Panic buying: getting ahead, but at what cost?


Behavioural and economic theorists attribute recent surges in panic buying to media sensationalism

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Image by Image credit: Richard Dorrell

By Matilda Seddon

The price of petrol in the UK very recently hit an all-time high. On Sunday (24/10), the average price rose to 142.94p a litre, overtaking the previous high of 142.48p. This is attributable to recent trends in panic buying. Some scientists have looked at underlying behavioural and economic factors in an attempt to explain the recurring phenomenon.

With the beginning of Covid-19 came a sharp increase in the trend of panic buying. Supermarket shelves were empty and the media’s reporting on this only exacerbated the issue, with headlines undermining the government’s reassurances. Headlines such as Virus Panic and Fighting for toilet rolls were commonplace at the time.

Fast-forward more than a year on and we’re seeing the return of frenzied stockpiling, but now Britons are swarming petrol stations rather than supermarkets. The Office for National Statistics (ONS) released a report stating that 37 percent of UK drivers were unable to buy fuel during the first half of October. Petrol prices have also been steadily rising on a global scale with the post-pandemic energy trend. These facts have been relayed in the media and have fed into widespread concern that demand might outweigh supply and there is a fuel crisis on the horizon. Cue widespread feelings of anxiety and helplessness.

There is no doubt that UK fuel suppliers have been adversely affected by interruptions in supply chains over the past twelve months. The effects of Covid employment regulations combined with Brexit-related supply chain issues have resulted in a marked lack of HGV drivers available to distribute fuel. The Road Haulage Association approximated that there has been a shortfall close to 100,000 drivers. That being said, these factors alone would not be sufficient to cause depletion at the scale we’re currently seeing. According to the Petrol Retailers Association (PRA), up to 90 percent of pumps in some areas of the country are completely dry.

The initial impassioned attempts of government ministers to convince Britons that there is no actual fuel crisis underway has proven unsuccessful. Other than a shortage caused by the recent spike in panic buying, there should be no cause for alarm. There have been queues snaking outside of service stations that could indicate some form of modern savagery. So where is this widespread belief coming from?

Rachel McCloy, an associate professor in applied behavioural science at the University of Reading spoke to The Economist about the effect of perceived scarcity on peoples’ behaviour. She attributes the public’s anxiety and the snowballing effect of fuel shortages across the country to the media’s sensational coverage of recent events. McCloy suggests that ‘panic buying is often a consequence of our cognitive and emotional responses to uncertainty.’ When we are uncertain and lack clear direction, we find ourselves compelled to act for the sake of doing something.

Another noteworthy lens for understanding panic buying comes from Nobel prize winner, John Nash, who emphasised the value of cooperation in developing strategy. Economists have looked to Nash’s Game Theory in an attempt to understand the public’s frenzied panic buying. Proponents of the theory have modelled human behaviour by looking at strategic interaction.

If we think about panic buying as a matter of strategy, surely an ideal strategy is going to be one that secures your survival. The question then becomes: are we focussed on our survival at the level of ourselves as individuals, or ourselves as a collective? Economists have observed the following: although panic buying is collectively irrational, it is individually rational.

The act of stockpiling and depleting the supply of stores and gas stations en masse is collectively irrational because people are causing the very object of their fear: that supplies will deplete and eventually run out. In essence, people panic buy because of perceived shortages, which then leads to actual shortages, reinforcing their fears and aggravating the issue.

When we make decisions by predicting how others will behave, we can then act rationally on the basis of these predictions. If, however, we assume incorrectly using Fermi estimation that others are going to act selfishly, we ourselves will be more inclined to act selfishly. So, when we see sensationalised imagery of people queuing outside a petrol station, we assume that they are doing so because they are selfish and untrustworthy. Meaning - if we ourselves don't act out of our own self-interest, we will be the ones left without any fuel or means for survival. People will generally drop their sense of social responsibility as soon as they think others are willing to drop theirs. This is what I meant by modern savagery.

McCloy makes a number of suggestions as to how the government might address this growing issue. By increasing the transparency of companies about their distribution plans, people will be less uncertain (and therefore less panicked) about the future and supply of resources. Rather than communicating messages about scarcity, there should be an attempt to instead convey a sense of normalcy.

In an ideal world, the government’s reassurance would be enough to prevent the unnecessary hoarding of essential resources such as fuel, toilet paper, and pasta. However, when the public relies on the media as it’s primary informational source, their perception of the state of things might just begin to reflect this reliance.