Why panic buyers reach for the loo paper

Why toilet paper? I wondered. Surely we live in the land of the long white roll?

Like many people I see panic buying as frustrating and pointless, but I can at least see some internal logic to stocking up on hand sanitiser, masks and rubber gloves.

When it comes to the stuff you need to make toilet paper — wood pulp — New Zealand probably produces more per capita than any nation in the world.

We also have two giant high-tech pulp and paper plants at Kawerau and Kinleith churning the stuff out.

It’s just about the last consumer good we’d run out of in this country — along with dairy and meat.

But I’m missing the point, aren’t I? Panic buying isn’t rational because it isn’t driven by a relationship to realworld supply and demand.

Ironically, coronavirus-related product shortages do pose a serious economic problem for New Zealand’s manufacturers.

As well as becoming our largest export destination in the past decade, China is now our biggest source of imported goods.

The coronavirus shut down of China’s factories and ports means many local manufacturers are running out of the key components they need.

For the record, Chinese production is gearing up again — estimates are that it’s back at about 40 per cent of capacity.

But it will be a slow process. Even though the virus spread is slowing there, people are being cautious — as you’d hope.

And even when they are back at capacity there will be an enormous backlog to work through.

So it’s likely New Zealand will face shortages of some consumer products over the next few months.

Potential shortages I’ve heard about so far include the parts to repair iPhones, high-end designer furniture and light fittings, parts for those spring-free trampolines, sugar substitutes for diet Coke, reusable nappies and possibly some lines of new season winter fashions.

None of these will spark much panic but they will put the squeeze on business cashflows and could put jobs at risk if they aren’t resolved.

That economic flow through is the more serious issue for the Government right now.

At least it ought to be — if it wasn’t having to also deal with public panic.

Panic buying, it turns out, is a mass psychological phenomenon that has been well documented and studied by psychologists and economists.

It transcends cultural boundaries — as we’ve seen in the past few weeks — and seems to be innately human behaviour.

Writing for the INSEAD Knowledge business site, Andy J Yap, a professor of organisational behaviour, makes the case that panic buying is a ultimately a response to loss of control.

However thin the veneer of control is in society, we cling to it and it provides security and structure in our lives.

When our perception of control is disrupted we panic and buy basic household products.

You’d think imminent catastrophe would see us buying more fun stuff — like booze and decadently unhealthy foods

But Yap — who also co-authored a 2016 academic paper called Control Deprivation Motivates Acquisition of Utilitarian Products — says we buy basic household items because we psychologically associate them with problem solving. High-profile American economist US Justin Wolfers this week set panic buying of toilet paper in the same

context as the bank runs of the Great Depression.

He tweeted: “You run and get toilet paper not because you think society is about to crumble, but because you fear that others fear this. Fear of a run on toilet paper — like a run on banks — is enough to create an actual run.”

In other words, everyone fears shortages, which leads them to stockpile, which creates shortages.

Wolfers then tweeted a pun about having a case of “the runs”.

Which reminded me of a big mistake made in my column last week.

I said coronavirus situation was so grim that economists “couldn’t” even make jokes about it.

I meant “shouldn’t”.

Of course you can make jokes, as anyone who’s found themselves singing alternative lyrics to The Knack’s 1979 hit My Sharona will know.

A bit of black humour is probably important to alleviate tension and emotive responses like panic and despair.

Wolfers also offers up a facetious solution to the panic buying of toilet paper.

He suggests the establishment of a government-backed Strategic Toilet Paper Reserve.

In that way the public could be reassured about supply just as are with regard to currency thanks to our government-regulated central banks.

The only difference is what’s printed on the paper, Wolfers concludes.

Ultimately, panic buying is a reminder that the twin drivers of fear and greed — that we usually attribute to stockmarket — can easily spill over to other markets if herd mentality takes over.

Behaviour driven by the response to other people’s behaviour, rather than what is really happening in the world, quickly becomes a problem.

Unfortunately, at a time when what is really happening is very serious it can become a dangerous distraction for authorities that need to be focused elsewhere.

I don’t hold with apocalypse scenarios because, whatever happens, life is already too short to spend it living in fear.

But it is probably worth remembering that in the movies and TV shows, the real problem, in the end, is always the other people, not the zombies.