THE excellent Tim Taylor on a new article on plasma donation:
John M Dooley and Emily A Gallagher take a different approach in “Blood Money: Selling Plasma to Avoid High-Interest Loans” (Review of economic studiesfuturepublished online May 2, 2024; SSRN Working Paper Version here). They study how opening a blood plasma center in an area affects the finances of low-income people. By way of context, they write:
“Plasma, a component of blood, is a key ingredient in medicines that treat millions of people for immune disorders and other diseases. With an annual value of more than $26 billion in 2021, plasma represents the largest human materials market. The United States provides 70% of the world’s plasma supply, consistently placing blood products among the country’s top ten export categories. The United States produces this level of plasma because, unlike most other countries, it allows pharmaceutical companies to compensate donors – typically around $50 per donation for first-time donors, with rates as high as $200 per donation. in the event of a serious shortage. The United States also allows relatively high donation frequencies: up to twice a week (or 104 times a year)…”
Not surprisingly, plasma donors are typically young and poor and use plasma donation as a substitute for non-bank credit such as payday loans.
I’m struck by Tim’s thoughts on how this relates to labor markets and regulation:
…I find myself thinking about the financial stresses many Americans face. Getting paid a few hundred dollars for a round of plasma donations is not an ideal answer. It is also not possible to take out a short-term loan at a high interest rate; in fact, taking out a loan can be a bad idea if you don’t plan to have the income necessary to repay it. In the modern American economy, hiring someone, even for a short-term job, involves human resources departments, paperwork, personal identification, bookkeeping, and tax records. These rules have their reasons, but the bottom line is that finding a short-term job that pays for a few days’ work is not easy, even 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 pushing a broom/Buys an eight-by-twelve four-bit.” Even granting some romance about the life of a tramp in this song, the idea that a low-income person can walk out the door and find a two-hour job that pays enough to solve immediate cash flow problems – other than donating plasma seems almost impossible in the modern economy.
