cancer patients, organ transplant recipi- ents, accident/trauma victims, and those suffering from various other diseases (AABB, 2013). As Figure 1 indicates, keeping a single person alive can require many individual donors. In addition, the number of blood transfusions in the United States has increased from 1.1 million in 1997 to 2.7 million in 2007. Large fluctuations in supply and de- mand for blood often lead to severe shortages. 4.5 million Americans are saved each year by blood transfusions (Brookhaven National Laboratory, 2014), meaning that these shortages pose a serious threat to the lives of many people. Moreover, as blood’s sensitivity to long distance transportation and short shelf life limit the transnational distribution of whole red blood cells, collection systems are generally isolated to individual countries. Within the 54 ElEmEnts : : sPRInG 2018 United States, regional suppliers provide about half the nation’s blood supply, with the Red Cross contributing 45%, and the last 55% being generated through hospitals’ own blood drives. It is also important to note that the exact price to produce a unit of blood varies from place to place. Generally, coastal blood is more expensive than blood from the Midwest because the higher cost of living translates into higher overhead and labor costs, which then must get passed on to hospitals. Blood centers in the Midwest can harvest a lot more blood than they need since it is so much cheaper for them to run their operations. “The centers in Iowa, for example, are able to collect from 12 percent of the population, compared to a national average of 3 percent” (Engber, 2006). This surplus can be transported to more populated areas where the demand is higher. Since there is a lack of market pricing in the market for blood, spikes in donations after natural disasters like Hur- ricane Katrina in 2005 and the terrorist attacks on Septem- ber 11, 2001 have caused excess supply, which later had to be destroyed due to short shelf life. In the case of 9/11, an estimated 100,000 to 300,000 units of blood (costing somewhere between $21 and $63 million) were eventually discarded (Mulcahy, 2016). Conversely, there are typically supply shortages during the winter and around other holi- days, resulting in dangerous imbalances between aggre- gate supply and demand (Slonim, 2014). In July 2017, for example, the American Red Cross was forced to issue an emergency call for eligible individuals to donate blood as soon as possible due to a shortage of 61,000 donations (American Red Cross, 2017). The American Red Cross and other organizations that collect blood aim to have, at any given point in time, enough blood for three days of de- mand at each location and of each blood type, but that tar- get is rarely met. It is estimated that, worldwide, there is currently a shortage of about 22 million units of blood per year (Lacetera et al. 2012). These statistics make clear that the current system of blood donations in the United States does not adequately match supply with demand. Some economists believe that these issues can be managed more effectively by incentivizing blood donations, thereby helping blood banks regulate supply. However, many people also find moral and ethical issues with paying blood donors, and, like Titmuss, have concerns about how this could compromise the safety of donated blood. In 2006, Professor Roland Benabou con- ducted a study which provided evidence for these moral concerns, finding that people often refuse to enter in trans- actions which seem to have economic benefit for them, as they judge such transactions to be insulting to their digni- ty. A 2001 study found that 56% of American blood donors already received some kind of incentive, including items of appreciation (~30%), paid time off work (~20%), blood credits (~10%), and cash (0.2%) (Abolghasemi, 2010). Af- ter an introduction to the market for blood and how it functions, as well as an explanation of the issues within it, it is important to examine the methods and results of sev- eral studies seeking to improve this market, which leads to the conclusion that expanding offerings of non-monetary incentives is the most effective way to improve the market for blood in the United States. StudieS and reSultS One potential method for improving the market for blood without incentives is to increase the number of donations under the current system using pre-donation education and training. A study conducted by Balegh et al. (2016) consisted of 244 eligible young adults who had never pre- viously donated blood, and 4 different treatments: applied tension instruction , relaxation instruction, web browsing, and a no treatment control scenario. After 20 minutes of exposure to one of the treatments, half of the subjects watched short videos about injection and blood drawing, while the others did not. Each subject’s intention to donate blood was then measured using a Theory of Planned Be- havior questionnaire. The results showed large increases in intention to donate compared to controls, and follow up analysis revealed a statistically significant association be- Figure 1. Amount oF blood needed For A given diseAse or Accident (courtesy oF Canadian blood serviCes) 55 blood money tween the degree of within-session increase in intention to donate and subsequent blood clinic attendance. This sug- gests that simple interventions can be effective in increas- ing non-donors’ attendance at blood collection drives. Fur- ther analysis suggests that these interventions could be optimized by selectively targeting different psychological barriers associated with blood donation. While this study provided no direct experimental effect on blood clinic at- tendance, it would be reasonable to predict a positive im- pact on actual attendance given the impact on intentions and the positive association between intention to donate and subsequent attendance. It is difficult, however, to tai- lor this solution to spikes in demand, which is a critical part of the issue. Solutions of this type may help increase overall levels of donation, but they fail to address sudden changes in demand. It is apparent that incentives are a cru- cial component of improving the market for blood in the United States, as they are the only method which can be adjusted to meet demand. Standard economic theory suggests that adding extra in- centives should increase donations by adding to the altru- istic motivations of donors, but other studies bring up con- cerns that incentives may actually deter donors or decrease the quality of donated blood. Lacetera et al. seek to provide robust evidence from both observational and field-experi- mental data that offering non-cash incentives increases blood donations, without increasing the fraction of donors who are ineligible to donate. Their evidence comes from blood drives conducted by the American Red Cross in northern Ohio between May 2006 and October 2008, to- taling about 500,000 individual blood donations. They noted that 37% of all drives offered an incentive, and 78% of all drives took place at a location where there had previ- ously been both incentives offered and no incentives of- fered. This is important to their regression, as it creates variance in incentives being offered while holding location and host constant, allowing them to more easily isolate the effects of the incentives across different types of organiza- tions and neighborhoods. The American Red Cross does not assign incentives in a purely random fashion; they at- tempt to apportion them across all blood drive hosts in a nonsystematic way in order to treat all hosts fairly. Lacetera et al. were able to confirm this by showing that the actual distribution of incentives across hosts cannot be distin- guished from a simulated, random distribution. A regres- sion analysis with host and location as fixed effects, there- fore, would allow one to identify the relationship between the presence of rewards and the outcome at a blood drive. The most common item offered by the American Red Cross at nearly 50 percent of all drives was T-shirts. Over- all, there are 13 distinct items that the American Red Cross offered to donors at more than 40 drives. The results of the study showed that “the number of donors who attempt to donate and the number of units of blood collected signifi- cantly increase when incentives are offered. On average, offering incentives leads to between 5.0 and 6.7 extra do- nors presenting at a drive—an increase of 15-20 percent” (Lacetera et al. 2012). They also found that giving incen- tives to donors did not increase the fraction of donors be- ing deferred, suggesting that the quality of the donor pool did not change. They also found a significant positive rela- tionship between the cost of the incentives and the num- ber of units collected, with no negative effect on the per- centage of deferred donors. The results show that items of higher monetary value generally attract a larger number of donors. It is also worth noting that “T-Shirts, which cost $2.95, attract 6.5 extra donors; sweatshirts, which cost $6.67, attract 13.2 additional donors; and jackets, which cost $9.50, attract almost 25 extra donors” (Lacetera et al. 2012). All three coefficients are statistically significant at the one percent confidence level. Because all three of these items are nearly identical in shape, size, and design, we can reasonably assume that they have extremely similar social image value. However, the impact on turnout and units collected increases with their economic costs, sug- gesting that it is the item’s cost that explains the increasing effect of incentives on donor behavior. A sign Advertising An AmericAn red cross bloodmobile donAtion center (courtesy oF Wikimedia Commons) 56 ElEmEnts : : sPRInG 2018 Following this observational study, the same researchers conducted a natural field experiment at 72 American Red Cross drives between September 2009 and August 2010. In this case, they were able to randomly divide drives into control conditions, and treatment conditions of $5, $10, and $15 gift cards for a variety of stores were offered. When comparing outcomes between control and treatment drives, there was statistically significant higher turnout and units collected under treatment conditions, with in- creasing effects in correspondence with higher gift card value. Once again, there was no impact on the percentage of deferred donors. However, the researchers also found that when incentives were offered at a given drive, the sub- sequent turnout at nearby drives diminished over the course of the year-long study, especially when those nearby drives didn’t offer incentives. Therefore, the incentives didn’t have as much of a positive effect on donor turnout as the regression originally predicted. If one additional neighboring drive among potential alternatives within two miles offers an incentive, the turnout will decline by an estimated 0.25 donors. Drives that offer incentives but are located further away do not have any effect on turnout. Column 3 estimates the effect of the monetary value of in- centives offered across various drives, which results in a negative, somewhat significant coefficient, indicating that for every $1 increase in the highest monetary value of in- centives offered at drives within 0-2 and 2-4 miles, 0.1 fewer donors turn out. We must therefore take these dis- placement effects into account, otherwise we risk overesti- mating the total effect of incentives. Taking displacement into account, the incentives used by the American Red Cross “seem to be highly cost-effective, on average costing 4 percent or less of the social benefit …” of one extra unit of blood (Lacetera et al. 2012). There are clearly positive effects on the number of units collected at blood drives through non-monetary incentives. There are also studies which have been conducted using cash as an incentive. Research by Mellstrom and Johnnas- sen (2005) presents evidence that the altruistic appeal of charitable giving can be spoiled by cash rewards. A person who may be eager to donate blood may also be concerned that the value of their contribution could be tainted by the inference that material gain played a role in their decision to donate. Following in the footsteps of Titmuss, Mell- strom and Johannesson seek to verify his findings through their own field experiment. Their study points to one of the primary reasons why many people think a direct cash per unit market for whole blood would not work. They studied the willingness of 238 Swedish subjects to join a blood donor program and offered one of three treatments: no payment, a SEK 50 payment (roughly $7), and a choice between accepting SEK 50 of payment and donating that same money to charity. They found that results differed largely between men and women; there is a significant crowding out effect for women when they are offered an incentive (with the supply of blood donors decreasing by almost half) but no statistically significant effect on the participation of men. They hypothesized that it is more im- portant for women to be perceived as caring and compas- sionate human beings, which is what lead to this result. Interestingly, they also found that offering the option of donating the money to charity fully counteracts the crowd- ing out effect for women and returns their level of supply to the original level. This suggests that the potential prob- lem of introducing monetary payments could be resolved by simply adding an option to donate the money to charity. However, there are still concerns about the safety of the blood supply in the presence of cash donations. Although studies referenced above showed no significant effects on the quality of the blood supply using non-cash incentives, there are several studies which provide con- cerning results when using monetary incentives. A 2009 study compiled information from many previous studies about the safety of paid blood donation, and noted that “some studies have shown that paid donors have a higher risk of transfusion-transmitted infections. Paid donors are also more likely to disguise risk factors of infection, such as drug abuse” (Buyx, 2009). It is also worth noting that a “It is apparent that incentives are a crucial component of improving the market for blood in the United States, as they are the only method which can be adjusted to meet demand.” 57 blood money collecting blood From A donor (courtesy oF Wikimedia Commons) significant portion of paid donors in the compiled studies came from populations with higher risk profiles, especially from low-income groups, and it is expected that cash pay- ments will continue to attract these high-risk groups. However, some empirical data indicates that, unlike cash payment, non-cash incentives are not problematic in terms of blood safety, as they are not necessarily tied to groups with problematic risk profiles (Glynn, 2003). Non-cash in- centives ranging from tokens of appreciation, T-shirts, mugs, food, and gift cards to stores or restaurants have all been shown to work, similar to the items used by Lacetera et al. in their 2012 study. With increased research, it is thought that a well-designed and specifically tailored in- centive program could be developed based upon local de- mographics and donation setting. Younger populations might be more attracted to things such as iTunes gift cards, video game bonuses, or other kinds of software, whereas older populations might be drawn to wellness class vouchers, non-transferable theatre tickets, or restau- rant gift cards. It is vital to note that this approach may only be useful temporarily in anticipation of (or during) shortages, as per- manent incentives may cause donors to assocciate blood banks with selfish goals. According to Ariely (2008), the reason for publically contributing to pro-social activities like blood donation is to be well-regarded by others. The long-term presence of incentives would dilute the idea of blood donation as a pro-social act, which could discourage individuals to take part in such activities. Another study conducted by Ellingsen (2008) showed that the motives of the counterparty are important to people taking part in an activity. The permanent presence of incentives may make blood donors change their perception of blood banks from non-selfish institutions to selfish ones. This could then lead to blood donors being less likely to act in a way that benefits the blood banks, because the incentives under- mine their contribution. concluSion With the recent upward trend in critical season blood shortages, coupled with increasing demands for blood transfusions, the importance of this issue grows every day. On the basis of various studies, I argue that the United States needs to more widely implement non-cash incen- tives in order to more effectively meet both increased and changing demands for blood. Many studies indicate that offering incentives has a positive impact on blood donors’ contributions, but the impact may become negative when offering money or cash-equivalent incentives. Based on this, non-cash incentives are a more effective solution than monetary incentives. Due to concerns that long-term, per- manent presence of incentives may alter social perception of blood donation from a prosocial activity to a selfish one, I believe it is also important to introduce these incentive programs strategically, such as when shortages occur. This provides a middle ground between the two polar ideolo- gies: completely altruistic donations and direct cash pay- ment. In order to optimize the market for blood in the United States, this solution would also rely heavily on pay- ing attention to donor motives and the construction of ef- fective incentive programs. With more money and re- search devoted to this idea, the goal of a safe and sufficient blood supply may be attainable. “I argue that the United States needs to more widely implement non-cash incentives in order to more effectively meet both increased and changing demands for blood.” 58 ElEmEnts : : sPRInG 2018 referenceS “56 Facts About Blood and Blood Donation.” BNL Blood Drives: 56 Facts, Brookhaven National Laboratory, www. bnl.gov/hr/blooddrive/56facts.asp. “Astonishing Facts about the Blood Shortage.” Online Health Care Degrees, University of Cincinnati, cahson- line.uc.edu/resources/mls/articles/astonishing-facts- about-the-blood-shortage/. “Blood Facts and Statistics.” American Red Cross, Ameri- can Red Cross, www.redcrossblood.org/learn-about-blood/ blood-facts-and-statistics. “Blood FAQ.” Advancing Transfusion and Cellular Thera- pies Worldwide, American Association of Blood Banks, www.aabb.org/tm/Pages/bloodfaq.aspx. “Who Does My Donation Help?” SFU Blood For Life, sfubloodforlife.com/who-does-my-donation-help/. Abolghasemi, Hassan, et al. “Blood donor incentives: A step forward or backward.” Asian Journal of Transfusion Sci- ence, vol. 4, no. 1, Jan. 2010, pp. 9–13., doi:10.4103/0973- 6247.59385. 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. Balegh, S., Marcus, N., Dubuc, S., Godin, G., France, C. R. and Ditto, B. (2016), Increasing nondonors’ intention to give blood: addressing common barriers. Transfusion, 56: 433–439. doi:10.1111/trf.13386 Buyx, Alena M. “Blood Donation, Payment, and Non-Cash Incentives: Classical Questions Drawing Renewed Inter- est.” Transfusion Medicine and Hemotherapy, vol. 36, no. 5, Oct. 2009, pp. 329–339., doi:10.1159/000235608. Ellingsen T, Johannesson M. Pride and prejudice: The hu- man side of incentive theory. Am Econ Rev. 2008;98:990– 1008. Engber, Daniel. “Does the Red Cross sell blood?” Slate Magazine, 11 Sept. 2006, www.slate.com/articles/news_ and_politics/explainer/2006/09/the_business_of_blood. html. Gammon, Katharine. “The Long Quest to Create Artificial Blood May Soon Be Over.” NBCNews.com, NBCUniversal News Group, 19 Jan. 2017, www.nbcnews.com/mach/sci- ence/long-quest-create-artificial-blood-may-soon-be-over- n708576. Gandhi, Rohit. “When life-Saving blood kills.” WION, 1 Aug. 2016, www.wionews.com/south-asia/when-life-sav- ing-blood-kills-3852. Glynn, Simone A., et al. “Attitudes toward blood donation incentives in the United States: implications for donor re- cruitment.” Transfusion, vol. 43, no. 1, 2003, pp. 7–16., doi:10.1046/j.1537-2995.2003.00252.x. Klose, T, et al. “Current concepts for quality assured long- Distance transport of temperature-Sensitive red blood cell concentrates.” Vox Sang, vol. 99, 1 July 2010, pp. 44–53., doi:10.1111/j.1423-0410.2009.01302.x. Lacetera, Nicola, et al. “Will There Be Blood? Incentives and Displacement Effects in Pro-Social Behavior.” Ameri- can Economic Journal: Economic Policy, vol. 4, no. 1, 2012, pp. 186–223., doi:10.1257/pol.4.1.186. MacDonald, Fiona. “Immortal Stem Cells Let Scientists Create an Unlimited Supply of Artificial Blood.” Scien- ceAlert, Science Alert, 28 Mar. 2017, www.sciencealert.com/ immortal-stem-cells-let-scientists-create-an-unlimited- supply-of-artificial-blood. Mellstrom, Carl, and Magnus Johannesson. 2005. “Crowd- ing Out in Blood Donation: Was Titmuss Right?” Goetborg University Working Papers in Economics180. Moradi, Samira, et al. “Artificial Blood Substitutes: First Steps on the Long Route to Clinical Utility.” Clinical Medi- cine Insights: Blood Disorders, vol. 9, 27 Oct. 2016, pp. 33–41., doi:10.4137/CMBD.S38461. Mulcahy, Andrew W., Kandice A. Kapinos, Brian Briscombe, Lori Uscher-Pines, Ritika Chaturvedi, Spencer 59 blood money R. Case, Jakub P. Hlavka and Benjamin M. Miller. Toward a Sustainable Blood Supply in the United States: An Analy- sis of the Current System and Alternatives for the Future. Santa Monica, CA: RAND Corporation, 2016. https:// www.rand.org/pubs/research_reports/RR1575.html. Nagurney, Anna. “America Is Almost Out Of Blood.” GOOD Magazine, The Conversation, 23 Jan. 2017, health. good.is/articles/tracking-blood-supply-chains-shortages. Nedelman, Michael. “Using stem cells to create an endless supply of blood.” CNN, Cable News Network, 28 Mar. 2017, www.cnn.com/2017/03/28/health/stem-cells-syn- thetic-blood-study/index.html. Reinhardt, Uwe. Projected Percentage Of The U.S. Popula- tion Aged 65 And Over. Physicians For A National Health Program, www.pnhp.org/news/2008/december/why- does-us-health-care-cost-so-much-part-iii-an-aging-popu- lation-isnt-the-reason. Slonim, Robert, et al. “The Market for Blood.” Journal of Economic Perspectives, vol. 28, 2014, pp. 177–196., pubs. aeaweb.org/doi/pdfplus/10.1257/jep.28.2.177. Timmermann, Mike. “Americans are donating plasma to make up to $400 a month.” Clark Howard, Clark Howard, 4 July 2017, clark.com/health-health-care/donating-plas- ma-location-make-money/. Titmuss, R. M. (1970). The Gift Relationship: From human blood to social policy. London: Allen & Unwin. 60 ElEmEnts : : sPRInG 2018