Panic Buying

Even though the US has been mass-producing toilet paper since the late 1800s, people still seem to have an issue with this very product and, therefore, buy it in huge quantities, especially during pandemic times.

This is known as 'zero risk bias' by risk experts and it describes a person's behavior when trying to eliminate a superficial risk entirely rather than just reducing a big risk, everything in order to feel safer.

While we are all facing the biggest challenge of our life, the 2020 pandemic, our behaviors are slowly starting to change. For instance, hoarding toilet paper is not something common, at least not in modern societies. Still, it is happening worldwide these days.

Among the most efficient ways to handle shortages of any kind, shops could introduce rationing certain products or even individuals could try and convince each other that there is no real need to hoard staff, such as toilet paper, as we are not talking about unlimited resources here.

• A model is just a series of calculations that abstractly represent some systems in the real world. We use models all the time.
• We may work out the routes we could take to get to work at a specific time of the day. We use past data to make predictions about what we can expect in the future in a given set of circumstances.
• As the volume of data and the number of variables increase, the computational task would increase.
• Powerful models aim to forecast inherently unpredictable events and make use of machine learning to look for patterns in the data that would otherwise be missed.

You can never accurately predict what's going to happen. Some efforts come close.

For example, models looking at the weather can achieve more than 90% accuracy. But crises are about change, and a model working from historical data may miss a dramatic and new change.

The measures to stop the spread of the virus are well-known by now: staying home in lockdown, working from home as a default option, schools switching from physical classrooms to e-learning models.

Not every country has been able to make these choices fast, due to a combination of hesitation, inaction, and paralysis. Before any decision is made, the first thing to do is determine what needs to be done and at what pace and scale.

As the current health crisis steamrolls into an economic crisis unparalleled for the last 100 years, the decline in economic activity is already at par with the great depression.

This crisis of global proportions requires resilience, both for near-term issues like liquidity and cash flow, as well as long-term issues like uncertainty, personal financial stress and recovering from multiple challenges that were already present and are now further complicated due to the pandemic.

The threat, uncertainty, and anxiety related to the pandemic lead us to make short-sighted decisions:

• we crave more information so we are spending a lot of time looking for news updates relating to the virus and its spread. But too much negative news causes stress and distraction.
• the lack of agency causes people to seek out actions that will make them feel more in control. Early on, this took the form of buying hand sanitizer and rubbing alcohol.

People want to take action quickly, even when inaction might be more prudent.
Faced with anxiety, some are making quick decisions about finances as well and started fear selling their stocks. But this is taking a paper loss in the present that is likely to come back in the future (given the way stock markets have acted in the past).

• Pizza Hut started selling pizzas online in 1994, using a flat, grey website to take the addresses and phone numbers of pizza-hungry customers.
• Amazon.com too was launched in 1994, when we could only buy books on the site and is now the biggest online retail store, making the CEO of Amazon, Jeff Bezos, one of the richest people on the planet.

• By 2017, Smartphone usage hit 80 percent worldwide, and online shopping apps became a common thing to use.
• Since then, online shopping has been topping every sales chart, with Shopify providing the worldwide sales figure of USD 3.5 trillion in 2019.
• A majority of stuff ordered online included electronics, books etc., with groceries not a huge priority, until this year.

One possible reason for the "optimism bias" is found in the way we learn new information. People are quicker to change their beliefs when the information is better than expected, compared to information that is worse than expected.

• If people were told that lockdown would be eased in two weeks, people would quickly update their beliefs. But if experts said it would last longer, people would be less likely to update their beliefs. They will make statements like "I don't really believe it" or "things change."
• People may underestimate their personal risk of infection.
• People may fail to adopt precautions like social distancing.

Outcomes bias it thinking that because things turned out reasonably good, we can underestimate how close they came to going wrong.

In the past 20 years, there have been two outbreaks of diseases caused by the new viruses. The outbreak of 2003 killed 774 people before it was contained, and the Mers outbreak in 2012 has killed 858. The new virus has far surpassed both.

We can’t control the existence of the new virus but we can control how we respond.

• Practice social distancing as much as possible.
• Cancel or postpone any events that you have planned, or make them remote.
• Practice safety measures, like washing your hands.
• Help others in more vulnerable situations.
• Hold off on visiting elderly friends or family members.
• Don’t hoard.
• Don’t tie up medical resources you don’t need.
• Use your time wisely. Try a new hobby, or read up on something that interests you.
• Batch your online orders to reduce the need for inefficient shipments.
• Don’t spread misinformation.
• If you get sick, isolate yourself at home as long as symptoms remain moderate.
• Cherish the people you love.

Some inefficiency can be seen as an insurance policy.

Year after year, if you don't get into a car accident, you may think that you have 'wasted' money on insurance. But insurance enables us to be resilient against problems that could overtake us. To be prepared, we need to learn to live less efficiently.

In the face of radical uncertainty, instead of asking which option will give the best results, we should be asking which option will provide us with good-enough results under the broadest range of future states.

Instead of maximizing return on investments, we should be setting a financial goal. Then we should choose investments that will allow us to achieve that goal under the widest set of future financial circumstances.

It's perhaps time to rekindle social norms that serve to slow us down in an uncertain world.

“The greater the difficulty, the more glory in surmounting it. Skilful pilots gain their reputation from storms and tempests.”

“Circumstances don’t make the man, they only reveal him to himself.”

Many consultants have headaches and nausea when they deal with stress and emotion. There are also times when there is nothing they can do, for example, provide beds, masks, and other needed supplies.

A psychological consultant advises that you should be aware of yourself, and distinguish which emotions are yours, which are the patients, and which are your empathy.

Consider unexpected risks associated with the response to the outbreak, for example, poor mental health that is related to social isolation. Steps to take into account:

• Staying connected with your social and family networks via technology
• Keeping your daily routines as much as possible
• Exercising regularly and practicing habits that you enjoy and find relaxing
• Seeking practical, credible information at specific times of the day.