Why are people panic buying?

Consumer psychologist Dr Paul Harrison examines why the coronavirus has triggered Australians to panic buy basic supplies.

As we are regularly being told at the moment, we live in extraordinary times.

After an unprecedented bushfire season – followed by our most populated cities being enveloped in smoke – we are now experiencing a health crisis that the head of the World Health Organization (WHO) referred to as "uncharted territory" as they combat the spread of COVID-19 (coronavirus) throughout the world.

It's not surprising then that many of us in Australia and in developed countries are feeling that the things that many have taken for granted – effective health systems, security and safety and our feeling of being sheltered from outside forces – are crumbling around us.

You could say we are facing, literally, an existential crisis.

These multiple crises make us feel like we are losing control. Yet human beings have an innate desire for control over their environment. We yearn for the ability to manage the processes and outcomes of events in our lives.

Close to home, this need for control has manifested itself in some very strange ways.

We know from research in the field of behavioural psychology that one way that people gain a sense of control in capitalist cultures is through product acquisition. In times of trouble, we are encouraged to spend our way out of it.

"In troubled times, we are encouraged to spend our way out of it." Image: Paul Harrison/Supplied

Marketing is very much about convincing us that we can solve problems through our purchases, and the general discourse in our culture is that uncertainty can usually be assuaged through economic and practical means. This includes monetary stimulus such as tax cuts, emergency grants, financial assistance, or simply buying something to fix the situation.

To some degree, we have bought into the cliché that the best way to solve a difficult situation is to "throw money at the problem" in some form.

And so, panic buying of consumer goods – most notably toilet paper – has grabbed the headlines, with many people scratching their heads and asking: "Why toilet paper?"

My initial reaction was probably the same as yours. But on reflection, it does make some sense – and our understanding of social and individual psychology can go some of the way to explain it.

A perceived lack of control

Humans seek simple answers to problems. We struggle with nuance, uncertainty and change. Yet science and medicine operate on the underlying principle that knowledge is provisional and will evolve and change as we learn more about the topic. This is how we achieve progress.

However, this dichotomy causes dissonance and tension.

News about the coronavirus is unfolding hourly, and many of us are struggling to keep up with a "source of truth". In reality, this is because no one really knows what is going to happen.

Scientists are naturally careful about reaching conclusions and tend to talk in caveats. They use statements like "the evidence suggests" or "this is what we currently know" – which is inconclusive, and pushes up against the very definitive pronouncements made by media commentators and politicians.

Indeed, virologists would say that the only time that they can say with certainty what the effect of the virus will be, is after it has completed its spread through the population, which is not at all reassuring to an uneasy and frightened populace.

Unfortunately, knowing this doesn't necessarily ameliorate (or ease) our concern, and in some circumstances actually magnifies it.

Mixed messages coming from mainstream and social media, from politicians and medicos, from different countries, and different health authorities such as the World Health Organisation (WHO), the Australian Department of Health, or the US Centers for Disease Control and Prevention (CDC) on how to respond make it even more difficult to find that one source of truth.

With the media cycle needing content, messaging isn't consistent, and what we know and don't know is constantly evolving.

Under these circumstances, there is a perceived lack of control, and we work hard to regulate our feelings. The simple act of problem solving – any problem solving – gives us a sense of control. And research has found purchasing utilitarian, practical and regularly bought products, such as toilet paper and cleaning products, tends to be one of the simple ways that we feel this sense of achievement.

Generalised problem solving

In situations of uncertainty and stress, people recognise that a problem exists, and so they seek to go from the current "bad" situation, to a better situation. But, if you are dealing with unclear information, the way to move to the better situation is not immediately obvious.

Resolving the problem may involve some difficulty and some thinking to devise the solution. So what we tend to do is react to our immediate emotional needs, rather than participating in a rational, thoughtful process.

In our minds, we feel that we need to take action to resolve the dissonance or feeling of unease. Research shows us that in generalised problem solving, we seek to satisfy two key requirements:

1. We must be able to perform the action in our current situation and circumstances.
2. The action should lead to the desired end state, which is to reduce our sense of lack of control.

Funnily enough, toilet paper satisfies that goal.

Toilet paper is something that we readily and regularly buy, so it requires little cognitive resources to think that we are going to need it if we are quarantined for any reason – or if things get out of hand.

While most of us know that COVID-19 is a respiratory virus and that toilet paper will do nothing to manage the virus, what people are doing is responding – without thinking too much – to a regular habit of purchase.

Risk as feelings

Humans are complicated creatures. Under situations of stress and uncertainty, rather than relying on scientific evidence, we tend to rely on how we "feel" about something. Psychologists and economists refer to this as the "risk as feelings" paradox. In addition, the "risk as feelings" theory also includes emotions as an anticipatory factor (or, how we feel at the time of the decision).

This feeds into our thinking about how to prepare for something abstract such as a viral outbreak.

The "risk as feelings" theory is related to what psychologists and economists refer to as the "affect heuristic", where how we feel is used as a source of information when we are making a choice – and is considered an efficient way to decide, because it is quick, automatic, and rooted in previous experiences.

However, the "risk as feelings" theory explains those situations where choices, such as those due to anxiety and stress, diverge from what we might usually think is a sensible, moderate course of action.

Secondary panic buying and the information cascade

As well as the primary psychological reasons that help to explain panic buying, there are also a few external or secondary forces that underpin it.

In general, people are easily influenced by the decisions of others, especially in social and economic situations. In addition, when information is limited, people tend to imitate those who have come before them, even though their own information may be contradictory.

The herd instinct, where people follow the crowd to avoid risk, has manifested itself in social media apps such as WhatsApp – with private groups encouraging people to buy toilet paper before it runs out – along with people joking on Twitter, Facebook and mainstream media about the shortages of toilet paper.

Herd behaviour has the capacity to influence our behaviour, even if we have alternative information that might contradict that behaviour.

The information cascade – a theory used in behavioural economics to explain how individuals make decisions in a sequential way – also goes some way in explaining why people might be buying up big.

Importantly, in the information cascade scenario, factors such as the limited time in which people can act on information (the fact that the shelves are emptying) and being able to observe the actions of others (through social and mainstream media) can lead to people acting irrationally, and against their better judgment and those of their fellow citizens.

Scarcity

Our psychological response to scarcity results in us believing that if something is scarce, it is rare. Without sounding too dramatic, scarcity also exploits our psychological and social vulnerabilities, because it relies on urgency and anticipated regret (the ubiquitous fear of missing out). That said, scarcity also has a positive side, in that it helps us to prioritise our choices and set goals.

Humans are social animals, and although we would like to think that we are all independent thinkers, the reality is that it would simply be impossible to think about everything we do in isolation, and on its merits. So, we look to others to help us to decide.

If we see that "our people" want something, then we tend to give that something (what psychologists call the attitude object) more value. If we are looking around and everyone is grabbing toilet paper, tissues, and even Coca-Cola (as I've observed), even if we don't need them, we feel that if we miss out, we will miss out on something important.

In the current environment, anxiety also increases our likelihood of succumbing to the scarcity effect, because stress and anxiety results in mental fatigue and overload, which means that we aren't able to exercise normal rational processes, and leads to an overvaluing of things that we don't have. So, scarcity actually impedes our coping efforts, and interferes with motivation. makes us more vulnerable to temptation, and tends to accentuate more implicit self-protection tendencies, such as protecting ourselves and those closest to us.

Tragedy of the commons

Ultimately, we end up with people not acting as a community but as individuals satisfying their own self-interest. Unfortunately, Australians, in general, are not particularly collectivist in their thinking.

Put very simply, collectivistic cultures tend to value generosity, helpfulness, dependability and attentiveness to the needs of others. In individualist cultures, there is a greater emphasis on characteristics such as assertiveness and independence.

We have had a series of crises over the past six months. Our ontological security, our sense of continuity and order, is threatened. Stress levels are high and, in times of crisis, our natural, ingrained and implicit tendencies will assert themselves even more.

So, as the crisis unfolds, some people may feel that because they are unlikely to be supported by the community, they will have to fend for themselves.

The tragedy of the commons is a simple sociological parable that helps to explain why people might be hoarding a simple item such as toilet paper.

In the original pamphlet, by British mathematician William Forster Lloyd in 1833, he asks us to consider a town commons (land where everyone in the village can let their cattle graze).

He argued that rational, self-interested farmers would seek to increase their individual livelihood. In turn, more farmers would seek to use the land and add to their herd, one animal at a time, until eventually the common land could not sustain any more cows.

Similarly, what we are seeing at present is every individual consuming a resource (toilet paper) at the expense of every other individual, which leads to overconsumption and ultimately depletion of the resource.

What next?

Obviously, this is a bigger issue than low supplies of toilet paper. We are in uncharted waters. It is actually quite difficult to know what to do at this early stage.

Right now, it is to be expected that people will not behave in a typical, rational, thoughtful way.

People are worried, stressed and frightened. It will require significant effort and patience to stay calm.

In addition, trust in politicians and Australia's leading institutions, including banks, health care institutions, NGOs, media and even universities is at an all-time low, so many people find it difficult to feel secure and safe. Maybe not surprisingly, most Australians want their democracy to be more representative, integrated and inclusive, but feel that it is currently the opposite.

Short-term, we need to be kind to one another and to ourselves, and as much as possible act as a community. Read reputable sources, such as broadsheet rather than tabloid newspapers, magazines and television programs. Trust people who have trained in the field in which they are commenting. Interrogate those sources and be open to new information as it emerges. Wait for multiple sources to confirm something.

Medium term, we have to become better at accepting nuance and detail. I would hope that our leaders start to talk more openly about the acceptance of doubt, while also providing opportunities for us to act as a community and solve problems collectively based on evidence.

And long term, we need to get better at listening to our scientists when they warn us about impending risks. We need to implore our leaders to champion evidence over rhetoric and seek to restore trust in our scientific and knowledge institutions.

Dr Paul Harrison is the deputy director and marketing lead in the Deakin Business School MBA program, director of The Centre for Employee and Consumer Wellbeing, and a senior lecturer at Deakin University. He researches, consults and advises government, industry and NGOs predominantly in the field of consumer behaviour and marketing.

Disclaimer: The views and opinions expressed in this article (which may be subject to change without notice) are solely those of the author and do not necessarily reflect those of Finder and its employees. The information contained in this article is not intended to be and does not constitute financial advice, investment advice, trading advice or any other advice or recommendation of any sort. Neither the author nor Finder has taken into account your personal circumstances. You should seek professional advice before making any further decisions based on this information.

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Images: Getty Images, supplied (Paul Harrison)