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…[Back in mid-February] I went to buy some toilet paper…[and] couldn’t find a single roll. It seems…[the awareness of the rampant spread of COVID-19 had caused] widespread panic buying of…it across the U.S. over fears COVID-19 would cause shortages…As an economist I am fascinated as to why people would be hoarding a product that is widely produced and doesn’t help protect from a respiratory virus like COVID-19…[This article investigates and answers that question.]
The average person in the U.S. uses about 100 rolls of toilet paper each year. If most of it came from China, this could be a huge problem because supply chains from that country have been severely disrupted as a result of COVID-19. The U.S., however, imports very little toilet paper – less than 10% in 2017 – and most of that comes from Canada and Mexico so…
Why Do People Hoard a Product That Is Abundant?
- …A risk expert in Australia explained it this way: “Stocking up on toilet paper is …a relatively cheap action, and people like to think that they are ‘doing something’ when they feel at risk.” This is an example of “zero risk bias,” in which people prefer to try to eliminate one type of possibly superficial risk entirely rather than do something that would reduce their total risk by a greater amount.
- Hoarding also makes people feel secure…which is especially relevant when the world is faced with a novel disease over which all of us have little or no control. However, we can control things like having enough toilet paper in case we are quarantined.
- It’s also possible we are biologically programmed to hoard. Birds, squirrels and other animals tend to hoard stuff.
How Should We Go About Handling Shortages?
There are a number of ways to handle shortages, including those caused by hoarding.
- The best way is to convince people to stop doing it, especially with plentiful products like toilet paper. However, logic often fails when dealing with emotional issues.
- Another way is by rationing. Formal rationing is when governments allocate goods by specifying exactly how much each family gets. The U.S. used rationing during World War II to allocate gasoline, sugar and even meat. China rationed a lot of goods including food, fuel and bicycles until the 1990s.
- Sometimes businesses enforce informal rationing. Stores prevent customers from buying all they want. The store I went to for toilet paper had a sign limiting shoppers to five packages per customer.
Modern economies run on trust and confidence. COVID-19 is breaking down that trust. People are losing confidence that they will be able to go outside and get what they need when they need it. This leads to hoarding items like toilet paper.
Conclusion
While the government advises preparing for a pandemic by storing a two-week supply of food and water, there’s no need to hoard stuff, particularly products that are unlikely to suffer from a shortage. [A case in point is that when I returned to] my local grocery store…a few days later the toilet paper aisle was fully stocked.