No market faces the same challenges as that of the American blood bank, where all supply is determined by the unreliable and irregular altruism of donors. With blood being the life-saving product that it is, this donation-based business model routinely falls short of its actual needs and is in need of broad reform.
Blood banks are placed in a precarious situation, as they either have more blood than they could possibly need or not nearly enough. Blood is a perishable commodity that must be used within 42 days. Thus, people must be willing to donate blood on a regular, year-round basis in order for blood banks to have an adequate supply. In reality, blood banks, which are subject to the whims and fancies of the public, tend to have bouts of excess blood and blood shortages. In emergencies, such as in the case of a natural disaster, terrorist attack, or school shooting, people have the tendency to run to their nearest blood bank to donate. However well-intentioned this altruism may be, it is largely unhelpful and can even be harmful. Immediately after 9/11, Americans nationwide lined up to donate at their local blood banks and donated over 475,000 units of blood. The flood of donations quickly overwhelmed blood-collection centers, and in the end, only 258 units of blood were used. Thousands of units of blood had to be thrown away.
Conversely, blood banks often experience shortages, especially during the summer and winter holidays. Several programs meant to alleviate seasonal blood shortages include incentivizing donations by using non-monetary gifts and notifying the public about the existence of a blood shortage to encourage them to donate. Unlike typical markets where supply and demand intersect at an optimal equilibrium point, blood banks rely on donations to get their supply of blood. If blood banks were to pay people for blood, they would be able to decrease or increase the supply of blood at any given time. This practice would give blood banks greater control over blood supply and make them far less likely to have to endure dramatic swings in supply. Such greater control and efficiency can be seen in the American market for plasma, in which people are paid to donate. As one of the few countries that allows people to be paid for their plasma, the United States exports a majority of its plasma to countries like Canada and Australia that hypocritically ban paying their own citizens for plasma because of ethical quandaries.
Even though the United States Food and Drug Administration allows people to be paid for their blood, it strongly encourages blood to come strictly from donations because of concerns that people may lie about their health and eligibility to donate if there is money on the line. These are genuine concerns about whole blood, since plasma is typically broken down before use in pharmaceuticals but never directly infused into a person’s system.. Whether or not it is donated or paid for, whole blood is tested for safety. Concerns about paid blood are currently based on a small body of research, and further research needs to be done to see whether concerns about paid blood are statistically sound or simply unsubstantiated worries.
The current system for collecting blood has many flaws that can and should be remedied. Compensating people for their blood, either through cash or nonmonetary gifts, would create a more regular supply of blood and would even allow blood banks to request more of the blood types that are high in demand. Since blood is such a vital and life-saving product, altruism cannot be solely relied upon to provide an adequate supply. Rather, a more stable source of blood can and should be achieved by incentivizing people to donate.