The Behavioural Science Behind Panic Buying: Social Proof, Scarcity and the Fear of Missing Out
The psychology of panic buying is a triumvirate of powerful biases - social proof, scarcity and the fear of missing out, also known as loss aversion.
At the start of lockdown there was a rush to the supermarket to buy toilet paper and dried pasta. We witnessed the power of social proof playout via the media. They documented empty shelves and supermarkets publicised the apparently responsible measures they took to limit purchases of the most popular items. According to Google Trends, panic buying interest peaked at nearly x100 higher than any point over the last 5 years, with the nadir of interest the week commencing the 16 March; a reflection of the mass media coverage.
Social proof has continued to be visible as lockdown restrictions have eased, thankfully with a more positive effect. The manager of my local coffee shop was not just delighted to reopen but commented that “queuing on the pavement has been a quick way to show we serve the best coffee… we’ve been busier than before”.
In addition to social proof, the scenes of empty shelves also triggered the scarcity heuristic in us. Such is the effect of scarcity and social proof in combination, it eroded any price sensitivity we may have had. Reports of hand sanitiser being sold for 50 times their retail price on eBay appeared as early as the beginning of March. Retailers limiting the number of essential items an individual could buy, made sense from the point of view of hampering the greedy resale market.
However, a previous behavioural science study shows that limiting the number of items someone can buy in fact encourages the purchase of a product in greater volume. In relation to a promotional offer for soup, when customers were told the maximum number they could buy was 4 cans, the average customer purchased 3.5 cans. In contrast, when customers were told the maximum purchase was 12 cans, the average customer purchased a whopping 7 cans (Decoded: The Science Behind Why We Buy, Phil Barden). Whilst these measures have been relaxed, they are overdue to be lifted altogether.
Panic buying behaviour was furthered encouraged by a third bias, our fear of missing out. In February and March, as we anticipated lockdown and what it might mean, we took reassurance in copying the behaviour of others. Better we follow the crowd than risk being stuck without toilet roll. Less than a fiver to make sure we don’t look stupid and get caught without loo roll is good value surely?
As demand for various products and PPE increased the media flagged the potential for supply chain issues, particularly with China first hit by COVID-19. The UK government, either through supply chain issues, miscommunication or ineptitude, did miss out on accessing personal protective equipment, at least initially. More recently, it is likely the same fear of missing out that has contributed to the US buying up almost the entire world supply of coronavirus drug, Remdesivir.
Just as in the supermarket, as at the highest echelon of government, behavioural science is playing a part in decision making. Buying the entire stock of a drug only perpetuates and encourages panic buying. Although supermarket shelves are now well stocked, government officials should be wise not to play out the same biases on a grand scale when it comes to a vaccine.