Blood Money: The Financial Implications of Plasma Sales for Individuals and Non-Bank Lenders

74 Pages Posted: 11 Oct 2021

See all articles by John Dooley

John Dooley

Washington University in St. Louis

Emily Gallagher

University of Colorado at Boulder - Department of Finance; Federal Reserve Banks - Federal Reserve Bank of St. Louis

Date Written: October 11, 2021

Abstract

In the United States, households donate plasma for compensation at a higher rate than they use payday, auto-title, rent-to-own, or pawn loans. Our paper is the first to explore the financial implications for households of plasma donation. Plasma donors tend to be younger and less educated with lower incomes and credit scores; they are also more reliant on non-bank credit. We use dramatic growth in plasma centers between 2014 and 2021 to study the causal effect of the ability to donate plasma on non-bank credit. We find that access to a plasma donation center reduces demand (inquiries) for payday and installment loans by 6.5% and 8.1%, respectively, with larger effects (13.1% and 15.7%, respectively) on younger borrowers. Moreover, foot traffic increases by 7-10% at essential and non-essential goods establishments when a new plasma center opens nearby. Our findings suggest that plasma donation helps households smooth consumption without appealing to high-cost debt.

Keywords: household finance, precautionary savings, discretionary income, consumption, health economics

JEL Classification: D12, D14, G23, J22, J28, J46, I14, I15

Suggested Citation

Dooley, John and Gallagher, Emily, Blood Money: The Financial Implications of Plasma Sales for Individuals and Non-Bank Lenders (October 11, 2021). Available at SSRN: https://ssrn.com/abstract=3940369 or http://dx.doi.org/10.2139/ssrn.3940369

John Dooley (Contact Author)

Washington University in St. Louis ( email )

Emily Gallagher

University of Colorado at Boulder - Department of Finance ( email )

Campus Box 419
Boulder, CO 80309
United States

Federal Reserve Banks - Federal Reserve Bank of St. Louis ( email )

411 Locust St
Saint Louis, MO 63011
United States

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