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Preparing for a pandemic: spending dynamics and panic buying during the COVID-19 first wave.

ABSTRACT: In times of heightened uncertainty, consumers face incentives to build up precautionary stocks of essential supplies. We study consumer spending dynamics during one such time, the first infection wave of the COVID-19 pandemic, using household scanner data covering fast-moving consumer goods in the United Kingdom. We document large increases in demand for storable products, such as food staples and household supplies, in the days before lockdown. Households in all socio-economic groups exhibit unusually high demand pre-lockdown, but there is a clear gradient, with the largest demand spikes for wealthier households. Although stories of people purchasing extreme amounts received a lot of attention, higher aggregate demand was mainly driven by more households than usual choosing to buy storable products, with only small increases in average quantities bought on a given trip. Temporary limits on the number of units per transaction, introduced following the demand spike, are therefore unlikely to lead to the avoidance of stock-outs.

SUBMITTER: O'Connell M

PROVIDER: S-EPMC8209877 | biostudies-literature | 2021 Jun

REPOSITORIES: biostudies-literature

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Preparing for a pandemic: spending dynamics and panic buying during the COVID-19 first wave.

O'Connell Martin M de Paula Áureo Á Smith Kate K

Fiscal studies 20210608 2

In times of heightened uncertainty, consumers face incentives to build up precautionary stocks of essential supplies. We study consumer spending dynamics during one such time, the first infection wave of the COVID-19 pandemic, using household scanner data covering fast-moving consumer goods in the United Kingdom. We document large increases in demand for storable products, such as food staples and household supplies, in the days before lockdown. Households in all socio-economic groups exhibit un ...[more]

PMID: 34176997

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Project description:The over-purchasing and hoarding of necessities is a common response to crises, especially in developed economies where there is normally an expectation of plentiful supply. This behaviour was observed internationally during the early stages of the Covid-19 pandemic. In the absence of actual scarcity, this behaviour can be described as 'panic buying' and can lead to temporary shortages. However, there have been few psychological studies of this phenomenon. Here we propose a psychological model of over-purchasing informed by animal foraging theory and make predictions about variables that predict over-purchasing by either exacerbating or mitigating the anticipation of future scarcity. These variables include additional scarcity cues (e.g. loss of income), distress (e.g. depression), psychological factors that draw attention to these cues (e.g. neuroticism) or to reassuring messages (eg. analytical reasoning) or which facilitate over-purchasing (e.g. income). We tested our model in parallel nationally representative internet surveys of the adult general population conducted in the United Kingdom (UK: N = 2025) and the Republic of Ireland (RoI: N = 1041) 52 and 31 days after the first confirmed cases of COVID-19 were detected in the UK and RoI, respectively. About three quarters of participants reported minimal over-purchasing. There was more over-purchasing in RoI vs UK and in urban vs rural areas. When over-purchasing occurred, in both countries it was observed across a wide range of product categories and was accounted for by a single latent factor. It was positively predicted by household income, the presence of children at home, psychological distress (depression, death anxiety), threat sensitivity (right wing authoritarianism) and mistrust of others (paranoia). Analytic reasoning ability had an inhibitory effect. Predictor variables accounted for 36% and 34% of the variance in over-purchasing in the UK and RoI respectively. With some caveats, the data supported our model and points to strategies to mitigate over-purchasing in future crises.

Dataset Information

Preparing for a pandemic: spending dynamics and panic buying during the COVID-19 first wave.

Publications

Preparing for a pandemic: spending dynamics and panic buying during the COVID-19 first wave.

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