I have pointed out a few times over the years that the US has for many years relied on voluntary donations for blood, but on paid donations for blood plasma (for example, see here, here, and here). One result of these divergent incentives is that while I receive information about the need for blood donations now and then, when it comes to blood plasma, the US is a major exporter.
My earlier posts on this subject have focused on trying to understand why some kinds of donations seem appropriate for payment, while others are not. But John M Dooley and Emily A Gallagher take a different approach in “Blood Money: Selling Plasma to Avoid High-Interest Loans” (Review of Economic Studies, forthcoming, published online May2, 2024; SSRN working paper version here). They are investigating how the opening of a blood plasma center in an area affects the finances of low-income individuals. As background, they write:
Plasma, a component of blood, is a key ingredient in medications that treat millions of people for immune disorders and other illnesses. At over $26 billion in annual value in 2021, plasma represents the largest market for human materials. The U.S. provides 70% of the global plasma supply, putting blood products consistently in the country’s top ten export categories. The U.S. produces this level of plasma because, unlike most other countries, the U.S. allows pharmaceutical corporations to compensate donors – typically about $50 per donation for new donors, with rates reaching $200 per donation during severe shortages. The U.S. also
permits comparatively high donation frequencies: up to twice per week (or 104 times per year). …
The authors use survey data on paid plasma donors. Also, there is a rule that a plasma donor must live in the general neighborhood of the plasma center. Thus, it’s possible to compare those living in neighborhoods where a plasma center has just opened to areas where they have been open for some time and areas where they will open later. The survey data show:
Plasma donors are more likely to earn incomes of less than $20,000, have little in savings, and/or have poor credit scores. Demographically, plasma donors tend to be younger (age ⩽ 35), underemployed, and lack college degrees; they are also more likely to identify as black or male. For example, a respondent who meets all of
these demographic conditions would be about 2.5 times more likely than the average respondent to be a plasma donor. The primary reasons for donating plasma are to pay for day-to-day essentials and emergencies (64%), followed by non-essential spending (19%). Few respondents (6%) cite debt repayment as a reason for donating. Plasma donors are much more likely than non-donors to report being unable to afford the cost of entering other forms of gig work (e.g., you must have a
car to drive for Uber). Importantly for our subsequent analysis, plasma donors report less access to traditional forms of credit (e.g., credit cards or personal loans). Instead, non-bank lenders – which offer short-term, high-cost loans – are a common source of credit for plasma donors.
Comparing across neighborhoods that just got plasma centers, have had plasma centers for awhile, and are getting plasma centers in a few years (areas which seem reasonably comparable in other ways), and using Clarity Services credit bureau financial data from Experian, they find:
We find that plasma centers substitute for non-bank credit. The quarterly probability that a nearby individual inquires about a payday or installment loan falls significantly within four years of a plasma center opening. This treatment effect is owed entirely to young adults (age 35 or younger), which is the same age group that tends to donate plasma, according to survey data. For young adults in the Clarity sample, the decline reaches 0.51 p.p. (13.1%) for payday loans and 0.82 p.p. (15.7%) for installment loans after four years. Payday loan transactions
among young adults decline by 18% within three years of the opening. … Exploring other sources of heterogeneity, we find that the opening of a plasma center has the
most negative impact on demand for Internet loans, as opposed to loans sold in stores, which may also reflect the role of age. And, as might be expected given the other demographic traits of plasma donors, treatment effects are also more negative among individuals earning less than $2,000 per month and in areas experiencing high unemployment.
One result of these patterns is that the global supply of blood plasma rests heavily on the veins of lower-income Americans under 35 who live in neighborhoods with a local plasma center.
But in addition, I find myself thinking about the financial stresses that many Americans face. Being paid a few hundred dollars for a series of plasma donations isn’t an ideal answer. Neither is taking out a high-interest short-term loan; indeed, taking out a loan at all may be a poor idea if you aren’t expecting to have the income to pay it back. In the modern US economy, hiring someone for even a short-term job involves human resources departments, paperwork, personal identification, bookkeeping, and tax records. These rules have their reasons, but the result is that finding a short-term job that pays for a few days work isn’t simple, even if though most urban areas have a semi-underground network of such jobs.
Roger Miller’s classic 1964 song, “King of the Road,” tells us that “two hours of pushin’ broom/ Buys an eight by twelve four-bit room.” Even after allowing for a certain romancing of the life of a hobo in that song, the notion that a low-income person can walk out the door and find an two-hour job that pays enough to solve immediate cash-flow problems–other than donating plasma–seems nearly impossible in the modern economy.
