Why Panic Buying Is More Rational Than Popularly Perceived

Toilet paper, gasoline, flour. All have been subject to panic buying during the pandemic. The panic buying of gasoline is still rampant in the UK. 

But it turns out that such behavior can frequently be rational due to realization of expectations based on personal experience. And those expectations are exacerbated by social media models designed to generate engagement. JL

Chris Baraniuk reports in Wired:

Among the reasons people gave for their excessive purchasing of household products was a sense of uncertainty about the future. Also, a perceived lack of control. Expectations are what really drives any panic buying episode. “If there’s a danger of depletion of resources in the future then it makes sense to go out and get some. Social media is a very powerful tool to make people go into that panic mode. This has played a role. Images of gas station queues are easy to find on Facebook and Twitter.

The snaking queues of cars have stretched for hundreds of metres, even kilometres. Reports abound of drivers waiting for hours just to fill up on petrol, forecourts running dry of fuel, and buses diverted to avoid the gridlock. Occasionally, the mayhem has led to arguments and altercations. The petrol crisis is as real as it gets.

And yet, the UK government and industry leaders both say that there is plenty of petrol in the UK. A lack of lorry drivers meant that some petrol stations were beginning to run short at the end of last week, however, and it was arguably the fear that things were about to get much worse that triggered full-blown panic among drivers.

It’s taken almost everyone by surprise, but even the term “panic buying” doesn’t precisely convey what’s happening when people instinctively head out to the forecourt to join a queue of cars waiting to fill up. The term panic buying is not very well defined, notes Richard Bentall, professor of clinical psychology at the University of Sheffield. “It implies that there is something completely irrational about it – that isn’t true,” he says. “If there’s a danger of depletion of resources in the future then it makes sense to go out and get some.”

People may, for example, deduce that an abundance of petrol at refineries is no good to them if they can’t get any at their local forecourts. But there are sociological factors at work, too. “If you go to the supermarket and you see people clutching as many toilet rolls as they can get, you go get yourself some toilet rolls,” says Bentall.

In other words, panic buying is also a self-perpetuating trend. Plus, the authorities’ insistence that no shortage exists can have the opposite of the intended effect. “Those messages of course belie what’s in front of people’s eyes,” he adds.

Earlier this year, Bentall and colleagues published a study on panic buying during the pandemic. Surveys of 2,000 people in the UK and 1,000 people in the Republic of Ireland suggested that having children, experiencing symptoms of depression, being relatively wealthy, or thinking you might be about to lose your source of income were all among potential drivers of panic buying. The government may have limited control over such things, especially in the short-term, which makes messaging particularly important during supply crises.

Elvira Ismagilova, a lecturer in marketing at the University of Bradford, has also studied panic buying behaviour during the pandemic. Her survey of 1,000 UK respondents is yet to be published but Ismagilova says that among the reasons people gave for their excessive purchasing of household products was a sense of uncertainty about the future. Also, a perceived lack of control.

“Social media is a very, very powerful tool to make people go into that panic mode,” says Ismagilova. This has undoubtedly played a role during the recent run on petrol pumps. Images of the petrol station queues are easy to find on Facebook and Twitter. Sometimes the merest suggestion of a shortage is enough to spark a dash to the shops.

In 1973, a rumour about toilet paper got out of hand in the US. Republican senator Harold Froehlich had heard from industry contacts that the nation faced a possible – possible – toilet paper shortage. And so, he issued a press release highlighting this. Soon after, primetime comedian Johnny Carson made a very good joke about the notion of a toilet paper shortage on The Tonight Show. That joke has since been credited with inflaming the great “toilet paper panic”.

Speaking to the New York Times in February 1974, Stewart Henderson Britt, a professor of marketing at Northwestern University, said that it once took a long time for a rumour to spread: “Now, all it takes is one TV personality to joke about it and instantly the rumour’s in all 50 states.”

Key to the toilet paper panic was the fact that people in the US had recently endured a lack of fuel and meat. They were expecting the next shortage. Living through the Covid-19 pandemic, and having witnessed shortages of various products during the first lockdown, has perhaps made people in the UK more anxious of running out of petrol than they otherwise might have been.

Expectations are, after all, what really drives any panic buying episode, says Andrew Ching, professor of marketing and economics at Johns Hopkins University’s Carey Business School. The expectation, for example, that your fears are well-founded; that there really is a shortage and it’s going to get worse. If things really are as bad as they seem, then you’d better start stocking up now.

There are various examples of panic buying scattered throughout history, according to a recent book on the phenomenon. It happened during the Cuban Missile Crisis, for instance. And also during the 1918 flu pandemic, when people snapped up supplies of quinine and Vick’s VapoRub in an effort to protect themselves from the deadly disease.

Panic buying also appears in more subtle forms. It’s akin to property prices skyrocketing in a housing bubble, argues Ching. Or, when there’s a run on the banks. This is what happens when customers start to worry that their bank might fail. In rushing to withdraw their money they, ironically, only increase the likelihood of a collapse. The creators of The Simpsons, among many others, have had their fun with the phenomenon.

The Bank of England suffered multiple such panics during the 1800s, as Kilian Rieder, lead economist for the Austrian National Bank, noted last year in a piece for VoxEU. Various interventions failed to reassure customers – until eventually the government decided to announce that it would let the bank continue operating even if its cash reserves fell below the previously mandated minimum. “The mere publication of the declaration of suspension led to a sudden end of the runs,” wrote Rieder.

Nearly two centuries later, the British government has announced that rules for lorry drivers are to be adjusted in an effort to end the petrol crisis. It’s one of a number of special measures authorities have taken, as well as having army drivers on standby to help with fuel deliveries.

Most people don’t have the facility to store a large amount of petrol at home so stockpiling it isn’t an option, notes Ching. If the government can demonstrate that it is really improving the flow of fuel to forecourts, then the petrol crisis could end up being quite temporary. However, he adds that the dearth of lorry drivers might lead to shortages of other products in the coming months. (To take just one other example, the makers of Irn-Bru say they are currently struggling to make deliveries of the fizzy drink because drivers are so scarce.) “We could end up seeing other panic buying,” adds Ching.

Bentall argues that being open about the actual availability of petrol, rather than insisting that no shortage exists, would have been more helpful. “You’re much better to say there are temporary shortages but only affecting some parts of the country,” he suggests.

And Ismagilova says the media also has a role to play in not sensationalising the prospect of a shortage when it is not yet in full swing.

She also has a suggestion for how to curb panic buying once it begins. In her research on stockpiling behaviour during the early stages of the pandemic, people suggested that they were less likely to engage in such activity having been made aware of the potential negative consequences – such as food or essential household items becoming unavailable for people who genuinely need them. Most people, says Ismagilova, don’t think about such effects initially.

In recent days, it has emerged that panic buying petrol also has serious consequences. Professionals in the care sector and other key workers who rely on their own vehicles have found it difficult or impossible to make all of their appointments on time due to a lack of fuel.

This message, that panic buying can actually be quite dangerous, is now starting to filter through. Bentall says that some people are naturally more capable of considering these consequences than others. It is they who possess the greater talent for analytical thinking – and the power of self-control in uncertain times.

“It’s the stopping and thinking that mitigates against panic buying,” he explains. “The impulse is to do it – and you have to override that impulse.”