Using Psychology Concepts to Explain Mathematical Economics Cases Case Study

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Introduction of material incentives reduces the supply of voluntary blood donors by 7 to 9 PercentThe law of supply in economics states that, all else unchanged, an increase in the price of a good or service will increase the quantity supplied. The quantity supplied is the level of supply that suppliers are willing to bring to the market for sale. Suppliers are assumed to be rational, which means they seek to maximize utility for themselves. As such, they will supply more of something if they expect to get a higher price for it. However, does the law of supply apply to prosocial activities such as blood donations?The World Health Organization in 1975 passed a resolution encouraging countries to target 100 percent voluntary non-renumerated blood donations by 2020. This meant filling blood banks with donations collected from unremunerated volunteers. However, developed nations such as the US have begun offering material incentives to blood donors to encourage more people to donate blood to the country’s blood banks. The incentives offered include gift cards, cash, community service credits for minor offenders, ticket vouchers, blood assurance program memberships, and paid time off work (Abolghsemi et al., 10). Based on the law of supply, one would expect the supply of donors to increase with the introduction of material incentives. However, findings from conducted studies show that cash incentives discourage seven percent of donors from donating again, while the rest of the incentives discourage 9 percent of donors from returning (Abolghsemi et al., 10). Studies conducted to compare findings from different locations found that introduction of monetary incentives reduced the supply of donors at religious sites by almost half, and increased donor supply in schools and universities, although the increase was minimal (Abolghsemi et al., 10).CASE STUDY QUESTIONS1. What are some of the material incentives offered to blood donors in the United States?Blood donors in the US receive a number of material incentives for their donations. The most common ones include opportunities to win prizes such as vehicles and television sets, event and movie tickets, branded t-shirts, blood credits, cash, paid time off work, and blood assurance program memberships (Abolghsemi et al., 10). Items of appreciation, such as t-shirts are the most common incentives for blood donors in the US, while cash is the least common (Abolghsemi et al., 10).2. What was the general effect of introducing material rewards on the supply of voluntary blood donors?Generally, introduction of monetary rewards reduces the supply of voluntary blood donors. Cash incentives reduce the number of voluntary blood donors returning for another donation by 7 percent, while the rest of the incentives reduced blood donor supply by at least 9 percent.

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The greatest decline in supply was reported among donors at religious sites, where introduction of incentives discouraged approximately 50 percent of voluntary donors from returning.3. What are the findings from studies conducted outside the US? Are they similar to those reported in the case?Studies conducted outside the US have yielded varying results. Mellstrom and…

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…publish their names on public sites such as local newspapers (Abolghsemi et al. 11). This will help the donors maintain their public image despite accepting incentives. Further, Abolghsemi et al. (11) advises that policymakers administer selective incentives such as free medical tests for older donors and lottery tickets for younger donors. This would be more effective than administering umbrella incentives that fail to take into account the needs of different donor groups.PROJECT TOPIC AND OUTLINEProject Topic: Investigating the effect of material incentives on the supply of blood donors in the United StatesThesis Statement: Material incentives reduce the supply of voluntary blood donors in the US.Effects of material incentivesImpact of cash incentives on the decision-making of voluntary blood donorsImpact of administering gifts such as lottery ticketsImpact of offering free medical tests on donors’ decision-makingPolicy RecommendationsTo adopt or not to adopt cash incentivesTo adopt or not to adopt use of lottery ticketsTo adopt or not adopt use of freed medical tests with blood donorsREFLECTIONThe author concludes that case studies that associate complex economic phenomena with real-life applications help to portray the idea in a less complex and more practical idea. In this case, for instance, the case study advances a complex idea about prosocial suppliers’ unique behavioral pattern and how it deviates from the law of supply. However, the author simplifies the concept by using a prosocial activity with which most people can relate – blood donation. The concept of blood donation helps the audience relate better with the idea and….....

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