The Market for Blood

• Published in: The Journal of economic perspectives 2014, Vol.28 (2), p.177-196
• Main Authors: Slonim, Robert, Wang, Carmen, Garbarino, Ellen
• Format: Article
• Language: English
• Subjects: Altruism; Blood; Blood & organ donations; Blood Banks - economics; Blood donation; Blood Donors - ethics; Blood Donors - history; Blood Donors - supply & distribution; Blood plasma; Blood platelets; Blood products; Blood specimen collection; Blood transfusion; Business schools; Consumer Product Safety; Developed Countries; Developing Countries; Economic forces; Economic performance; Economic statistics; Economic theory; Economics; Economies of scale; Gifts; Health Care Sector; Health economics; Health technology assessment; Hemophilia; History, 17th Century; History, 18th Century; History, 19th Century; History, 20th Century; Holidays & special occasions; Humans; Hurricanes; Infections; Life expectancy; Market; Market prices; Moral hazard; Plasma; Prices; Registries; Studies; Suppliers; Supply; Supply & demand; Supply and demand; Terrorism; Tissue donation; United States; Volunteerism; Volunteers
• ISSN: 0895-3309; 1944-7965
• DOI: 10.1257/jep.28.2.177

Donating blood, “the gift of life,” is among the noblest activities and it is performed worldwide nearly 100 million times annually. The economic perspective presented here shows how the gift of life, albeit noble and often motivated by altruism, is heavily influenced by standard economic forces including supply and demand, economies of scale, and moral hazard. These forces, shaped by technological advances, have driven the evolution of blood donation markets from thin one-to-one “marriage markets,” in which each recipient needed a personal blood donor, to thick, impersonalized, diffuse markets. Today, imbalances between aggregate supply and demand are a major challenge in blood markets, including excess supply after disasters and insufficient supply at other times. These imbalances are not unexpected given that the blood market operates without market prices and with limited storage length (about six weeks) for whole blood. Yet shifting to a system of paying blood donors seems a practical impossibility given attitudes toward paying blood donors and concerns that a paid system could compromise blood safety. Nonetheless, we believe that an economic perspective offers promising directions to increase supply and improve the supply and demand balance even in the presence of volunteer supply and with the absence of market prices.