Social Interactions and Stigmatized Behavior: Donating Blood Plasma in Rural China

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1 Socal Interactons and Stgmatzed Behavor: Donatng Blood Plasma n Rural Chna X Chen Yale Unversty and IZA Davd E. Sahn Cornell Unversty and IZA Xaobo Zhang Pekng Unversty and IFPRI March 2018 Abstract Despte the resultant dsutlty, some people, n partcular, the poor, are engaged n behavors that carry socal stgma. Emprcal studes on stgmatzed behavor are rare, largely due to the formdable challenges of collectng data on stgmatzed goods and servces. In ths paper, we add to ths lmted emprcal evdence by examnng the behavor of donatng blood plasma n exchange for cash rewards n Chna. We do so usng two prmary data sets: the frst s a threewave, census type household survey that enables us to examne the evolvng patterns and determnants of donatng plasma. The second s data on detaled gft exchange records of all households. The data allow us to defne reference groups, measure the ntensty of socal nteractons, and dentfy peer effects usng a novel network structure based nstrumental varable strategy. We fnd that peer effects nfluence decsons to donate plasma. For example, a one standard devaton ncrease n ncome from donatng plasma n the peer group ncreases the value of own plasma donaton by 0.15 standard devatons. Famles wth sons have more ncentves to donate plasma to offset the escalated costs of gettng ther sons marred n a tght marrage market that favors grls. JEL Classfcaton: O1, Z1, R2, D8 Keywords: socal stgma, socal networks, peer nfluence, plasma donaton, Chna

2 Everyone was rendered both vctm and supporter of the system. Václav Havel, Introducton Certan markets exst, especally n mpovershed envronments where economc concerns outwegh moral values, for goods and servces that are assocated wth sgnfcant socal stgma (Edlund and Korn 2002; Kanbur 2004). Markets for body parts, chld labor, prosttuton, abducton and human traffckng, drug abuse, and toxc waste are just some examples. However, emprcal economc studes on stgmatzed behavor are rare, n large part due to the dffculty n collectng relevant data. In ths paper, we study a partcularly stgmatzed behavor n Chnese socety donatng blood plasma for cash. Blood banks provde sgnfcant cash compensatons to plasma donors. It has become wdespread n Chna snce the early 1990s, as the rapd economc growth n Chna n the past three decades and ts ntegraton nto the global economy have been accompaned by strong demand for blood products. Despte the rapd ncome growth, some poor households are laggng behnd. They are more lkely to be entced to donate plasma, n exchange for cash rewards. For these poor ndvduals, the margnal utlty of cash rewards s often hgher than the margnal dsutlty of the socal stgma assocated wth donatng plasma, whch s recognzed as mmoral n the Chnese culture. One of the attractons of blood plasma donaton s that through plasmapheress, a process to obtan blood plasma wthout depletng the donor of other blood consttuents, the remanng components are returned to the donors. Donors are able, therefore, to more - 2 -

3 frequently gve plasma. 1 Plasma obtaned by plasmapheress statons s not used n clncal blood transfusons, but s nstead sold to bopharmaceutcal companes that produce hgh proft human blood products, such as albumn, ntravenous mmunoglobuln (IVIG), ant nhbtor coagulaton complex, globuln, and hematoblasts. Snce the openng of pad plasmapheress statons n Chna n the early 1990s, ther operatons have proven hghly proftable for the enterprses that run them. However, there has also been a prolferaton of plasma collecton operatons that do not follow prescrbed procedures; standards of practce for sterlzaton are often neglected, accurate vrus detecton methods are not employed, and there s often mproper sharng of centrfuge machnes and non dsposable needles (Prat 2006). Although donatng plasma s legal (albet often the process takes place n an underregulated context), the stgma wth the behavor orgnates from three consderatons. Frst, the offer of large fnancal ncentves s seen as nducng a hghly rsky behavor among those n need of money. Thus, pad plasma donors are often labeled as both poor and vewed by others n the communty as engagng n a desperate behavor to mprove ther economc stuatons. Related to that, relyng on donatng plasma as a man source of ncome sgnals lazness. Second, people connected to plasma donors, whether they are famly members or close socal contacts, are concerned about the lkely spread of (deadly) nfectous dseases, snce t s well understood that plasma donaton has contrbuted to epdemcs, ncludng HIV/AIDS and hepatts (Shao 2006). Thrd, blood has a sprtual and symbolc meanng n Chnese culture. Donatng blood s essentally regarded as gvng one s body, unlke n the 1 The natonal regulatons for plasma and blood donaton stpulate that ndvduals are nelgble to gve plasma f they are older than 50 or younger than 20, wegh less than 50kgs for males and 45kgs for females, or serously dsabled. In addton, an nterval of 15 days between donatons s requred for plasma, and 3 months for whole blood (Asa Catalyst 2007)

4 West, where t s largely vewed altrustcally and where blood s a commodty wthout any strong sense of t beng ntegral to the physcal or sprtual sense of self or personal dentty. In keepng wth our expectatons, we fnd that donatng plasma s concentrated among those wth low economc status. Interestngly, however, donatng plasma s also observed to be concentrated among people wth close socal relatons. We are nterested, therefore, n testng the hypothess that the dsutlty assocated wth donatng plasma for cash subsdes may be lower when peers engage n the same behavor. That s, we test the hypothess that plasma donaton becomes ethcally acceptable when more people, n a clan or a communty n whch plasma donors are concentrated, engage n what would normally be consdered unacceptable behavor. Our focus on the extent to whch socal nteractons may motvate people to gve more blood represents an ssue that, to date, has not been explored n the theoretcal lterature on stgmatzed behavors (Basu and Van 1998; Edlund and Korn 2002). Ths lack of ntegraton of the lterature on stgmatzed behavors and socal nteractons s largely due to the hstorcal dffculty of extendng standard models of ndvdual utlty maxmzaton, so as to allow parwse, tradc, or more complex nteractons that shape behavor and explan socal concepts (Akerlof 1976; Basu 1986). Although the lterature has started more recently to nclude research on the structure of socal networks and behavor (Ballester, Calvó Armengol, and Zenou 2006; Calvó Armengol, Patacchn, and Zenou 2009), our applcaton n explanng stgmatzed behavors s new. And, more generally, our focus on dentfyng peer effects on plasma donaton may be mportant not only n the Chnese context, but may help understand observatons, such as n Kanbur (2004), that stgmatzed behavors also persst n rcher contexts

5 Our focus on dentfyng the role of socal nteractons n plasma donaton remans challengng due to the reflecton problem and correlated effects that may confound the analyss of peer effects (Mansk 1993). To address ths ssue, we take advantage of unusually comprehensve socal network data, whch enable us to crcumvent the reflecton problem by usng spatal nstruments on partally overlappng peer groups. Specfcally, the ntuton behnd our dentfcaton strategy s twofold. Frst, we rely on partally overlappng groups to generate peers peers (or excluded peers), whose characterstcs act as excluson restrctons n solvng the reflecton problem. Second, a large set of nstruments,.e. those exogenous characterstcs of the excluded peers naturally generated from the group structure, correlate wth peers behavor by means of socal nteractons but are uncorrelated wth the ndvdual group shock. These nstruments allow us to partally deal wth correlated effects (De Gorg, Pellzzar, and Redaell 2010). Through drect and ndrect peer fxed effects, an average of all relevant characterstcs n a network, ncludng those of drect peers and excluded peers, are further subtracted from each ndvdual equaton to remove unobserved characterstcs and the potental mpact of the nsttutonal envronment on behavor (Bramoulle, Djebbar, and Fortn 2009). We collected two unque data sets for ths study. The frst detals gft exchange records from all households n fve vllages durng the perod , whch nclude all gft lnks wthn and across the fve vllages, as well as all gft lnks between the fve vllages and the outsde world. Keepng a wrtten record of gfts receved has been a tradton n Chna for thousands of years. Ths socal norm has also been preserved n many neghborng countres, such as Vetnam, Korea, Japan, Thaland and Camboda, where people engage n recprocal gft - 5 -

6 exchanges (Chen 2014). The records kept by each household generate data, whereby the peer groups vary at the household level, whch guarantees the presence of excluded peers. Addtonally, the gft network data effectvely gauges ntensty of socal nteractons through accurate and complete network nformaton on the sze of parwse gft exchanges. Thus, we defne reference groups, measure ntensty of socal nteractons, and dentfy peer effects. Our approach to utlzng partally overlappng reference groups, dentfed from gft records, dffers from co authorshp network data (Goyal, Van Der Lej, and Moraga Gonzalez 2006), technology adopton network data (Conley and Udry 2010), and rsk sharng network data (De Weerdt and Dercon 2006) n that t possesses the feature of excluded peers. Whle Bramoulle, Djebbar, and Fortn (2009) and De Gorg, Pellzzar, and Redaell (2010) make use of the same strategy, the former only allows a maxmum of 10 people n the nomnated frendshp networks, and the latter has lttle nformaton on socal nteractons. The second data set s a longtudnal survey of all households n the vllages n whch we gathered detaled data on the patterns and determnants of donatng plasma. Matchng the two datasets enables us to track how decsons to donate plasma are affected by the nature of socal networks. Thus, our paper s among the frst attempts to collect data that allows for the modelng of stgmatzed behavors, applyng a spatal dentfcaton strategy to estmate the effect of socal nteractons. Our unque data enables us to measure real reference groups, test peer effects for stgmatzed behavors, and understand how the ntensty of socal nteractons drves peer effect estmatons

7 Our results ndcate that n addton to poor people beng more lkely to donate plasma, there s strong evdence of the presence of peer nfluence on donatng plasma. However, the ntensty of socal nteractons does not seem essental to peer effect dentfcaton. Moreover, peer effects appear to be partally drven by socal nteractons that reduce stgma. The remander of ths paper s organzed as follows: n Secton 2, we present the detals of donatng plasma for cash subsdes n rural Chna. Secton 3 derves llustratve models for the mpact of peer nfluence on donatng plasma. Secton 4 descrbes the longtudnal household survey and gft exchange network data, the dentfcaton of peer nfluence, and the emprcal framework. In Secton 5 we report estmaton results. Fnally, Secton 6 concludes. 2. Plasma Donaton and Epdemcs n Rural Chna In Chna, there are separate markets for whole blood and blood plasma. The former s manly suppled by voluntary donaton and s destned prmarly for hosptals and blood transfusons. Plasma donors, n contrast, are offered cash compensaton, snce the plasma s prmarly used by commercal enterprses such as bopharmaceutcal companes. Current regulatons forbd pharmaceutcal companes and commercal enterprses from extractng plasma from voluntarly donated whole blood, a polcy desgned to preserve the supply of blood for patents n need. It s therefore no surprse that wth the growng demand for plasma among commercal enterprses n ths lucratve market, donatng plasma s more popular than voluntarly gvng whole blood. Another reason for the popularty of plasma donaton s the nature of ts process. Whole blood s taken from the donor, and thereafter, the plasma s separated from the whole blood

8 The red blood cells are then renjected back nto the donor ntravenously. To speed up the process and reduce tme costs ncurred by the donors, they are often gven red blood cells from dfferent, prevous donors wth the same blood type who were sent on ther way, whle ther blood s beng processed n a centrfuge machne to be renjected nto a later donor. One troublng concern s that n the 1990s and early 2000s, the health status of blood plasma donors was not strctly screened and unsantary condtons for donatng plasma were wdespread (Shao 2006). Ths was allowed despte regulatons that plasma from nfected donors be segregated (Watts 2006) and presumably, not renjected back nto another donor. Consequently, some people wth hepatts and HIV nfecton were allowed to donate blood, resultng n outbreaks of HIV nfecton and hepatts C (Wu, Rou, and Detels 2001; Prat 2006). Contamnaton of red blood cells durng the process of obtanng plasma was assocated wth outbreaks of HIV nfecton among plasma donors as early as 1994 (Wu, Rou, and Detels 2001). In fact, donatng plasma n the 1990s and the 2000s has accounted for over one ffth of Chna s HIV cases (Cohen 2004; Yan et al. 2013). There has been a strong regonal component to both donatng plasma and the resultant outbreak of dseases. For example, a wdespread HIV/AIDS epdemc n Henan provnce occurred n Chna n the 1990s, where estmates ndcate that over 1.2 mllon people contracted AIDS, and blood transfuson n unsantary blood banks are consdered prme suspects for ths epdemc (Asa Catalyst 2007; Gao 2009). The Chnese government responded rapdly to the epdemc by reducng the number of commercal blood banks and tghtenng regulatons. In response, many blood banks n Henan provnce moved ther operatons to southwest provnces, such as Guzhou, where we conducted our surveys. It s not surprsng that the blood banks chose Guzhou as a major - 8 -

9 source of supply of blood plasma (Yn 2006), snce t s one of the poorest provnces n Chna. The most recent fgures ndcate that plasma statons n Guzhou have suppled 40 percent of the total blood plasma snce 2006, renderng t the largest plasma market n the country. However, despte the efforts of the government to ensure safety of donatng plasma, a rapdly growng epdemc of nfectous dseases, partcularly hepatts C n early 2006, has affected Guzhou. 2 In response the government temporarly shut down all blood banks n Guzhou, only to allow them to be reopened n 2007, after steps were taken to mprove the santary condtons of donatng plasma n the regon. Snce then, the commercal enterprses runnng the blood banks have aggressvely moved to ncrease plasma donaton, ncludng rasng cash rewards for each donaton and offerng bonuses to those donatng regularly. In addton to the ncentves for regular donaton, cash penaltes have been mposed on those donors who do not donate bweekly. The objectve of those runnng the plasma statons thus has been to create a regular group of donors, usng both ncentves and penaltes that encourage them to gve plasma bweekly throughout the year. For those that sgn up for ths commtment, gvng plasma thus generates a steady source and szable proporton of ncome. The relance on plasma donaton s further renforced by regular donors often lackng energy to do farm work, further ncreasng ther relance on donatng plasma. 3. Conceptual Model 2 In January 2006, statstcal data showed that the ncdence, the number of deaths, and the fatalty rate of nfectous dsease, respectvely, ncreased by 21.36%, 65.38%, and 36.28% on a year on year bass. In March 2006, the three numbers further ncreased to 30.01%, 73.17%, and 33.20%, respectvely

10 Our startng pont s a statc model of stgmatzed behavor n whch peer pressure mpacts plasma gvng decsons, and the decson to donate plasma s subject to constrants on labor supply. Suppose there s a contnuum of agents n an economy. Each agent makes decsons on labor market partcpaton and donatng plasma. Agents are heterogeneous n labor productvty, 3 rangng from mn to max, wth the cumulatve dstrbuton functon F( ). Therefore, wage ncome s denoted by w. Donors are subject to a maxmum legal donaton level and, therefore, a maxmum possble ncome from donatng plasma B. The actual level of plasma donaton rangng from 0 (not donatng ) to 1 ( donatng at the bweekly level) s denoted by h. We follow the basc household decson model that ncorporates the socal stgma assocated wth plasma donaton and an exogenous wage rate, max Uch ( (,, w), Shh (, )) (1) h.. st c w hb, where U( ) s the utlty functon. The standard assumpton for utlty from consumpton c follows,.e., U 0, U 0. S() s the socal stgma functon representng dsutlty from c cc donatng plasma. The standard assumpton U U 0 follows, meanng that: (1) the cs greater the dsutlty s from donatng plasma, the lower s the margnal utlty of consumpton, and (2) the margnal dsutlty from donatng plasma becomes greater as consumpton ncreases. In other words, wealther people suffer more from an ncreasng socal stgma than Sc 3 For smplcty, n ths statc model, labor productvty s not a functon of donatng plasma

11 ther poorer counterparts. Utlty s decreasng n stgma, and the margnal dsutlty from stgma s ncreasng n stgma,.e., U S 0, U SS 0 4. The average level of plasma donaton n the reference group s h. The wage rate n productvty term s w. A person wth labor productvty receves w from labor provson.5 The socal stgma functon S() satsfes two condtons: S 0, S 0 ; S 0, S 0. The frst smply states that stgma ncreases n own donaton ; the second s that stgma decreases n peers donaton. It s further assumed that a person does not have any compulson or gult assocated wth a decson not to donate plasma, regardless of the average plasma gvng n the reference group,.e. S(0, h) 0. The only effect exerted by peers s therefore operatng through stgma. Thus, n combnaton, these condtons lead to the followng proposton: h h hh hh h(, h, w) 0 h (2) Ths proposton, whch we test emprcally and elaborate on n Appendx II, states that an ndvdual s level of plasma donaton ncreases n average donaton n the reference group. 4. Data and Emprcal Strategy 4.1 Data collecton Guzhou s one of the poorest provnces n Western Chna wth ts populaton comprsed of more than 20 ethnc groups. Our study uses matched longtudnal household survey data 4 Ths assumpton s supported by the survey data. In the survey, subjectve questons on happness and satsfacton were asked to each ndvdual household member. Peers plasma donaton rate (a proxy of stgma) aganst these subjectve ratngs (a proxy of utlty) are plotted n Appendx I. The frst and second order condtons of utlty wth regard to stgma are consstent wth the shapes of Appendx I. 5 All the households n our census type survey have access to only one blood bank that sets a unque prce and maxmum legal plasma ncome B; but human captal and, therefore, wage ncome vary across ndvduals

12 collected n Guzhou. 6 The frst data set collected gft records from all households n fve randomly selected vllages over a perod from , ncludng rch nformaton on senders, recevers, and sze of all cash and n knd gfts. These records nclude all gft lnks wthn and across all 184 households from the fve vllages. In addton, we have rch nformaton on gft exchanges between the 184 households and those n other vllages. A total of 251 households are ncluded n the gft gvng data set. The data were recorded by hosts at the tme they were presented wth gfts by guests, on the days that they hosted socal events, ncludng weddngs, funerals, comng of age observances, chldbrth, and house movng ceremones. Relatves were responsble for recordng gfts, f the hosts were llterate. Gft recevng records were routnely kept for a long perods by recpents n order to serve as remnders to recprocate n future gft gvng when attendng events. In total, more than 11,000 gft lnks among households n were dentfed. Second, a longtudnal survey of all 251 households nvolved n these gft exchanges was conducted n 2007, 2009, and In each wave, the survey collected household level data on demographc characterstcs, cash and n knd transfers, and ncomes and consumpton, n addton to rch communty level nformaton on publc facltes, nvestment, and nsttutons. Descrptve statstcs on the sample are shown n Table 1, and we present Foster Greer Thorbecke poverty measures on the sample n Table 2. These tables show that poverty was wdespread, although, t decreased by half between 2007 and In contrast, nequalty was ncreasng n the vllages surveyed. 6 Ths survey was jontly conducted by the Internatonal Food Polcy Research Insttute (IFPRI), Chnese Academy of Agrcultural Scences (CAAS), and Guzhou Unversty

13 The three rounds of household survey ncluded nformaton on plasma donaton, ncludng cash receved. Informaton on donatng plasma was collected on each famly member, ncludng those who were away at the tme of survey. Gven the senstvty of collectng data on donatng plasma, we made great efforts to ensure the accuracy of these data, ncludng extensve tranng of local enumerators to effectvely communcate wth and elct accurate nformaton from the resdents n our sampled vllages. Table 3 summarzes ths nformaton so that we can see that, n 2007, 10.3 percent of all households were engaged n plasma donaton. The money receved accounted for 4.5 percent of total ncome among all households, whether they donated plasma or not (Table 4). The 2010 follow up survey of the same households ndcated that 13.0 percent of households were engaged n plasma donaton and that they contrbuted 8.7 percent to the total ncome, a doublng snce Ths large ncrease was due manly to an ncrease n the share of households wth two or more ndvduals donate. By the tme of the 2012 follow up survey, 25 percent of households gave plasma, although there was a slght declne n the share of total ncome that those gvng represented, down to 7.4 percent of the total ncome (Table 4). The explanaton for the drop n the share of plasma donaton n the total ncome s that the number of households wth two or more donors dropped from 6.0 to 3.8 percent. Overall, unlke for the rch, the payment for plasma s sgnfcant, and the ncentve to be a plasma donor s strong for the poor. Appendx III depcts the dynamcs of plasma donaton n an example network usng the matched longtudnal household survey data and the gft networks data. It s evdent that

14 households surrounded by more plasma donors n ther networks are more lkely to donate plasma n the followng perod. 4.2 Reference groups Substantal ethnographc evdence documents socal nteractons at the vllage level n less developed rural communtes. Foster (1967) argued that vllage nteractons mght be a more credble assumpton than studes that use cty blocks, census tracks, schools, or classrooms when vllages are small. In a recent study, Mangyo and Park (2011) suggested that vllage reference groups are salent for rural resdents lvng n close proxmty. Therefore, we frst defne reference groups at the vllage level. The mountanous condton n our surveyed regon further solates connectons wth the outsde world. Apart from our defnng the reference group by the vllage boundary, we explot the rch nformaton on gft networks to further defne reference groups per each household s correspondng gft recevers, whch we refer to as alters, n keepng wth the standard termnology n socal network analyss. Ths alternatve defnton of gft recevers as the reference group has the advantage over the vllage based defnton, snce t characterzes ndvdual socal nteractons wth multple, partally overlappng reference groups. Fgure 1 llustrates the gft lnks for one of the fve vllages from whch we collected network data. Gft exchange networks are more ntense wthn clans and vllages, perhaps due to ther lower enforcement cost. A majorty of resdents may have knshp tes wth each other n a tradtonal rural communty, whch largely determnes socal norms and shapes behavor. Though donatng plasma s recognzed as mmoral n the Chnese culture, t becomes ethcally

15 acceptable when more people n a clan, and the communtes n whch they are concentrated, engage n what would be consdered stgmatzed behavor. Ths could explan our observaton, drawn from mappng the data, that donatng plasma s usually clustered among people wth close socal relatons. Proxmty to other donors alone, however, may not compel households to become plasma donors, even f they have very smlar socoeconomc characterstcs, unless they are part of the same socal network. To llustrate ths more concretely, Fgure 2 plots the postve relatonshp between average plasma donaton decsons n the reference group (defned by vllage boundary) and own plasma donaton decsons over the three waves of the survey. Each subfgure plots one of the plasma donaton factors of the peers that we nvestgate n ths paper that s: (1) whether to donate plasma; (2) the ncome earned from donatng ; and (3) the number of household members donatng plasma aganst the mean of the own plasma donaton decsons n the vllage. The postve relatonshp s strongest between the number of famly members donatng plasma n the network and own plasma donaton decsons. 4.3 Emprcal strategy: Identfcatons of peer nfluence As we dscussed n the ntroducton, the strength of our paper rests on our ablty to tackle the dentfcaton problem that arses, snce behavor s determned by behavor, whch brngs a crcularty of cause and effect. Thus, parameters n classcal peer effect models are not unquely dentfed (Mansk 1993 and 2000). We therefore need to crcumvent the reflecton problem

16 that hnders dsentanglng endogenous from exogenous effects n estmatng the mpact of peer nfluence on donatng plasma. The conventonal nstrumental varable strategy mght partally address ths challenge, snce part of the dffculty arses from the endogenety of the behavor that enters both sdes of the econometrc equaton. Lagged communty level nstruments that drectly affect lagged average group behavor, but arguably have no drect lnk to current ndvdual behavor under evaluaton, can be employed. However, ths conventonal strategy assumes that ndvduals nteract n a parttoned group wth a common boundary, and no nfluence comes from outsde the group. Peer effects n ths settng may not be dentfable (Mansk 1993). There has been growng recognton that socal nteractons wthn parttoned groups are very partcular and not lkely to fully represent the breadth of socal nteractons, whle nteractons n partally overlappng groups yeld an dentfcaton strategy. Lee (2007) explored the role of varatons n group szes n dentfyng socal nteractons. De Georg et al. (2010) assumed socal nteractons wth multple reference groups to dentfy peer effects. Followng the lterature n spatal econometrcs (Case 1991; Anseln, Florax, and Rey 2004; Bramoulle, Djebbar, and Fortn 2009), we consder a lnear n means peer effects model where each household has ts specfc reference group, and the average behavor and characterstcs of the group nfluence one s own behavor. Interactons are structured through a drected socal network. The relaxaton of a group nteractons assumpton allows us to separate endogenous effects from exogenous effects and resolve the reflecton problem. Specfcally, we estmate the followng model for plasma donaton decsons:

17 y y jt, 1 jt, j P j P Pt,, xpt,, t Pt,, n t, 1 n t, x, (3) or n matrx notaton, Y GY X GX, (3 ) where an agent s plasma donaton decson, y Pt,,, s a lnear functon of the average behavor of ts peers n a heterogeneous group P of sze n, whch partally overlaps wth others peer groups, own characterstcs, x, and mean characterstcs of the peer group. Agent s excluded from the group defned by drected gft exchange networks. The term, y Pt,,, denotes three ndcators of donatng plasma for household : a dchotomous varable defned by whether or not t donates plasma; ncome from donatng plasma; and number of household members engage n donaton. Both donaton value and the number of members donatng plasma measure engagement ntensty. Average plasma donaton decsons n peer groups are constructed n three ways to measure peer behavor: the frst takes the smple average over peers donaton behavor; the second weghs peers plasma donaton decsons by row normalzed, parwse gft values n the adjacency matrx and then takes the weghted average over peers donaton behavor for each ndvdual; and the thrd weghs peers plasma donaton decsons by ther centraltes n the network. captures the endogenous peer effect of donatng plasma, and, the exogenous effect of the peers characterstcs on ndvdual s plasma donaton. The Generalzed Spatal Two Stage Least Squares (GS2SLS) estmaton s mplemented to deal wth the smultanety n dentfyng peer effects, as ndvdual decsons mght ndrectly affect the average decson n

18 the reference group. The reference groups are defned on gft networks wth spatal nstruments generated from the network structure. Specfcally, we adopt a set of excluded peers relevant characterstcs as excluson restrctons. Appendx IV derves and llustrates ths spatal nstrumental varable strategy n greater detal. Standard errors n all estmatons are clustered at the network level. There are 42 ndependent networks n the gft exchange data. denotes a set of covarates, ncludng the gender of the household head, ther age, educaton, ethncty, and nformaton on cadre and party membershp, household sze, household per capta ncome (excludng donatng plasma), 7 rato of local wage to per 580cc plasma prce, and whether any household members experenced major health shocks, death, or death of lvestock. 8 The share of all household members, comprsed of unmarred sons aged 11 29, s also ncluded, wth the expectaton that when ths value s hgh, t s assocated wth greater expenses assocated wth ther gettng marred. Ths s expected to rase the ncentve to donate plasma. Note that the plasma donors age profle suggests that none of the unmarred sons gve plasma, avodng any drect effect of unmarred sons as potental donors. The elderly persons (as a share of all household members) are controlled for due to the offcal stpulaton that prohbts them from donatng plasma. We further control for travel tme to the local blood bank to capture nonmonetary cost. 9 7 If a person s turned away because he/she looks sck, ths could smultaneously affect hs/her ncome, as the same appearance makes them look ll. Though t s unlkely that people were ever turned back from donatng plasma, we replace ncome wth ts predcted value through regressng on famly background and productve assets. 8 Years between the three wave household survey has wtnessed sgnfcant changes n these characterstcs, especally per capta ncome (due to hgh ncome growth, worsenng ncome nequalty, and hgh ncome moblty), household sze (due to massve mgraton), relatve wage (due to rapd rse n labor market wage and plasma donaton compensaton after the reopenng of the blood bank), exposures to shocks and travel tme to the local blood bank (due to mprovng publc nfrastructure that reduces tme to commute), whch gve us szable varatons to dentfy the effects. 9 Plasma donaton behavor s often concentrated where local transportaton condtons permt. Transportaton condtons vary among vllages. In vllages wth better road access, farmers use carts to transport people to the

19 Unobserved varables common to households who belong to the same socal envronment may be correlated wth households background, whch causes an addtonal dentfcaton problem. To address ths ssue, we take the dfference of equaton (3) for people wthn the same network to elmnate unobserved factors at the network level. 10 Two types of wthn network dfferences can be derved: the local dfference whch expresses the model n devaton from the mean equaton of one s drect contacts and the global dfference whch expresses the model n devaton from the mean equaton of one s drect and ndrect contacts. 11 Bramoulle, Djebbar, and Fortn (2009) showed that the global dfference mposes less restrctve condtons to obtan dentfcaton. The endogenous peer effect ( ) and exogenous effect of peers characterstcs ( ) can be dstngushed on most networks when the global dfference s adopted. Ths strategy, however, does not address the concern over self selecton nto the networks. Though randomzng reference groups may solve the endogenous formaton of the peer group, one lmtaton s the rrelevance of assgned groups n many nteractve decsons (Fletcher 2010). Our study reles on observatonal socal network data. Neglectng endogenous frendshp selecton may overestmate peer effects to a large extent (Fletcher and Ross 2011). Our partal solutons to endogenous network formaton are twofold. Frst, t s possble that some unobserved factors, e.g., popularty, affect both the lkelhood to form lnks and ndvdual plasma donaton, but stll dffer among ndvduals n the same network. The county seat and the nearby blood bank, whle for ethnc mnorty groups lvng n the mountans, people are less lkely to donate plasma regularly. 10 Note that our approach to remove correlated effects goes further than De Georg et al. (2010), who argued that the nstruments,.e., characterstcs of excluded peers, uncorrelated wth the ndvdual group shock suffce to solve endogenety due to unobserved correlated effects. 11 Both dfferences assume that no household s solated, and the results are generally vald for any rownormalzed matrx G

20 network wll not be exogenous, condtonal on and x. To avod the resultng nconsstent estmates of socal nteractons, we assume that these unobservables do not change over tme and estmate a fxed effect model to remove unobserved factors at the household level. Results not reported n the paper suggest that peer effects stll account for wthn household varatons n plasma donaton. Second, stgma assocated wth donatng plasma may affect network formaton and can be captured by the error term. We mtgate ths concern by usng the gftexchange network data between 1994 and 2003, whch predates the openng of a local blood bank. In other words, the formaton of gft networks was establshed well before ndvduals were makng decsons regardng whether or not to donate plasma. 5. Emprcal Results 5.1 Man results Tables 5a 5c present the man results on three plasma donaton decsons, presentng OLS (column R1) and GS2SLS estmates (columns R2 R5) wth the non weghted adjacency matrx. Column R1 of Table 5a s a parsmonous specfcaton and shows that the margnal effect of peers decson to donate plasma on the own probablty of dong so s based upward. Columns R2 through R5 present the results of the GS2SLS estmates, wth the frst stage and second stage estmatons of our preferred specfcaton n column R5 presented n Appendx V. F tests of the excluded nstruments ndcate that weak nstruments are not a concern. Overdentfcaton tests fal to reject the valdty of the spatal nstruments. Column R2 presents the same specfcaton usng the GS2SLS estmaton strategy n whch peers average probablty to donate plasma s nstrumented by characterstcs of excluded

21 peers generated from the network structure. The dentfed peer effects n columns R3 through R5 are robust to controllng for the rch set of ndvdual and household characterstcs, contextual covarates, and network fxed effects, 12 although the margnal effect decreases as we move across the columns, especally when we add ndvdual and household controls n column R3 and contextual controls n column R4. Our preferred specfcaton n columns R5 controls for the extensve set of ndvdual and household covarates, contextual factors, and network fxed effects. The results suggest that a hgher rate of 10 percentage ponts of plasma donaton among peers rases the probablty of an ndvdual donatng plasma by approxmately 2.5 percentage ponts, or 13.9 percent. Tables 5b and Table 5c present correspondng results on plasma donaton value and the number of famly members donatng, respectvely. The GS2SLS estmates n our preferred specfcaton n column R5 suggest that a 10.0 percent ncrease n peers ncome from donatng plasma rases ndvdual ncome from donatng plasma by 3.0 percent (Table 5b). Evaluated when the frst famly member begns gvng plasma, one more peers famly member then gvng plasma, on average, leads to a hgher chance, by 46.9 percentage ponts, that a second famly member n a household gves plasma (Table 5c). We should note that the actual magntude of ncrease n the number of addtonal famly members donatng s stll relatvely small, snce only 25.8 percent famles donatng plasma have more than one member engaged n such a practce. 12 Beyond column R2, controllng for ndvdual and household characterstcs n column R3 reduces the peer effect estmate by 24 percent ( /0.513). Column R4 further ncludes contextual controls, and the peer effect estmate reduces by 23 percent ( /0.390). Further controllng for network fxed effects n our preferred column R5, the peer effect estmate drops by 16 percent ( /0.297)

22 Throughout columns R1 R3 n Appendx V, none of the exogenous effects, other than exposure to lvestock deaths, s sgnfcant, suggestng socal nteractons manly operate through peers behavor. Key ndvdual and household characterstcs are worth notng. Havng an unmarred son s assocated wth a greater ncentve to gve plasma, whch s probably due to the strong motve to earn extra money to get the son marred n the compettve marrage market, wth skewed sex ratos favorng females. Households wth more elderly persons are less lkely to donate plasma, as are those wth hgher ncome and of mnorty status. Table 6 reports the mpact sze as a 1 standard devaton change n peers average behavor n terms of the mpact on ndvdual behavor, as expressed n standard devatons. The effect szes vary across 3 plasma gvng decsons, rangng from for plasma donaton probablty to for the number of famly members engaged n. Unfortunately, the lack of emprcal evdence from other smlar studes on peer effects of stgmatzed behavor prevents us from makng a more meanngful comparson of these effects, though there s lttle queston of ther mportance. 5.2 Addtonal analyss and robustness Table 7 relaxes the pror assumpton that all lnks or contacts mpose the same nfluence over an ndvdual under nvestgaton. Specfcally, we next assume that strength of the lnk matters n terms of the nfluence over the ndvdual s plasma gvng behavor. In specfcaton 2, each peer s plasma gvng decson s weghed by the sze of the gft that they send to another ndvdual. An alternatve assumpton we make s that peers postons n the networks have

23 nfluence over the ndvdual, so each peer s plasma decson s weghted by measures of ther network centralty, ncludng out degree centralty (specfcaton 3), n degree centralty (specfcaton 4), and the Bonacch centralty (specfcaton 5; see Table 1 for summary statstcs). Correspondngly, the adjacency matrces for socal nteractons are all row normalzed. In Table 7, GS2SLS estmatons wth these dfferently weghed adjacency matrces are compared to that wth a non weghted adjacency matrx n Tables 5a 5c. Overall, surprsngly, we do not fnd any larger or more sgnfcant peer effect estmates n Table 7 than the baselne results reported n Table 5. Whle the exstence of a gft lnk matters to socal nteractons, ths result may n part reflect that gft sze and ndvdual s poston n the gft networks are relatvely homogeneous and are ndcatve of the well recognzed norm of ceremonal gftng n these tradtonal, agraran communtes (Chen, Kanbur and Zhang 2011). Robustness checks are presented n Table 8. Frst, as a falsfcaton test, we randomly assgn households to placebo peer groups. Peer effects dsappear, reassurng us that the real gft network data we collected captures the doman of socal nteractons and that our dentfed peer effects are causal. Second, more nuanced checks are done, and the man results do not vary. For example, smlar to De Gorg, Pellzzar, and Redaell (2010), we change the set of excluded peers characterstcs as nstruments. All these checks ndcate that the results on peer effects are robust to changes n the set of nstruments. 13 Studes have argued that explotng drectonalty n networks s a useful dentfcaton strategy to test spurous correlatons (Chrstaks and Fowler 2007; Bramoulle, Djebbar, and Fortn 2009). Our dentfcaton so far reles on defnng peers as people to whom one sends 13 These results are avalable upon request

24 gfts (also known as an ego perceved network, n whch an ego dentfes an alter as a frend va gvng a gft). An alter perceved network, however, conssts of alters who dentfy egos as frends va sendng gfts to egos. If contextual effects do not spurously drve the relatonshp observed between the ndvdual and peers plasma donaton behavor, we should observe weaker or even no relatonshp between the two when peer effects are dentfed usng alterbut not ego perceved peers. Results reported n Table 8 ndeed show no evdence of any effect. Ths provdes suggestve evdence n favor of a causal nterpretaton regardng peer nfluences on donatng plasma. 5.3 The potental mechansms of peer effects The presence of endogenous nteractons arguably mght be too broad to be very helpful to gude polcy (Mansk 2000). There are dstnct channels whereby group nteractons affect ndvdual behavor. Frst, preference nteractons determne that the dsutlty assocated wth donatng plasma declnes (ncreases) as more (fewer) peers engage n the practce, whch promotes (dscourages) ndvdual plasma donaton. Second, nformaton dssemnated on the proft and rsk assocated wth donatng plasma may shape expectatons through socal nteractons. Households wth more donors n ther networks may ncrease donaton f proft domnates. Prescrptons for approprate publc polcy dffer between preference nteractons and expectaton nteractons. If expectaton nteractons are at play, an educatonal nterventon curbng frequent plasma gvng mght be useful, f nformaton on ts devastatng health effects or potental rsks s constraned. However, the same educatonal nterventon becomes

25 superfluous later on, when nformaton s abundant and preference nteractons become the major channel. More attenton should then be gven to polces that change preference. Expectaton nteractons alone may not provde a satsfactory explanaton n our context. In 2006, a hepatts C epdemc affected the regon, and all blood banks were shut down due to blood contamnaton. Durng the epdemc the local government made every effort to publcze nformaton on the stuaton and the assocated health rsks, ncludng sendng offcals to speak ndvdually wth each famly. An open ended survey n 2007, desgned to elct ndvduals perceptons of donatng plasma, ndcated that nformaton on both benefts and costs of donatng plasma had been effectvely transmtted to the publc through such outreach. Specfcally, 96 percent of all respondents n our study correctly recalled the sze of cash compensaton for plasma donaton ; and 97 percent of respondents also lsted potental devastatng mpacts of regularly donatng plasma, such as lack of strength, dsease nfecton, appette loss, fatgue, nausea, and vomtng. Among mgrants vulnerable to work related accdents, almost all beleved that donatng plasma was rsker than an ndustral njury. Other evdence that demonstrates the role played by nformaton dssemnaton s that, compared to rate of plasma donaton n 2006 of 31.2 percent before the shutdown of the blood bank, the rate of plasma donaton dropped to 10.3 percent ntally after the reopenng of local blood banks n However, the doublng of plasma donaton rate n fve years, between 2007 and 2012, suggests that the channel of nformaton dffuson could be serously tme lmted. Preference nteractons are lkely a man mechansm at work n explanng peer effects. As we dscussed above, dsutlty from socal stgma may declne when more peers partcpate, whch promotes more plasma donaton. What we are unable to substantate s the exact

26 cause of the stgma: s t that a person s labeled as beng poor and lazy due to large fnancal ncentves to donate, the potental spread of nfectous dseases due to operatonal scandals and epdemcs, or a range of possble cultural taboos? The only real emprcal nsght we get nto ths ssue s based on the 2007 open ended survey, n whch approxmately 90 percent of respondents (ncludng both plasma donors and those who had never donated plasma) reported that t was dffcult to talk to others about plasma gvng. A majorty of the plasma donors and non donors responded that people may avod the donors, judge them badly, or msunderstand them, and a few answered that they dd not want or thnk people should take pty on them. Though we are not able to locate the exact stgma that may drve the dentfed peer effects, they all support the strong effect we observe n our analyss. 6. Conclusons Informaton on stgmatzed behavor s often too senstve to collect. Combnng two unque sources of prmary data on long term socal networks and a rch census type panel survey that ncludes data on one knd of stgmatzed behavor, donatng plasma n rural Chna, we are able to add to the lmted number of emprcal studes on stgmatzed behavor wth rch nformaton on ndvdual engagement. We also unquely collected long term spontaneous gftrecevng records kept by each household to provde early evdence on how socal nteractons may shape stgmatzed behavor. Our novel dentfcaton strategy reles on spatal nstruments that are naturally generated from the network structure n order to gauge peer nfluence on donatng plasma. The strategy effectvely solves the reflecton problem and dstngushes correlated effects that are

27 problematc n emprcal studes on peer effects. The unprecedented, rch nformaton on real socal connectons through long term gft exchanges enables us to probe nto the ntensty of socal nteractons. We fnd strong evdence of peer nfluence, whch enrches our understandng of socal determnants of donatng plasma. The ntensty of socal nteractons, however, plays a trval role n dentfcaton. Peer nfluences are salent n ego perceved networks but not n alterperceved networks, whch reassures us that contextual effects may not drve the results. In addton to socal nteractons, poorer famles tend to gve more plasma. Famles wth unmarred sons gve more plasma, presumably to create a better poston for ther sons n the hghly compettve marrage market n Chna. They use the proceeds from the donaton to buy bgger houses, pay hgher brde prces, and throw more lavsh weddng banquets. All these actons occur, despte the fact that the stgmatzed behavor of donatng plasma often evokes popular dscomfort, dstrust, and even outrage among the publc. Our results ndcate that ndvdual plasma donaton may ncrease wth peers average donaton va both expectaton nteractons and preference nteractons. Contextual nteractons and correlated effects, however, mply no such feedbacks. Programs targetng popular agents n the networks and, therefore, curbng ndulgence n stgmatzed behavor may be effectve n reducng rsky plasma donatng behavor. Ths acton may ndrectly reduce plasma gvng from peers wth feedback to further decrease donaton from the targeted households. The ssue of plasma donaton under unhygenc condtons s mportant n ts own rght. It engenders devastatng mpacts on donors, ncludng adverse effects on health and labor

28 supply, and at the same tme does lttle to allevate poverty and ntergeneratonal nequalty. The devastaton of the HIV crss n Henan Provnce n Chna n the 1990s and the hepatts C crss n Guzhou Provnce n the 2000s, n whch plasma donaton contrbuted to both crses, are epsodes that warrant careful reflecton to avod smlar events n the future. Havng shown the sgnfcance of socal nteractons, understandng ts exact mechansms and consequences wll be valuable questons open to future research

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32 Fgure 1. Long term Gft Exchange Network n One Vllage Source: Authors gft network data from one of the fve vllages. Note: Dots of the same color show households n the same clan. Dots to the boundares show households from other vllages. The dots (households) are based on actual geographc locatons

33 Own plasam donaton probablty Mean plasma donaton rate n the networks Mean ln(per capta plasma ncome) Mean ln(per capta plasma ncome) n the networks # hh members donatng plasma Mean # hh members donatng plasma n the networks Fgure 2. Peer Influence on Household Plasma Donaton Source: Authors survey data Notes: The horzontal axes denote peers mean plasma donaton decsons, ncludng whether to donate plasma, ncome earned from donatng plasma, and the number of household members who donate plasma. The vertcal axes denote own plasma donaton decsons. Each dot represents one vllage, whch takes the mean of own plasma donaton decsons and peers mean plasma donaton decsons at the vllage level

34 Table 1. Summary Statstcs ( ) Varables Mean S.D. Dstance to the county seat (km) Share of mnorty households (%) No. of household members Household head age (years) Vllage leader or party member (Y/N) Share of household members aged 11 29, unmarred (%) Share of household members aged 60 and above (%) Male head of household (dummy) Educaton of household head (year) Per capta cultvated land (mu) Own farm machne (Y/N) Own cow (Y/N) Own horse (Y/N) No. of occurrences of major dsease among famly members n last 2 years No. of occurrences of lvestock deaths n last 2 years Normalzed n degree centralty (popularty) Normalzed out degree centralty (nfluence) Normalzed Bonacch centralty Source: Authors survey data

35 Table 2. Summary Statstcs on Poverty and Income Inequalty ( ) Total Poverty and ncome nequalty measures Per capta annual ncome (RMB) 1, , ,004.2 Income nequalty (Gn) Income nequalty excludng donatng plasma (Gn) Income below poverty lne of 892 RMB (%) (P0) Poverty gap below poverty lne of 892 RMB (P1) Squared poverty gap below poverty lne of 892 RMB (P2) Source: Authors survey data. Table 3. Summary Statstcs on Households Donatng Plasma ( ) Partcpaton rate n donatng plasma (%) % households wth one plasma donor % households wth two or more plasma donors Mean per capta ncome from donatng plasma (RMB per year) Gross cash beneft from donatng plasma (per 580cc) Source: Authors survey data Note: The gross cash beneft from donatng plasma (per 580cc), 150 RMB, s before deductng any cost ncurred around each plasma gvng. However, all drect costs ncurred around plasma gvng, such as transportaton fee, lodgng fee, and basc nutrents ntake to mnmze damage to health, are supposed to be deducted to generate the mean per capta ncome from donatng plasma (RMB per year). Table 4. Man Sources of Income (Percent) ( ) Total Man Sources of Income (percent) Farmng Lvestock Local non farm and self employment Remttance from mgrants outsde the county Dsaster relef, ant poverty programs, deforestaton subsdes Gft ncome Income from donatng plasma Other ncome (ncludng land leasng) Source: Authors survey data

36 Table 5a. Impact of Peer Effects on Probablty of Donatng Plasma ( ) R1 R2 R3 R4 R5 Network Peer Group + Lnk OLS GS2SLS GS2SLS GS2SLS GS2SLS Lagged peers mean rate of plasma donaton 0.801*** 0.513*** 0.390** 0.297** 0.250** (0.097) (0.100) (0.175) (0.128) (0.125) Indvdual and household controls No No Yes Yes Yes Contextual controls No No No Yes Yes Drect and ndrect network fxed effects No No No No Yes F test excluded nstruments p value over dentfcaton test (Pseudo) R N Notes: [1] Lnear probablty models (LPM) are estmated. Margnal effects from LPM are presented. [2] Robust standard errors are clustered at the network level. *sgnfcant at 10%; **sgnfcant at 5%; ***sgnfcant at 1%. [3] Excluded nstruments n the GS2SLS estmatons nclude the followng characterstcs of peers peers: per capta ncome excludng plasma donaton compensaton, household sze, ethncty, educaton, share of the elderly, share of unmarred son, relatve market wage to plasma donaton compensaton, cadre status, travel tme to the local blood bank, and major shocks (ncludng major dseases, lvestock deaths, natural dsasters, and famly member deaths). [4] Vllage fxed effects and year fxed effects are ncluded n ndvdual and household controls

37 Table 5b. Impact of Peer Effects on Income from Donatng Plasma ( ) R1 R2 R3 R4 R5 Network Peer Group + Lnk OLS GS2SLS GS2SLS GS2SLS GS2SLS Lagged peers mean ncome from donatng plasma 0.834*** 0.558*** 0.445*** 0.367*** 0.303** (0.101) (0.101) (0.173) (0.127) (0.123) Indvdual and household controls No No Yes Yes Yes Contextual controls No No No Yes Yes Drect and ndrect network fxed effects No No No No Yes F test excluded nstruments p value over dentfcaton test (Pseudo) R N Notes: [1] Robust standard errors are clustered at the network level. *sgnfcant at 10%; **sgnfcant at 5%; ***sgnfcant at 1%. [2] Vllage fxed effects and year fxed effects are ncluded n ndvdual and household controls

38 Table 5c. Impact of Peer Effects on Number of Household Members Donatng Plasma ( ) R1 R2 R3 R4 R5 Network Peer Group + Lnk OLS GS2SLS GS2SLS GS2SLS GS2SLS Lagged peers mean no. of household 0.924*** 0.673*** 0.537*** 0.525*** 0.469** members donatng plasma (0.130) (0.122) (0.195) (0.135) (0.135) Indvdual and household controls No No Yes Yes Yes Contextual controls No No No Yes Yes Drect and ndrect network fxed effects No No No No Yes F test excluded nstruments p value over dentfcaton test (Pseudo) R N Notes: [1] Margnal effects are presented. Robust standard errors are clustered at the network level. *sgnfcant at 10%; **sgnfcant at 5%; ***sgnfcant at 1%. [2] Vllage fxed effects and year fxed effects are ncluded n ndvdual and household controls

39 Table 6. Effect Szes (1) (2) (3) (4) S.D. Plasma S.D. Peers Plasma Effect Sze Donaton Donaton Peer Effects ˆ ˆ GY / Y Y Plasma donaton probablty Plasma donaton value (log) No. of household members donatng Notes: The estmates of peer effects n column (3) are taken from the scenaro R5 n Table 5 (a) (c). GY Table 7. Peer Effects wth Alternatve Weghtngs Lagged Peers mean rate of plasma donaton R1 R2 R3 Donate or not Donaton value No. of hh members donatng 1. Baselne 0.250** 0.303** 0.469** (0.125) (0.123) (0.135) 2. Weghed by parwse lnk ntensty (gft sze) * 0.297** (0.119) (0.117) (0.129) 3. Weghed by out degree centralty based on number of lnks 4. Weghed by n degree centralty based on number of lnks 5. Weghed by Bonacch centralty based on parwse lnk 0.236** 0.284** 0.438*** (0.121) (0.119) (0.129) 0.234** 0.280** 0.381*** (0.115) (0.113) (0.123) 0.249** 0.298** 0.501*** (0.127) (0.125) (0.135) Notes: [1] In degree centralty s defned as (normalzed) number of lnks the respondent receves from peers, whch measures one s nfluence over peers. [2] Out degree centralty s defned as (normalzed) number of lnks the respondent sends out to peers, whch measures one s popularty n the network. [3] Centralty comprehensvely measures drect and ndrect connectons one has n one s neghborhood. In addton to drect lnks, the more connectons the actors n one s neghborhood have, the more central one s (Bonacch 1987)

40 Table 8. Other Tests on Peer Effects R1 R2 R3 Donate or not Donaton value No. of hh members donatng Lagged peers mean plasma donaton 1. Baselne 0.250** 0.303** 0.469** (0.125) (0.123) (0.135) 2. Testng reference groups: Usng placebo groups (0.118) (0.118) (0.117) 3. Testng peer effects usng alter perceved but not egoperceved peers Notes: [1] Robust standard error n parentheses. [2] Other notes follow Table 5a (0.167) (0.164) (0.163)

41 ONLINE APPENDIX Peers' plasma donaton rate Self-rated well-beng Income satsfacton Hedonc happness Lfe satsfacton Appendx I. Peers Hgher Plasma Donaton Rate (or Lower Stgma) and own Subjectve Well Beng Data: Authors household survey data. Note: The vertcal axs,.e., peers average plasma gvng rate, nversely approxmates socal stgma. The horzontal axs,.e., three subjectve well beng (SWB) measures n the survey, approxmate ndvdual utlty. 5 ponts to beng the most satsfed or happest, 1 ponts to beng the least satsfed or least happy. Ths fgure suggests that utlty may decrease n stgma, and most SWB measures ndcate that the margnal dsutlty from stgma s ncreasng

42 Appendx II. Proof of the Proposton The frst order condton for an nteror soluton s: Uch ( (,, w), Sh (, h)) Uch ( (,, w), Sh (, h)) Sh (, h) B 0, (A1) c S h whch solves optmal level of donatng plasma h * (, h, w), gven the labor productvty ( ), the average level of donatng plasma n the reference group ( h ), and the wage rate ( w ). The second order condton s satsfed. Let denote the lower threshold of labor productvty below whch an agent donates the maxmum legal level, whle denotes the upper threshold of labor productvty, above whch an agent does not donate plasma. Consderng the corner solutons for h, f an ndvdual donates the maxmum legal plasma ( h 1 ), accordng to Kuhn Tucker condton we have: Uc ( (1,, w), S(1, h)) Uc ( (1,, w), S(1, h)) S(1, h) B 0, (A2) c S h where the labor productvty s low enough that the margnal utlty of consumpton domnates the margnal dsutlty of socal stgma for the whole range of h. The equalty (A2) holds wth. In contrast, f the labor productvty s hgh enough that the margnal utlty of consumpton s domnated by the margnal dsutlty of socal stgma for the whole range of h, the followng nequalty holds. The followng equalty holds wth : Uc ( (0,, w), S(0, h)) Uc ( (0,, w), S(0, h)) S(0, h) B 0. (A3) c S h Fnally, to acheve the nteror market equlbrum of peer Influence, an ex ante expectaton of average plasma donaton should concde wth the resultng average plasma donaton gven the expectaton: max h h h w df mn (,, ) ( ), (A4) where mn max. Meanwhle, a stable equlbrum of the peer Influence requres that h / h 1, h, w. Dfferentatng LHS of (1) wth respect to w yelds:

43 h h h h h BU [ cc( ch cw) UcS Sh ] USShh Sh[ USc ( ch cw) USSSh ] 0 w w w w w (A5) Collectng the term h / w, we have: h B U S U B U S U w BU c BU S U S S U c S U SOC cc h Sc cc h Sc 0 2 cc h cs h S hh h Sc h ( h) SS h h sgn( ) sgn( ) 0 w (A6) (A7) Therefore, both the rsng wage rate ( w ) and labor productvty ( ) have a negatve mpact on donatng plasma. Frst, growth n consumpton nduces a fall n margnal utlty of consumpton; second, a rse n consumpton makes margnal dsutlty of the socal stgma greater. To derve the mpact of peer pressure on plasma donaton, we dfferentate LHS of (A1) wth respect to h, whch yelds: h(, h, w) h(, h, w) h(, h, w) BUccch BUcS[ Sh S ] US[ Shh S ] h hh h h h h(, h, w) h(, h, w) Sh[ UScch USS( Sh S )] 0 h h h Collectng the term h / h, we get: h(, h, w) BU S U S S U S BU S U S S U S 0 cs h S hh h SS h cs h S hh h SS h 2 h BUccch BUcS Sh ShhUS ShUScch ( Sh) USS SOC (A8) (A9) More ntense plasma donaton n the neghborhood nduces to more actvely donate plasma

44 Appendx III. Plasma Donaton Decsons Transmttng through Socal Networks Data: Authors household survey data matched wth gft networks data. Notes: Ths appendx provdes a real example of plasma donaton transmttng va gft networks durng Each dot represents a household, and red dots ndcate that the households donate plasma. Each (dashed or sold) lne represents a gft. There are four cases: (1) a sold lne between two red dots means a gft between two plasma donors ; (2) a sold lne between a red dot and an empty dot means a gft between a current plasma donor and a future donor ; (3) a dashed lne between two empty dots means a gft between two non donors ; and (4) a dashed lne between a red dot and an empty dot means a gft between a plasma donor and a nondonor

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