Daily Bulletin

The Times Real Estate

.

  • Written by David A. Savage, Associate Professor of Behavioural Economics , Newcastle Business School, University of Newcastle

Recent days have brought reports of shoppers clearing out supermarket shelves from Wuhan and Hong Kong to Singapore and Milan in response to the spread of coronavirus. This behaviour is often described as “panic buying”.

However, the research shows that what’s going on here is nothing to do with panic. It’s a perfectly rational response to the situation.

Responding to disaster

Panic is one of the most misunderstood and misinterpreted of all human behaviours. The common, traditional understanding of the phenomenon is based on myth rather than reality.

If we understand panic as a state of uncontrollable fear that drives irrational behaviour, then how people usually respond in the face of disaster is something else entirely.

It’s a common belief that social law breaks down in a disaster. In the Hollywood version, chaos ensues and people act in illogical or unreasonable ways. The reality is very different.

Most research rejects the notion of a “disaster syndrome” described as a state of stunned shock or the occurrence of mass panic. In real disasters, people usually hold on to tenets of acceptable behaviour such as morality, loyalty, and respect for law and customs.

Planning ahead

If we are not seeing panic, what are we seeing? Unlike most animals, humans can perceive some future threats and prepare for them. In the case of something like the coronavirus, one important factor is the speed at which information can be shared around the world.

We see empty streets in Wuhan and other cities, where people are unable or unwilling to go outside for fear of contracting the virus. It is natural that we want to prepare for the perceived threat of similar disruption to our own communities.

Read more: Vital Signs: a connected world makes this coronavirus scarier, but also helps us deal with it

Stocking up on food and other supplies helps people feel they have some level of control over events. It is a logical thought process: if the virus comes to your area, you want to be able to reduce your contact with others but also ensure you can survive that withdrawal period.

The greater the perceived threat, the stronger the reaction will be. At this stage it is believed that virus has an incubation period of up to 14 days, so people want to be prepared for at least 14 days of isolation.

Stocking up to prepare for a crisis isn't 'panic buying'. It's actually a pretty rational choice Bare supermarket shelves are often a sign of preparation, not panic. Andrea Canali / EPA

A reasonable response

Preparing for a period of isolation is not the result of an extreme or irrational fear but rather an expression of our ingrained survival mechanisms. Historically, we had to protect ourselves from things such as harsh winters, failing crops or infectious diseases, without the aid of modern social institutions and technologies.

Stocking up on supplies is a valid response. It indicates citizens are not helplessly reacting to an outside circumstance but instead are thinking forward and planning for a possible situation.

While part of this response is due to the urge for self-reliance, it may also be a herd behaviour to some extent. A herd behaviour is one driven by imitating what others do – these behaviours can be a kind of conditional cooperation with others (for example, yawning).

Erring on the side of caution

A lot of uncertainty surrounds disasters, which means all advanced decisions are made on the basis of perceived threats not the actual disaster itself. Because of this uncertainty, people tend to overreact. We are generally risk-averse and aim to prepare for the worst-case scenario rather than the best.

When it comes to stocking up (or hoarding) a large private collection of goods to see us through a disaster, we don’t know how much we will need because we don’t know how long the event will last.

Accordingly, we tend to err on the side of caution and buy too much rather than too little. This is the natural response of a rational person who faces future uncertainty and seeks to guarantee their family’s survival.

Read more: Coronavirus: how media coverage of epidemics often stokes fear and panic

The importance of emotions

Buying up large stores of supplies – which can lead to empty supermarket shelves – may seem like an irrational emotion response. But emotions are not irrational: they help us decide how to focus our attention.

Emotions allow individuals to attend to issues longer, to care about things harder and to show more resilience. They are an instinctual element of human behaviour that we often fail to include when trying to understand how people act.

Changes in individual behaviours can have large-scale implications. For example, a supermarket will normally organise its supply chain and stocks on the basis of average levels of consumption.

These systems do not handle big fluctuations in demand very well. So when demand surges – as it has in parts of China, Italy and elsewhere – the result is empty shelves.

Should I be stocking up?

In general Australians are not as well prepared for disaster as our kin across the ditch in New Zealand, who routinely have emergency kits in their homes due to the prevalence of earthquakes. However, the recent summer of fires, floods and disease should have given us all a wake-up call to be prepared.

You don’t need to rush out this very minute to buy several dozen tins of baked beans, but you might want to start assembling this kind of kit. Look through the ABC’s survival kit list, figure out what you already have and what you need to get.

Then you can make a shopping list and steadily gather the things you need. Done this way, it gives shops time to restock and won’t leave the shelves bare.

Authors: David A. Savage, Associate Professor of Behavioural Economics , Newcastle Business School, University of Newcastle

Read more https://theconversation.com/stocking-up-to-prepare-for-a-crisis-isnt-panic-buying-its-actually-a-pretty-rational-choice-132437

Business News

Insulation Solutions for Meeting Modern Industrial Standards

As global energy costs soar and environmental regulations tighten, industries face unprecedented pressure to optimise their operations while minimising their ecological footprint. Modern industrial ...

Daily Bulletin - avatar Daily Bulletin

How Australian Startups Should Responsibly Collect, Use and Store Customer Data?

Owing to the digital landscape, data is the most important currency in the market. From giant e-commerce sharks to small businesses, every company is investing heavily to responsibly collect data an...

Daily Bulletin - avatar Daily Bulletin

Revolutionising Connections - The Power of Customer Engagement Software

As time goes by, customer expectations keep on rising ever so rapidly. Businesses that must keep pace will need future-ready tools to deliver connectedness at every touchpoint. Customer engagement a...

Daily Bulletin - avatar Daily Bulletin

LayBy Deals