The Psychology of Panic Buying
What Happens When Commodities Go Viral
The panic buying as a result of the COVID-19 hysteria has been interesting to watch. It is easy to understand why people are stocking up on hand sanitizer and staple foods, but it’s more difficult to understand the extreme cases of panic buying of pasta and toilet paper, far beyond what anyone requires of these commodities.
There probably will never be a way to confirm or disconfirm this, but I wager that the panic buying of pasta and toilet paper has its origins in a particular incident in which same particular person was buying large quantities of pasta and toilet paper, others saw this buying, worried that they would lose out, and they started buying large quantities of pasta and toilet paper also. It probably spread from a single epicenter, with word of the incident spreading first by word-of-mouth and then on a planetary scale because of social media.
Last week when I was in a grocery story, everyone I passed in the store had toilet paper in their grocery cart. I found that this influenced me psychologically, against my better judgment. Even though I have enough toilet paper at home, when I started seeing people stocking up on toilet paper I had to restrain myself from responding to this observation by buying more toilet paper myself. There are rational concerns about fear of missing out, of the possibility of the item being difficult to obtain for some time, and so on, but unless one is predicting the collapse of the economy, it doesn’t make any sense to buy during a panic just because others are buying (you will probably pay a higher price for a reduced range of choices). Nevertheless, I found myself responding on an emotional level, and from this personal experience I can easily imagine the scenario I described above unfolding, of a single instance of panic buying that goes viral and spreads exponentially.
Stocking up on groceries when restaurants are closed and everyone needs to eat at home makes sense, and the staples that people have been panic buying will eventually be eaten because most of them will keep. So the food will not go to waste, though the impact on the restaurant business will leave a mark on the economy. And as interesting as it has been to see the panic buying, it also will be interesting to see how long it takes for the grocery stores to fully re-stock, how long people will continue their panic buying, and what happens when restaurants re-open.
