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.