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The psychology of panic buying

Panic Buying

Panic Buying

The world is seeing panic buying in supermarkets, with items like toilet paper, milk, soda, hand sanitizers, etc. flying off the shelves, especially in places with confirmed cases of the virus.

Panic buying is a psychological mechanism fueled by anxiety along with a herd mentality. People hoard stuff in panic, due to fear of the unknown, according to experts.


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The psychology of panic buying

The psychology of panic buying

https://www.bbc.com/worklife/article/20200304-coronavirus-covid-19-update-why-people-are-stockpiling

bbc.com

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Key Ideas

Panic Buying

The world is seeing panic buying in supermarkets, with items like toilet paper, milk, soda, hand sanitizers, etc. flying off the shelves, especially in places with confirmed cases of the virus.

Panic buying is a psychological mechanism fueled by anxiety along with a herd mentality. People hoard stuff in panic, due to fear of the unknown, according to experts.


Downsides of Panic Buying

  • Panic buying makes people feel in charge of the situation, while seemingly mundane measures like hand-washing, which are actually impactful, seem ordinary.
  • The problem comes when people overbuy in their over-panicked state of mind (irrational stockpiling), making the shortages worse than they really are.
  • Speculators also take advantage of panic buying and raise prices of essential items like face masks, forcing companies to take appropriate measures.

Loss Aversion

..is a principle which makes people do things so that they don't feel regretful later. 

People are panic-buying for the same reason too, with social media and news media amplifying the sense of scarcity.

Fake News And Lack Of Trust

Experts point out that panic buying can be a result of a lack of trust in the government.

If public fears are not addressed on time, fake news can induce panic. Better preparedness at all times for possible emergencies can be a way to reduce this among the public.

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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.

Successfully dealing with shortages

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.

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Simulating a crisis

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  • 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.
The accuracy of a model

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.

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The ongoing pandemic is more than just a gigantic health crisis. The global economic order, for the first time in several decades, is on the path to an imminent restructuring.
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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.

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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.

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Decision-making obstacles
Decision-making obstacles
Psychological reasons why we find decision-making difficult right now:
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The pandemic and our biases

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.
Financial decisions

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).

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  • People may underestimate their personal risk of infection.
  • People may fail to adopt precautions like social distancing.
Outcomes bias

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

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How to respond

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.
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Analyzing our options in uncertain times

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.

Stoicism: the art of staying calm

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

“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.”

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

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Stay informed by trusted sources

Facts will minimize your fear. There are two sources to use for managing fear in the new virus response: The World Health Organization and your national authority.

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Always return to yourself

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.

The effects of being isolated

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.

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