Blood for Social Status: Preliminary Evidence from Rural China

Evidence from developing countries has shown that relative concern matters for wellbeing. Overconsumption of positional goods due to status seeking contributes to an overall loss of welfare. Rural western China serves as an ideal destination to observe relative concern and induced social phenomenon. In Guizhou province, the negative effect of positional spending is even more intense when households living close to subsistence are compelled to donate blood to keep up with the Jones. Utilizing a census-type household survey data in 26 natural villages in rural Guizhou, we find that poverty leads to blood donation, especially through differentiated poverty depth. Meanwhile, social status seeking is intensified through income inequality, relative deprivation, and positional spending within a reference group, which renders more blood donation participation and at a higher level. The intensified blood donation is more saliently induced by relative deprivation than by income inequality, suggesting that further attention should be paid to what the most suitable inequality measure is in policy design or evaluation. The result is robust to different measures of relative deprivation. Further, the herd effect of blood donation exists, suggesting weak agents in making blood donation decisions. Interestingly, shortly after shocks such as unanticipated gift giving expenditure and livestock death, people are more likely to donate blood, while they generally do not engage in blood donation to cover anticipated large social expenditure such as house building and wedding.

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I32; J22; D13; D63
Xi Chen acknowledges generous Doctoral Research Grant from the Institute for the Social Sciences at Cornell University and precious data set provided by the Development Strategy and Governance Division at IFPRI. Conference Travel Grant provided by the Department of Applied Economics and Management at Cornell is also acknowledged. We are grateful to Ravi Kanbur for invaluable comments, guidance and encouragement. This paper also benefited from helpful discussion and invaluable comments from Robert Frank, David Sahn, Marc Rockmore, and seminar participants in the Department of Economics at Cornell. Due to time limit, I have not incorporated all helpful comments and suggestions in this early draft paper. The views expressed herein and any remaining errors are the author’s and do not represent any official agency.
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 Record created 2017-04-01, last modified 2020-10-28

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