Demand and supply of emergency help: an economic analysis of Red Cross services

This paper analyzes supply and demand side characteristics of (voluntary) Red Cross services in Austria. The demand side analysis is based on a contingent valuation study on people's willingness to pay for emergency treatment, transportation services and disaster relief activities. The supply side is identified by a high percentage of volunteers in the Red Cross organization which makes the provision of emergency help at low cost possible. We find that aggregate benefits of Red Cross services exceed their cost of production. Policy conclusions are drawn with respect to future recruitment and funding: whereas intrinsic motivation is important for the decision to volunteer, and financial incentives play a minor role in general, the young Red Cross activists work voluntarily for self-realization reasons and to continue their education. Age-specific recruitment strategies accompanied by word-of-mouth advertising are recommended to address potential volunteers. As long as the volunteering character of Red Cross services will be maintained and cost of production will not go up an increase of funds does not seem necessary in the future. Moreover, a radical change in the structure of funding may crowd out both donations and voluntary labor supply.