Monday, March 2, 2009

Costs of Obtaining Blood Donors

What tradeoffs do blood donors face when they act as suppliers in the market for whole blood donation? Personally, I spend a little over an hour of my time. Fortunately, I face almost no risk of adverse events from the experience.

In return, the most obvious things I get are a drink of water while the blood is being drawn, a choice of an additional beverage and snack after I donate, and some type of “goodie”. Most often, the American Red Cross will provide a t-shirt, although I have also received other things including a bumper stick, an apron, a tote bag, and entry in a sweepstakes.

In addition, I receive the satisfaction of knowing that as many as three people will be helped by my donation. I was once told by a friend that she appreciated my donation because without people like me making donations it would have been impossible for her father to survive as long as he did.

The most interesting question is why the American Red Cross feels the need to give a small reward each time. Is that what keeps people coming back? I like to think that I (and most of my fellow donors) would come back simply because we are altruistic. However, the American Red Cross has an incentive to produce its output (whole blood that can be used for patients) at the minimum cost per unit of blood that is obtained assuming that a sufficient number are obtained. There are any number of steps with costs in the production process and donors can be attracted through a variety of forms of advertising as well as through small rewards. If they thought that they could obtain a sufficient number of units through advertising rather than through providing a small reward and it were cheaper to advertise, they would do so. Experience must have indicated that one way of obtaining a sufficient supply at minimum cost is to provide a small reward. Recent behavioral economic studies have indicated that people can be motivated by incredibly small rewards.

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