When Markets Bleed: Financial Losses and Prosocial Behavior Evidence from Blood Donation in Taiwan

Abstract
This study examines whether financial market outcomes influence prosocial behavior by analyzing the relationship between stock returns and blood donation in Taiwan. Using daily district-level data from 2013-2020 that matches Taiwan Blood Services Foundation donation records with local brokerage trading activity, we find that financial losses significantly increase blood donation volumes. A one-standard-deviation increase in realized losses corresponds to a 6-8% increase in blood donations, with effects being strongest for large losses sustained over multiple days. Importantly, both realized and unrealized losses exhibit comparable effects, suggesting that psychological compensation mechanisms operate alongside symbolic “luck-reversal” behaviors in Taiwan’s culturally rich environment. In contrast, financial gains show weak and inconsistent effects on prosocial behavior, supporting asymmetric loss aversion theories. These findings challenge traditional wealth-effect models of charitable behavior and demonstrate that financial markets influence society through psychological spillover effects beyond conventional economic channels. The results have important implications for designing behaviorally-informed public welfare campaigns and understanding the broader social consequences of market volatility. Our robustness tests, including the exclusion of Taiwan’s financial center, strengthen rather than weaken the core findings, suggesting these behavioral patterns reflect genuine psychological responses to financial outcomes rather than institutional artifacts. Keywords - Prosocial behavior, Blood donation, Financial losses, Behavioral finance, Psychological compensation, Realization utility, Social finance