Herding, Hoarding & Miscalculating Risk: A Case of Facial Masks in Coronavirus

Understanding why people do what they do via behavioural economics

I often get asked how behavioural economics can be applied to the ‘real world’. Coronavirus is a serious topic, our understanding of which is evolving every day. This post identifies some people behaviours that are taking place in the evolving coronavirus situation, applying behavioural economics principles to help us understand why people do what they do.

Wearing Masks in Hong Kong

I am based in Shanghai, but have been working remotely in Hong Kong recently, as the coronavirus situation evolves.

What has been the impact of coronavirus in Hong Kong? Perhaps the most visible impact has been that everyone wears a mask. If one does not wear a mask, they are subject to looks of disapproval, as they are putting others’ lives at risk.

So how can behavioural economics help explain why everybody is wearing a mask?

1. Herd behaviour: This effect relates to people copying what others are doing. The coronavirus situation in Hong Kong brings this to life very vividly: when everyone else wears a mask, one has the pressure to follow.

2. Fear of the unknown: Unlike the common flu (which kills many more people than the novel coronavirus has so far), people fear the currently unknown potential impact of coronavirus — & act more irrationally because of it.

3. Availability heuristic: This bias occurs when people consider examples that come easily to one’s mind as being more representative than they actually are. One classic example can be seen in the novel coronavirus, reinforced by the fact that Hong Kong residents recall the impact of SARS.

Avoiding Masks in Australia

Before working remotely in Hong Kong, I spent time during the extended Chinese New Year period in Australia. Interestingly, people behaved in the opposite way when it came to masks. If one was wearing a mask, they were seen as paranoid or, worse still, somebody who could be carrying the virus.

So why was almost everybody not wearing a mask in Australia?

1. Herd behaviour: People move in herds. When others are not wearing a mask, one has the pressure to follow. That is, different ‘herds’ exist in Hong Kong vs Australia.

2. Fear of the unknown: Whilst this fear has not led people to wear masks (yet), a different fear (related to the fallout from the Australian bushfires) led to N95 masks selling out in prior weeks.

3. Availability heuristic: In Hong Kong, people can be viewed as overestimating the risk of low-probability, high-impact scenarios. Meanwhile, in Australia, people may be underestimating the risk (effectively ‘rounding down’ to zero). This difference may be driven by the fact that people in Australia have less personal experiences to relate to coronavirus, such as SARS.

Interestingly, common behavioural economics drivers can help to explain the seemingly opposite behaviours of people in Hong Kong & Australia.

Hoarding Masks in Hong Kong & Australia

Beyond wearing masks, residents in both Hong Kong & Australia have raided shelves of ‘N95’ masks.

Is this rational behaviour?

On the one hand, it is easy to understand that people, acting in their self-interest, may look to buy masks for future use.

However, health officials have advised that mask-wearing does not protect one’s self from the virus. Not only that, but given a worldwide shortage of N95 masks, stocking up on these masks actually exacerbates the shortage for public health professionals at the frontline in hospitals to have access to these necessary medical supplies. This in turn can increase the danger levels for the virus to spread — which can impact everyone.

Considering this broader societal angle can help us make better decisions — a common surgical mask may be all that is needed.

Closing Remarks

What lessons can be learned from the above?

1. People move in herds.

2. People do not assess probabilities well — either overestimating or underestimating risk.

3. People fear the unknown — & hoard when scared.

If the situation evolves & we see more infected cases pop up around the world, we may see these behavioural economics drivers leading to more common behaviours across the world.

By understanding why we do what we do, we have an opportunity to demonstrate more rational behavior — such as leaving N95 masks for the public health professionals who need them.

In the meantime, wash your hands & stop touching your face!