Will There Be Blood? Incentives and Displacement Effects in Pro-Social Behavior

We present evidence from nearly 14,000 American Red Cross blood drives and from a natural field experiment showing that economic incentives have a positive effect on blood donations without increasing the fraction of donors who are ineligible to donate. The effect increases with the incentive's economic value. However, a substantial proportion of the increase in donations is explained by donors leaving neighboring drives without incentives to attend drives with incentives; this displacement also increases with the economic value of the incentive. We conclude that extrinsic incentives stimulate prosocial behavior, but unless displacement effects are considered, the effect may be overestimated. (JEL D64, H41, I12)