Panic buying and herd behavior in the wake of the crisis: Understanding behavioral responses to COVID-19
How the behavioral perspective helps us understand why the panic buying took place and what we can do to prevent it in the future!
Wageningen Living Lab for Behaviour Change (website)
Earlier this year, most of us experienced something for the first time in our lives: standing in front of empty shelves in the supermarket. Whether it was an attempt to buy some of the needed toilet paper or to get some pasta for dinner, we often were faced with the fact that these products were sold out. When leaving the supermarket, we did not only leave with fewer items, we left with a feeling of surprise and unease, wondering how it had come that far.
What had happened there? In the Netherlands, at least, government officials had assured us citizens that enough food would be available for all of us. Still, especially in the first weeks of the lockdown, people were buying more food and other products than they needed. People feared that they would not be able to get everything they wanted. This led to slightly emptier shelves, which in turn, again led the next group of people fearing that they would get less than they’d actually want, further perpetuating a sense of scarcity.
We at the Wageningen Living Lab for Behaviour Change are specialized in understanding human behavior within global food systems. Our research includes exploring the drivers underlying behavior among food system actors, such as consumers and food producers, and finding new ways to stimulate behavioral change. The COVID-19 crisis is bringing along huge uncertainties — in the health domain, but also in the social and economic domains. Globally, consumers, companies, and governments are forced to behave in new ways, and changes are implemented at unprecedented speed. This brings up questions about understanding behavioral responses to the crisis, and about possibilities to develop interventions and methods to address harmful behavioral effects.
Furthermore, we want to look at what we can, collectively, learn from the first wave of the corona crisis and see whether we can take any measures of preparation for future events of such a scale.
What has been happening?
Panic buying as a reaction to scarcity is a phenomenon that is not new or unexpected. COVID-19 directly affects consumers — much more than producers: COVID-19 has not affected the food availability in countries. Yet, shelves in supermarkets are sometimes barren. Consumers are suddenly faced with a feeling of scarcity. Milk, bread, rice, and tins of preserved foods — basic staples run out of stock. We are observing panic buying: the human response to uncertainty and anticipated shortages of goods and services.
Why do people hoard for example toilet paper? Why is this white gold suddenly so popular? And it is not really the case that you will not survive the crisis without toilet paper, so why are people suddenly stocking on toilet paper? Panic buying is a behavioral response to an (anticipated) crisis situation and the perceived anticipated shortage of food. This creates stress and we respond by trying to reduce the stress by stockpiling.
Panic buying may be enhanced by scarcity bias. When a product is perceived as scarce, people put a higher value on it as compared to when the product exists in abundance. For example, our WUR colleague, Erica van Herpen, showed that consumers are more likely to buy a specific wine when it is perceived as scarce. This perception of scarcity can not only be communicated by another person, but also by an empty shelve. The mechanism only seems to work if people are involved with the product. So, consumers get information through various channels about the scarcity of a product. Television, social media but also the shelf itself communicate that the product is scarce and that makes the product more attractive to people that care about it. As a result, the attention and empty shelves create even emptier shelves.
In unfamiliar situations or moments that challenge us, if it is difficult to know how to react properly. Therefore, we often look for clues in the behavior of other people. The uncertainty of a global pandemic forces some people to take the behavior of others as a reference of what to do. They use social norm information. If our fellow shoppers hoard goods, we may think that others must be thinking as well that it is or may become scarce. We also may start behaving like them and become part of the pack. This is called herd behavior: everyone does what everyone else is doing.
So whether decisions are rational or wise is hardly of relevance: it is the perceived opinion of the majority, a collective framing of reality. In this sense, panic buying of food is comparable to herd behavior on stock markets — anticipating and accelerating scarcity.
Why is hoarding problematic?
For products to become cheaper, their production and transportation, among other factors, need to be made as efficient as possible. Due to this basic economic principle, just-in-time production has become very dominant within the globalized world. A consequence of this production paradigm is that only as much is produced as is being expected to be bought by the general population. When even only a relatively small group of people buys a significantly larger extent than they need, others might not be able to get everything they need.
Hoarding behavior may increase inequalities. Times of crisis accentuate the gap between the privileged and the rest — be it in times of anticipated economic crisis or food shortage. The first-mover advantage of being first in line is triggering rush on hoarding goods. However, this is possible only for those consumers who have sufficient time to buy at advantageous times, since hoarding behavior is no option for those that work long shifts or more than one job.
Panic buying does not solve but increases anxiety. People lose their sense of perceived control, so people start stockpiling to regain control in one domain of their life. However, instead of solving anxiety at an individual level, panic buying is aggravating it at the society level, since panic buying rapidly empties shelves in and other people are getting more anxious due to do the same. This creates a panic contagion that ignores logic and rational reasoning.
The measures taken — how effective were they?
While it is difficult to provide definite answers on the effectiveness of the measures actually taken, we can describe our expectations based on behavioral and scientific literature.
Imposing buying limits
While it may seem like a smart approach to restricting the number of packages of toilet paper to 2 or 3, it may not have the desired outcome. While normally, individuals would only buy one package, the limit of 2 or 3 suggests that now more than 1 package is the norm. This might impose social norm information on hoarding behavior, thereby stimulating this behavior as individuals think others will buy more products. Moreover, this might also work as an anchor heuristic, a higher number is anchored in our mind and we then move more towards this anchored number.
Every shopper has to use a cart
When doing our groceries, we often had to either use either a cart or a basket when entering the supermarket. This was partly done to control the flow of people into the supermarket, however, it might have had unwanted consequences. While quite a few shoppers are normally only buying a small number of items, using a cart or basket can easily tempt us to buy several of the items we wanted or to buy more different products. This might in itself facilitate buying more than we actually need and therefore contribute to the hoarding behavior.
Attention to hoarding behavior induces descriptive norms (what we see people are doing) social norms instead of injunctive norms (what we think we should do)
When considering panic buying, the actions of a few individuals that purchase more products than they actually need captures most of the attention. Scientific literature, however, suggests it seems like a good idea to focus more on all of the people that do not engage in panic buying. Although, it is not that easy. Smith and colleagues (2012) have shown that the positive effects of the expected (or injunctive) standards are being canceled out by the negative effects of the observed (or descriptive) standards. In other words, while we know that we should only buy one or two packages of toilet paper, seeing the almost empty shelf, and hearing a lot on the hoarding behavior of others, can easily motivate people to buy 3 or more packages instead. Knowing this, we need to consider other interventions to prevent panic buying.
What else can be done?
We would like to provide some suggestions on what measures and interventions could be used in order to aid supermarkets and customers to engage in responsible shopping behavior. These are suggestions based on our expertise and have not been scientifically explored in the context of COVID 19.
Setting the social norm
As noted before, individuals use their social environment to make decisions on what is accepted and what is normal behavior. Especially in novel situations, the behavior of others is a highly relevant source of information to learn how to behave in a socially approved manner. In order to stimulate desired behavior, it is, therefore, highly relevant to pay special attention to prosocial behaviors.
Sometimes people require a bit of aid when they have to navigate novel situations. This can take many forms, ranging from showing them what to do with examples to just providing informative written prompts. For example, prosocial behaviors can be communicated by showing signs in the supermarkets that 75% of the customers shop the same groceries as they did before. In the supermarkets, prompts might be the easiest way of reinforcing the desired behavior of the customers. A potential message here could be: “Even though COVID 19 has created a lot of uncertainty, most of our customers are still only buying as much as they really need!”. A message like this can already do the trick and might provide individuals with all the input they need to not to engage in panic buying. However, an empty shelve might counter this message.
Removing the image of the empty shelf
As discussed earlier, an empty shelf is a powerful image that triggers us to buy more than we need. One way to address unreasonable shopping behavior is to remove these images. One way of doing this is by hanging up material in front of the empty shelves, stating with factual information when the shelf will be refilled. This could be an effective way to prevent the sensation of scarcity as well as providing certainty to the shoppers, preventing panic buying before it starts.
Prosocial behavior
When the shelves are empty, the social norm might be too strongly communicated via the surroundings for normative messages to have a strong impact. Then, the prompts need to be formulated differently in order for us to not behave too unreasonably. An effective alternative is to remind us of prosocial behavior, as in mentioning vulnerable social groups that can suffer the most from empty shelves. A potential message could be “Please buy only as much as you really need. For the elderly, it is much more difficult to navigate different supermarkets than it might be for you. Keep in mind the members of our society that require some extra consideration during these times!”. Such a message can shift the focus from one’s own needs to the needs of others and might therefore just give the right nudge to behave more responsibly.
Make people aware of alternatives
Undoubtfully, many people do not consider novel alternatives when they are experiencing an unexpected and potentially stressful situation. However, these alternatives might give some much-needed ease of mind to those of us that are afraid of ending up with less than they need. Especially, in larger cities, throughout the last years, grocery delivery has become more and more prevalent. Providing a reminder and an easy how-to guide, paired with some of the prompts mentioned above, can change the grocery experience in COVID 19 times from the feeling of scarcity and uncertainty towards more security and a stronger sense of community.
The added value of behavioral science
The suddenness with which Corona swept across the world was a surprise for many of us. While it is already difficult for individuals to deal with this new situation, it was even harder for organizations and processes that were not able to possibly understand how we as citizens would react, as in the case of supply chains not having anticipated the rapid change in purchase behavior. We are, however, not completely helpless in these situations. Behavioral science has researched for many decades how changing circumstances affect us all as individuals and how we can help each other to deal with these circumstances.
We at Wageningen Living Lab are combining several different perspectives and forms of expertise when encountering these problems. Although we are an interdisciplinary group, we aim to understand societally relevant processes through the lens of behavioral science. There is a considerable wealth of insights available that can help individuals as well as organizations to navigate through the uncertainty of COVID 19. We are eager to explore how behavioral science can aid you in these times and what we can learn from each other.
Conclusion
Panic buying and herd behavior are grounded in the psychology of human behavior. Individuals feel the need to take care of themselves and are fed by multiple signals from society and their surroundings that further amplify this behavior. For example, due to the fact that shelves are becoming emptier, which is being noticed by customers, people receive additional information on scarcity and social norms that strengthen the tendency to hoard. The good news is that knowledge of human psychology can also be used to help individuals to make better decisions for themselves and for others. We advocate that it is highly relevant to highlight prosocial behavior which provides information on what the normal response in the novel situation would be.
