Why do people engage in altruistic behavior? Can an individual's contribution be displaced or “crowded out” because of contributions by another party? Professor Ivan Png has conducted a study to examine these questions, using blood donation as an example of altruistic behavior.

In his research, Prof Png analyzes data from World Health Organization (WHO) to understand the factors that encourage blood donation. A distinction is made between incentivized collection (involving an incentive, monetary or otherwise) and voluntary donation (where no incentive is involved).

Different countries have varying levels of incentivized collection and voluntary donation. For instance, in Malaysia , the rate of incentivized collection is 0.9% and voluntary collection 99.1%. In contrast, in the Maldives , the rate of incentivized collection is 80% while voluntary collection is at 20%. Prof Png's interest is in whether voluntary donation is affected by incentivized collection, and whether this varies according to a income, culture, health or other factors.

The Findings

  Incentivized collections crowd out voluntary donations : In countries where incentives are given for donating blood, the more people donate because of the incentives, the lower the level of voluntary donation. This suggests that incentivized collections crowd out voluntary donations. Specifically, a 1% increase in incentivized collection is associated with a reduction in voluntary donation of between 0.55% - 0.71%.

  Link between donations and income : Voluntary donations increase with income. The higher the GDP per capita, the higher is the voluntary blood donations.

  Culture affects voluntary donations: Voluntary donations tend to be lower among countries with a more individualistic culture. Individualistic cultures are those where ties between individuals are loose and everyone is expected to look after himself.

  No link between voluntary donations and health conditions: Voluntary donations are not affected by differences in health conditions, such as HIV prevalence and female life expectancy.

Public Policy Implications

  Blood donation is a not purely altruistic act. There are individuals who donate because of incentives. Among those who volunteer, they would reduce their donation if more people donate, even if the latter do so because they are incentivized.

  To incentivize or not to incentivize: Policy leaders, particularly those from developing countries, need to consider seriously whether to provide incentives for blood donation and even allow sale of blood as such actions displace voluntary blood donations.