The Market for Blood
On my way home from the library, I passed a Red Cross sign soliciting blood donations in exchange for movie tickets. In the past, I've seen offers of pizza and cookies for donations, but never cash. Why not? Congress banned the sale of organs (see National Organ Transplant Act of 1984), but blood is not an organ under conventional medical taxonomy. And sperm banks regularly pay their donors for specimens.
Some ideas:
Some ideas:
- Maybe my description of the law or facts is wrong. Maybe Congress has banned the sale of blood, or maybe blood donation agencies do in fact pay cash for donations.
- The Red Cross believes that offering cash for blood will "commoditize" the donation experience, diluting the altruistic motives of donors and leading to less blood supplied.
- The blood business is not a profitable one. Collecting, testing, and storing blood is, after all, expensive. The Red Cross, a non-profit organization, stays in the market notwithstanding its losses for nonmarket reasons. On this view, the pizza and movie tickets might be donations from altruistic businesses, not the Red Cross's attemt to compensate donors. (The problem with this view is that patient demand for blood is probably enormously inelastic, so if the Red Cross has any market power at all, it can set a high selling price to extract higher profits.)
- The skeptic in me suspects that the structure of the blood market is imperfect, characterized by an economy of scale. As a result, the Red Cross, an oligopsonist, is a price setter; it sets its buying price at 1 movie ticket. Competitors are few and far-between.
- Ultra-cynical view: The Red Cross doesn't want to deal with the homeless. Perhaps the Red Cross believes the homeless are more likely to disrupt their donation centers or are likely to drive away non-homeless donors. Movie tickets are less likely to attract the homeless than cash (plausible assumption?).
Thoughts?

3 Comments:
there was a post on becker-posner a while back on this topic...
I checked, and Becker has a post from New Year's Day 2006 about the market for organs. The last few paragraphs discuss the market for blood. Apparently U.S. law does not prohibit compensation for blood donations. Becker seems to suggest that some blood collection agencies actually do pay cash. I've never seen it, though.
Thanks for the tip.
I believe that NYS has outlawed paying people for donating blood, at least since the AIDS crisis of the '80s.
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