On the Ethics and Economics of Hoarding

Compulsive hoarding (hoarding disorder) is defined in the Diagnostic and Statistical Manual of Mental Disorders (DSM-5) as “persistent difficulty discarding or parting with possessions, regardless of their actual value, as a result of a strong perceived need to save the items and to distress associated with discarding them.”

Prevalence of hoarding disorder is expected to be around 2–5% of the adult population. In the United States, that would represent somewhere between four and 10 million people. Even at the high end of the estimate, 10 million people with diagnosable mental disorders are not responsible for the run on toilet paper, soap, meat and other food staples in the midst of the outbreak of the coronavirus.

Empty grocery store shelves
Bare shelves are the new norm at grocery stores across the country.

The run on grocery stores wasn’t orchestrated by the troubled shut-ins from reality television shows. It is being perpetrated by our friends and neighbors, who likely don’t usually have a pallet of Charmin under a tarp in the garage. Sparked by fear and uncertainty, a portion of society has ignited a supply crisis through abnormal purchasing behavior.

Hoarding: When a consumer’s current inventory of an item exceeds his inventory in previous periods, while his expected consumption rate remains constant.

Hoarding behavior can be rational when customers compete for limited supply in the presence of uncertainty or capacity constraints. Modern supply chains are flexible enough to handle regular deviations in demand, but in times of extreme fear and uncertainty even the most efficient supply systems are unable to keep pace. Supply chain disruptions are quickly exacerbated by customers who respond to scarcity by seeking larger safety stocks (hoarding), which causes still greater scarcity and creates a feedback loop that leads more to seek to build their private stocks.

While hoarding has worsened periods of scarcity throughout history (The Great Depression, World War II, the gas crisis in the U.S. in 1979, and in ongoing shortages of basic necessities in the former Soviet Union), shortages of basic staples are quite rare in modern economies. In general, consumers are unlikely to engage in aberrant behavior unless they believe specific conditions that require panic or flight are present. The conditions “must consist of imminent danger, and a belief that chances of escape are steadily diminishing when present. These conditions lead to such events as runs on banks, stock market drops and theater panic with people pushing and shoving to escape.”(Stiff et. al.)


If hoarding is a natural response to fear and uncertainty, why then are hoarders so reviled by society? Disdain for this behavior being so great that they were assigned their own place in Hell alongside the “wasters” in Dante’s Inferno.

“Virgil said, ‘These sinners were incontinent when it came to wealth. Neither group could control themselves. One group hoarded their wealth, while the other group wasted their wealth. Many of the sinners you see here were Popes, cardinals, and priests — such people are unfortunately prone to greediness.’”

Dante saw the two groups of sinners — the hoarders and the wasters — as two sides of the same coin. The hoarders and wasters were people who either held on to more than they could use or did not save at all.

In nearly all societies, the word “hoarding” has a negative connotation, as it suggests “self-interested, acquisitive behavior that has detrimental effects on others in the form of higher prices and/or material deprivation.” (Sharfman)

While anti-hoarding laws are fairly common (especially in poor nations), it is difficult to define hoarding in a meaningful and precise way. Early anti-hoarding laws date back to 70–500 C.E. in the Babylonian Talmud’s ban on fruit hoarding, which addressed hoarding among merchants in particular. The Talmudic hoarding prohibition made it illegal for merchants to build stocks of fruit or other essential commodities for the purpose of reselling them when supplies were low and the price had risen.(Sharfman)

The Talmud considers hoarding to be the moral equivalent to usury, which is also prohibited. The Talmud banned hoarding of “life’s necessities,” which include fruits, wines, oils, and the various kinds of flour.” These goods are distinguished from non-necessities such as spices, cumin and pepper, to which the prohibition does not apply.

While the Talmud’s hoarding ban is aimed at those who would hoard to sell at a profit, many societies have attempted to restrict hoarding and manage scarcity through consumer-focused anti-hoarding laws and price controls for retailers. In open markets where supply is plentiful and market forces are predictable, there is little need for such legislation. However, in times of extreme uncertainty, general market forces are not enough to stabilize markets.(Stiff et. al.)


In times of uncertainty and fear, scarcity alone is insufficient to explain hoarding behavior.

In their paper, “An Endowment, Commodity, and Prospect Theory Perspective on Consumer Hoarding Behavior,” King and Devasagayam explain how irrational (and temporary) hoarding behavior can be explained through components of three general economic theories:

The Endowment Effect states that people “tend to place a higher value on objects they own, or merely possess, than objects they do not own. Possession of a product increases the sense of endowment, while the prospect of losing the product increases hoarding and purchase acceleration.

The Commodity Theory explains the psychological effect of scarcity, stating “any commodity will be valued to the extent that it is unavailable.”

Prospect Theory explains consumer behavior under uncertainty. The theory suggests, “people associate greater psychological discomfort with losses than with gains due to loss aversion propensity.

The authors illustrate the interaction of these theories and their impact on hoarding behavior as:


Consumers and retailers in industrialized countries have come to expect there will seldom be scarcity of any goods during stable economic times.

This was not the case in the former Soviet Union, where shortages of all staples were routine. Researching hoarding behavior in the Soviet Union in the late 1980s, Harvard economist Martin Weitzman posited that the classical theory of consumer behavior was not sufficient to explain hoarding of scarce supplies. In his journal article “Price Distortion and Shortage Deformation, or What Happened to the Soap?” Weitzman noted that in addition to a monetary cost, shortage products also featured an “effort cost” based on the time and effort a consumer put into obtaining a product. In such an environment, Weitzman suggests hoarding is a natural component of the model.

General economic theory suggests there is a market-clearing price that would eliminate the shortage. This is visible in a standard supply and demand chart.

Figure 2: Supply & Demand in Shortage

With no change in quantity supplied, typical market forces would drive prices up to the point of equilibrium. In an efficient market, supply and demand meet at a point of equilibrium, and the balance between shortages and surpluses is maintained through price fluctuations.

Rather than simply label hoarders as “irrational” aberrations that cannot be accounted for, Weitzman modeled consumer behavior in a shortage environment.

The Weitzman Model

Weitzman modeled the effort cost in shortages as:

U(d) — V(e) — W(s)

Where d is usual consumption, e represents the amount of effort required to obtain a good, and s stands for the stock quantity of a good. The first element U(d) is the utility function — i.e. the amount of utility a consumer derives from a good. The second V(e) is the negative utility of the effort to obtain the product, and W(s) is the negative utility of storing the item.

Weitzman points out that this function differs from the standard model in that prices are not necessarily market-clearing because of the influence of effort to obtain the product and ability to store it.

Weitzman ultimately concludes that the directly unproductive activities of search and storage distort the price of a good, which presents severe threats to normal function of an economy. He points out that in these types of shortages, distributors and manufacturers are not to blame. He advocates for price increases so that “consumers can move toward a better state where they are not impelled to hoard large inventories.” The essential issue, he says, is to “remove the incentives that lead to excessive inventory stocks blocking what should be a direct flow of goods from production to consumption.”


In a time where the global economy seems on the verge of collapse, the idea of price controls to eliminate a shortage of base goods seems draconian — especially considering increased prices would more directly impact the poor, who are already the most vulnerable. Faith in a free market leaves hope that retailers might implement policies restricting quantities of the shortage goods that can be purchased by any single individual. In such a regime, families could circumvent private restrictions by sending multiple family members through grocery store checkout lines individually, but such an approach would at least slow hoarding behaviors.

As producers and distributors adjust to the new normal and increase production in an effort to better match demand, and merchants implement rationing policies there is hope that irrational hoarding may slow when consumers see inventory available on store shelves and the positive feedback loop is broken.

1. American Psychiatric Association: Diagnostic and Statistical Manual of Mental Disorders: Diagnostic and Statistical Manual of Mental Disorders, Fifth Edition. Arlington, VA: American Psychiatric Association, 2013.

2. Pertusa A., Frost R.O., Fullana M. A., Samuels J., Steketee G., Tolin D., Saxena S., Leckman J.F., Mataix-Cols D. (2010). “Refining the boundaries of compulsive hoarding: A review”. Clinical Psychology Review.

3. Stiff R., Tourk KA (1975)“Scarcity and Hoarding: Economic and Societal Explanations and Marketing Implications”

4. Sterman J., Dogan G (2015)“I’m not Hoarding, I’m just stocking up before the hoarders get here. Behavioral causes of phantom ordering in supply chains.”

5. Sharfman K (2006) “The Law and Economics of Hoarding” Loyola Consumer Law Review

6. Torah: Bava Batra 90a-b: Hoarders of Produce

7. King D., Devasagayam R (2017)“An Endowment, Commodity, and Prospect Theory Perspective on Consumer Hoarding Behavior”

8. Weitzman M (1991) “Price Distortion and Shortage Deformation, or What Happened to the Soap?”

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