The Media and Panic Buying

The problem with seeing pictures of empty shelves is that it just makes panic buying worse. The media have an important role to play in this but first let's try and understand why panic buying is a problem. In short: panic buying means resources are not allocated to those who need them.

Imagine if there were only two people in a village, Helen and Jack. Every week they go to the village shop and on the shelf there are 6 cans of soup.

Each week, Helen goes in and usually buys 1 can of soup and Jack goes in and buys 2 cans of soup. Sometimes they may buy more or sometimes a bit less. However, the important thing is the shopkeeper roughly knows how many cans of soup she needs on her shelf. Each week she will replace the ones that got bought and keep the shelves full with 6 cans.

Now let us say suddenly something happens like the coronavirus, people are worried that they may need to stay indoors. Jack is concerned and decides to buy 6 cans of soup so he has enough soup for 3 weeks. Helen comes into the shop afterwards to find the shelves completely empty.

So the problem is not that there isn’t enough soup, it is that Jack has enough soup for 3 weeks and Helen does not have any soup at all.

But there is an important psychological effect here that is not demonstrated in the above example. When we go to the shops, we take visual clues in order to estimate how large the total supply of the soup is.

Consider the case if Helen comes into the shop first and sees the usual 6 cans on the shelf. In this example, she is worried about the virus and Jack is not. As Helen is worried, she buys 3 cans rather than her usual 1.

Jack comes in after Helen, he isn’t worried about the virus but the shelf is looking a bit empty. Usually there are about 5 or 6 cans on the shelf when he comes in but now there are only 3! So he is now concerned something may have happened to the total amount of soup and so decides to buy the 3 remaining soup cans that are left on the shelf rather than his usual 2. As there is now no soup on the shelves, if anyone else comes into the shop looking for soup they will have no soup!

So what can we do to stop this? Well let’s say the shop keeper had some spare cans of soup in the back, as soon as Helen bought 3 she could have restocked the shelf before Jack came in. As Jack isn’t so worried about the virus when he comes in, he sees a shelf full of soup and only buys his usual 2. Even if he has heard a rumour that people are panic buying soup, seeing a full shelf will mean he is still less likely to buy more soup. Seeing a full shelf shelf makes him question the rumour as he has no need to believe otherwise.

Although supermarkets do have some spares in the back, most of their cans are in warehouses where there are giant stacks of soup cans that go on for miles. The problem with panic buying is not that there isn’t enough soup to go round, but it is that the delivery drivers can’t get the soup to the stores quick enough to restock the shelves. When we see empty shelves we wrongly assume that soup is running out. The only thing that is running low is the soup on the shelves, not the soup the total amount of soup the super markets have.

So what can the media do? Well the media have a duty to cover important events like when people panic buy. But they also have a duty to cover it responsibly. By showing empty shelves this triggers the same psychological response as Jack had in the previous example, it makes us think that something is in short supply. 

So rather than showing empty shelves and having a random guy in a high-vis vest saying “don’t panic buy”, it would be better so show pictures of these giant warehouses full of stuff and explain how their supply chain works.

So if by seeing these gigantic warehouses full of stuff on the news and enough people believe* (correctly!) that there is enough supply of food, then the problem of empty shelves will go away!

*A similar problem happens sometimes when people are worried a bank is going to run out of money. This causes a bank run and people start queuing to take their cash out. One way to solve this bankrun is for the government to come in and back the bank and say they will supply all the short-term cash they need. As a result, people no longer think the bank will run out of money and so stop queuing up at cashpoints. Amazingly, by the government SIMPLY announcing this decision solves this problem, they may not even have to act!