Solving Shortage in a Priceless Market: Insights from Blood Donation
In markets such as those for blood, tissue, and organs, ethical and safety concerns typically preclude outright payments to donors. This means that other techniques must be used to boost donations when supplies run short. Using data for a large city in China, Sun, Lu and Jin evaluate the effectiveness of two approaches used to solicit donations during periods of blood shortage. The first is a text message informing previous donors that there is a shortage in their blood type and the second is a family replacement (FR) program through which family and friends of those in need are asked to donate.
Since a shortage message targets a particular blood type, Sun et al are able to compare the behavior of previous donors who receive the message with the behavior of individuals that have similar characteristics and prior donation histories but did not receive the message. The differences in donations between the two groups both in the period when the targeted message was sent and in subsequent periods allows the authors to assess the short- and long-term effects of the message. In the case of the family replacement program, the authors estimate separate effects for donors who had donated blood in the past and those who had not. The comparison group for past donors reached through the FR program is constructed in a fashion similar to that for the message recipients; the comparison group for those in the FR program who had not previously donated is constructed using information on the full population of the city together with information on the flow of new donors with similar characteristics. The authors find that, overall, the FR program was substantially more effective than the targeted text messages at increasing short run supply, though both raised short-term donation rates. However, donors reached through the FR program who had not previously donated blood were less likely to donate in the future than other non-donors in the population.
Based on these results, Sun et al caution against the overuse of the family replacement program. In populations with very low donation rates and severe shortages, the FR program may be the most effective means of generating needed donations, but targeted text messages have the virtue of generating donation increases without reducing the future willingness of donors to give blood.
Sun, T., Lu, S. F., & Jin, G. Z. (2016). Solving shortage in a priceless market: Insights from blood donation. Journal of health economics, 48, 149-165.