Understanding Our Panic-Buying with Neuroscience
- Why do people stock up on toilet paper?
- Why do consumers buy on emotion?
The Coronavirus or COVID-19 pandemic is at the top of the news around the world. Consumers are emptying store shelves, stocking up on bottled water, bread, milk, and toilet paper. This health crisis has given us a glimpse of how consumers buy on emotion.
Many studies have demonstrated how strong emotions can make us very irrational. For example, a group of volunteers was asked this question: How much would you pay to avoid a 99% chance of a painful, short electric shock? The average amount was about $10. Another group of volunteers was asked how much they would pay to avoid a 1% chance of getting an electric shock. Surprisingly, the average amount was about $7, not much less.
Even though the chance of getting infected by the coronavirus is very low, our emotional brains simply ignore that fact.
How Our Emotions Overpower Rational Thinking
Neuroscientists, psychologists and economists have identified about 200 human cognitive biases that often cause people to behave irrationally. Some of those ingrained tendencies can help explain panic-buying behavior.
- Our Brains Are Biased Toward Survival – Most cognitive biases arise in the fast-thinking, emotional areas in the brain that make decisions without our conscious awareness. Responding to fear, hunger and the need to survive is a primary function of those areas. Impending emergencies activate those emotions and can cause irrational reactions.
- News Reports Trigger Our Fear of Losing Control – Emergencies get round-the-clock coverage. The attentional cognitive bias makes us treat repetitive negative news stories as highly important. That triggers a fear response and put us in survival mode. We want to flee from danger but have no control of what is happening. We feel we must do something quickly. Panic-buying gives us a sense of control.
- Our Brains Tend to Overestimate Danger – Another tendency is called the relativity cognitive bias. Our fast-thinking brains are very poor at calculations. If we see reports of hundreds of deaths, we tend to believe we are at high risk. We overestimate the real danger and do not accurately calculate our odds of becoming ill.
- We Feel Safer by Following the Crowd – To help ease our panic, we want to make sure we have what we need to survive. News stories about long lines of shoppers buying toilet paper triggers the loss aversion bias in our brains. We rush to stores and join other panic shoppers, so that we don’t miss out. Following the crowd is called the bandwagon cognitive bias. We join the long lines out of fear. When we find supplies, we overbuy, “just to be safe.”
- Why We Panic-Buy Things We Don’t Need – As we watch the news, we see what others are buying up. Another cognitive bias, the availability bias, makes us think we also need those things. If others are buying toilet paper, milk, bread, and bottled water, we stock up on those things, even if they are not really needed. In the COVID-19 pandemic, there is no increased need for toilet paper and the water supply is not threatened. But we feel a desperate need to buy what others are buying. We don’t stop to think.
During this panic-buying frenzy, we should ask ourselves these questions instead.
- Are we experiencing a supply shortage of what we need to survive?
- Can toilet paper help us avoid or fight off the coronavirus?
- Are we hoarding because others are doing it?
Our Decisions in Emergencies Are Emotionally Based
While it’s only natural to be irrational in an emergency, Neuroscientists have learned that almost 95% of all our decisions are made emotionally and intuitively. Very often, we make irrational decisions without our awareness. We love to follow the crowd so we feel safe.
The coronavirus epidemic has given some valuable insights into consumers’ buying decisions.
That awareness may stop us from joining the hoarding crowds and reduce our chances of getting infected by COVID-19.