Investigating the Relationship Between Medical Crowdfunding and Personal Bankruptcy in the United States: Evidence of A Digital Divide

MIS Quarterly (Forthcoming)

52 Pages Posted: 24 Oct 2015 Last revised: 19 Jul 2018

See all articles by Gordon Burtch

Gordon Burtch

Boston University - Questrom School of Business

Jason Chan

University of Minnesota - Twin Cities - Carlson School of Management

Date Written: July 8, 2018

Abstract

As of 2007, an estimated 62% of individual bankruptcy filings in the United States were a direct result of costs borne from medical treatment following illness or injury, up from 46% in 2001. This pressing issue is only getting worse and is in need of relief. In this work, we consider the potential of a relatively recent, and rapidly growing phenomenon to mitigate the problem: online crowdfunding for medical expenses, wherein patients reach out to their social network for monetary support via online platforms that facilitate the process. On the surface, medical crowdfunding holds the potential to address insurance gaps and to help those burdened by medical debt. However, recent questions have arisen in the healthcare literature around fairness and equity in the distribution of funds. Consistent with the notion of digital divide, many have raised concerns that the individuals most likely to benefit from these services are not the individuals who are most in need. Accordingly, we first seek to establish the effect of this novel phenomenon on a key indicator of financial distress: rates of personal bankruptcy. We then explore heterogeneity in patterns of funding solicitation and acquisition, to assess the presence inequalities across patient populations. We leverage proprietary data from a large medical crowdfunding platform based in the United States, which we combine with county records of personal bankruptcy filing. We report evidence that greater success amongst medical crowdfunding campaigns does translate into a reduction in personal bankruptcy filings. Subsequently, we report analyses which revealed evidence consistent with the presence of a digital divide. Specifically, we report evidence that disadvantaged groups are systematically more likely to launch medical crowdfunding campaigns, yet conditional on campaign launch, garner systematically less in funding. We discuss the implications for the literature on the digital divide, as well as implications for practice and policy.

Suggested Citation

Burtch, Gordon and Chan, Jason, Investigating the Relationship Between Medical Crowdfunding and Personal Bankruptcy in the United States: Evidence of A Digital Divide (July 8, 2018). MIS Quarterly (Forthcoming), Available at SSRN: https://ssrn.com/abstract=2676821 or http://dx.doi.org/10.2139/ssrn.2676821

Gordon Burtch

Boston University - Questrom School of Business ( email )

595 Commonwealth Avenue
Boston, MA 02215
United States

Jason Chan (Contact Author)

University of Minnesota - Twin Cities - Carlson School of Management ( email )

19th Avenue South
Minneapolis, MN 55455
United States

HOME PAGE: http://carlsonschool.umn.edu/faculty/jason-chan

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