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Panic buying is a natural response (but how much toilet paper do we need?)


Panic buying, despite being very unhelpful in a crisis, makes sense when you consider the risk of coronavirus escalating


Empty shelves at your local shops, toilet paper memes, photos of people pushing large trolleys filled with enough food to feed an army. You don't have to look far to find that panic buying has been one of the major responses to the spread of coronavirus, or COVID-19. The evidence is clear and ugly. What is panic buying? Basically it is the act of purchasing large amounts out of fear, and hoarding basics like canned food. It is easy to be critical of people for panic buying, it is important to consider that it is actually a rational response to crisis.



On observing the empty shelves, many commentators refer to panic buying as irrational and illogical - why would anyone need that much toilet paper? The videos of fights breaking out in supermarkets over trivial items seem to confirm the hypothesis that this is just nuts. I agree in principle - share the love and share the food. Don't buy more than you need. Hoarding is a dangerous response to the coronavirus crisis that threatens supply chains, food distribution and social cohesion.


That being said, panic buying makes a whole lot of sense when you think about it as a way to prepare, protect yourself, and protect your family. For many people protecting themselves and loved ones is their top priority in a crisis, and buying up the basics is one way of doing that. In a crisis, who really cares about strangers? I won't pretend that this is a blanket assumption for all who are panic buying, just that the logic of panic buying makes sense. In an emergency, it makes sense to be prepared, to have the items necessary to weather the storm. What if it gets really bad? With a month's worth of food you could really hunker down if needed.


How is New Zealand responding to coronavirus? New Zealand is in stage two of its pandemic plan (or was at the time of writing) where Covid-19 is contained but the risks are growing, unnecessary travel should be contained and more travel restrictions are put in place. By stage four, with sustained levels of virus transmission, contact between people is eliminated with the exception of essential services. Where to from here?


It is hard to know the direction of travel today, but it is reasonable to think that it could get worse before it gets better. Fear is natural with daily news of the virus' escalation reinforcing the danger. With ominous charts of the virus' uptake showing an exponential curve, you don't have to be a mathematician to to see that there is considerable risk. The response of health authorities could even make people panic buy worse as it reinforces that there is a real problem at hand.


There is a bit of tragedy of the commons in this. The tragedy of the commons is where individuals acting in their own self-interest compromise the common good. If only one person was panic buying, we wouldn't have an issue. The supply chain and distribution would be fine. When everyone panic buys we have a disaster. That is, of course, why controlling the urge to panic buy is critical. Having quotas on the number of people going into shops is sensible as it helps create the impression of calm, and alleviates pressure on shop staff. Rationing is also a reasonable response.


How awful would it be if it really did get that bad and you were caught without? In that context, hoarding today in preparation for a foreseeable risk makes sense. I have no intention of condoning panic buying. I am simply pointing out that it is not as irrational as commentators claim and is a reasonable response in a crisis to protect yourself and your family. The key for businesses and governments is to develop measures to control panic buying.



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A New Zealand based politics and economics blog

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