I have pointed out a few times over the years (see, for example, here , here , and here ) that the United States has relied on voluntary blood donations for many years, but paid donations for plasma. One result of these various incentives is that while I occasionally receive information about the need to donate blood, the United States is a major exporter when it comes to plasma.
My previous post on this topic focused on understanding why some types of donations seem appropriate for payment while others do not. However, John M Dooley and Emily A Gallagher write in “Blood Money: Selling Plasma to Avoid High-Interest Loans” (Economic Research ReviewsoonPublished online May 2, 2024; SSRN working paper version here). They are examining how opening a plasma center in an area affects the finances of low-income people. As background they write:
Plasma, a component of blood, is a key ingredient in drugs that treat immune disorders and other diseases in millions of people. With an annual value of over $26 billion in 2021, plasma represents the largest market for human materials. The United States supplies 70% of the world’s plasma supply, and blood products consistently rank among the country’s top 10 export categories. The United States, unlike most other countries, produces this level of plasma because it allows pharmaceutical companies to compensate donors (typically about $50 per donation for new donors, reaching $200 per donation in severe shortages). do. America too
Allows for a relatively high frequency of donations: up to 2 times per week (or 104 times per year). …
The authors use survey data on paid plasma donors. There is also a rule that plasma donors must live near a plasma center. It is therefore possible to compare people living in areas where plasma centers have just opened with those where they have been open for some time and those where they will open later. Survey data shows:
Plasma donors are more likely to earn less than $20,000, have little savings, or have low credit scores. Demographically, plasma donors tend to be younger (⩽ 35 years), underemployed, and lacking a college degree. They are also more likely to identify as black or male. For example, respondents who meet all of the following:
These demographic conditions make them approximately 2.5 times more likely than the average respondent to become a plasma donor. The main reason for donating plasma was to pay for everyday necessities and emergencies (64%), followed by non-essential expenses (19%). 6% of respondents cited debt repayment as a reason for donating. Plasma donors are much more likely than non-donors to report being unable to afford the costs of undertaking other forms of gig work, e.g.
The vehicle you will drive for Uber). What is important to note in subsequent analyzes is that plasma donors report less access to traditional forms of credit (e.g., credit cards or personal loans). Instead, non-bank lenders that offer short-term, high-cost loans are a common source of credit for plasma donors.
Compare areas that just have a plasma center, have had a plasma center for a while, and will have a plasma center in a few years (areas that are otherwise reasonably comparable) and use Experian’s Clarity Services credit agency financial data to determine the following: Found it.
We find that plasma centers are a substitute for non-bank credit. The quarterly probability that nearby individuals will inquire about payday or installment loans decreases significantly within four years of a plasma center opening. According to survey data, this treatment effect is entirely due to the younger population (under 35 years of age), who tend to donate plasma. For young adults in the Clarity sample, after four years, payday loans decreased by 0.51pp (13.1%) and savings loans decreased by 0.82pp (15.7%). payday loan deals
Among young people, there is an 18% decrease within three years of opening. … Investigation of other causes of heterogeneity revealed that the opening of the plasma center
In contrast to loans sold in stores, the demand for internet loans has the most negative impact, which may also reflect the role of age. And, as might be expected given other demographic characteristics of plasma donors, the treatment effect is more negative for those earning less than $2,000 per month and in areas with high unemployment.
One consequence of this pattern is that the global supply of plasma depends largely on the veins of low-income Americans under the age of 35 who live near local plasma centers.
But I’m also thinking about the financial pressures that many Americans face. Getting paid hundreds of dollars for a series of plasma donations is not the ideal answer. We also do not take out high-interest, short-term loans. In fact, it may not be a good idea to take out a loan at all if you don’t expect to have the income to repay the loan. In the modern American economy, hiring someone for even a short-term job requires a human resources department, paperwork, personal identification, ledgers, and tax records. There are reasons for these rules, but the upshot is that finding a short-term job that pays for a few days of work is not straightforward, even though most urban areas have a semi-underground network of such jobs.
Roger Miller’s classic 1964 song “King of the Road” says, “Push a broom for two hours/Buy an 8 x 12 four-beat room.” Even after allowing for the song’s romance with the life of a vagabond, it leaves out the idea that low-income people can walk out the door and find a two-hour job that pays enough to solve their immediate cash flow problems. Donating plasma seems nearly impossible in the modern economy.
