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New digital safety net or just more ‘friendfunding’? Institutional analysis of medical crowdfunding in the United States

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  • Lee, Sumin
  • Lehdonvirta, Vili

Abstract

Crowdfunding is becoming a popular way of financing healthcare. Some commentators suggest that crowdfunding could serve as a new institution that fills gaps in conventional safety nets. Others suggest that crowdfunding is simply another way of obtaining help from family, friends, and local associations, and has little transformative potential. We provide one of the first quantitative analyses of medical crowdfunding, and the first to model the broader societal context in which campaigns are situated. We scraped data on US medical campaigns from the leading platform, and combined them with county-level socioeconomic data to model predictors of campaign frequency and success. Our findings suggest that many seek help from crowdfunding when both formal and informal conventional safety nets fail them. Significantly more campaigns are initiated in US counties with poorer private insurance coverage, lower social security provision, fewer social associations, and weaker cultures of giving. However, campaigns are least likely to reach their goals where most needed. Campaigns are more likely to be successful in counties that are wealthier and healthier, and have more social associations. Crowdfunding is not merely ‘friendfunding’: fundraisers can increase their chances of success by having their appeals widely shared on social media. However, the returns to sharing are greater for campaigns initiated in wealthier areas. Overall, our findings suggest that medical crowdfunding is an entrepreneurial safety net: one where protection is not afforded universally or on the basis of need, but on the basis of one’s ability to appeal to the audience and out- compete rivaling needfuls.

Suggested Citation

  • Lee, Sumin & Lehdonvirta, Vili, 2020. "New digital safety net or just more ‘friendfunding’? Institutional analysis of medical crowdfunding in the United States," OSF Preprints 9kecq, Center for Open Science.
  • Handle: RePEc:osf:osfxxx:9kecq
    DOI: 10.31219/osf.io/9kecq
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    References listed on IDEAS

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    1. Berliner, Lauren S. & Kenworthy, Nora J., 2017. "Producing a worthy illness: Personal crowdfunding amidst financial crisis," Social Science & Medicine, Elsevier, vol. 187(C), pages 233-242.
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    3. G. Hodgson, 2007. "What Are Institutions?," Voprosy Ekonomiki, NP Voprosy Ekonomiki, issue 8.
    4. Bi, Sheng & Liu, Zhiying & Usman, Khalid, 2017. "The influence of online information on investing decisions of reward-based crowdfunding," Journal of Business Research, Elsevier, vol. 71(C), pages 10-18.
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    Cited by:

    1. Igra, Mark & Kenworthy, Nora & Luchsinger, Cadence & Jung, Jin-Kyu, 2021. "Crowdfunding as a response to COVID-19: Increasing inequities at a time of crisis," Social Science & Medicine, Elsevier, vol. 282(C).
    2. Zahid Yousaf & Obaddah Shakaki & Nicoleta Isac & Alina Cretu & Andrei Hrebenciuc, 2022. "Towards Crowdfunding Performance through Crowdfunding Digital Platforms: Investigation of Social Capital and Innovation Performance in Emerging Economies," Sustainability, MDPI, vol. 14(15), pages 1-12, August.
    3. Laura Grassi & Simone Fantaccini, 2022. "An overview of Fintech applications to solve the puzzle of health care funding: state-of-the-art in medical crowdfunding," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 8(1), pages 1-27, December.

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