Economics of Panic Buying in Singapore: What Are the Implications?
Panic Buying: The ‘Kiasu’ Singaporeans in Us
It was a week before Valentine’s Day when Singapore upgraded up her Disease Outbreak Response System Condition (DORSCON) from DORSCON Yellow to DORSON Orange.
FYI: DORSCON Orange means that the disease is severe AND spreads easily from person to person, but it has not spread widely in Singapore and is being contained
Small groups of Singaporeans responded by scrambling and emptying our supermarkets of basic supplies like toilet paper, instant noodles, and rice.
If we shared the same enthusiasm for hoarding as we do towards buying Valentine’s day bouquets and chocolates in search of partners, we would have found a perfect solution to our ageing population.
Since then, the Government has constantly reassured Singaporeans that we have ample food and essential supplies.
In the hope of calming down and bringing out the best in Singaporeans.
However, all efforts fell through when Malaysia imposed lockdown measures in a bid to stem the rising number of COVID-19 cases.
When Singaporeans received the news, guess who starting panic buying of essentials… AGAIN.
It seems as though no amount of Minister Chan Chun Sing’s leaked audio recording can get into the heads of this group of Singaporeans.
This mentality, if not rectified fast enough, will rock the fundamentals of our society and will amplify the impact of every crisis we go through as a country.
Why Is Everyone Panic Buying?
You might be wondering, “Is Singapore the only one that is subjected to this curious side effect from the spread of COVID-19 Coronavirus?”
Across the globe, supermarkets shelves are being emptied due to panic buying.
Canned goods, instant noodles, hand sanitisers, toilet paper, and bottled water are amongst the first things to sell out.
There were even cases of fights between shoppers trying to get their hands on these essentials.
Implications of Panic Buying
“I do what I want, why does it concern you?”
However, irresponsible panic buying can bring about severe implications to the society in the long-run.
And when each individual’s act of irrationality is amplified by herd mentality it will trigger a larger impact.
In short, you can do whatever you want.
But if herd mentality triggers 5,000 other people to do EXACTLY what you’re doing.
Then it becomes society’s problem.
What kind of problems?
Here are some that we want to avoid at all cost:
Inefficiencies in the Economy
Inefficiency occurs when there is a mismatch in supply with the demand that needs it the most.
Shortages of certain items just because a group of people wish to stock up their kitchen can be dangerous if we deprive those who genuinely need the supplies the most.
During the previous panic-buy, there were diabetic Singaporeans who were unable to get their hands on alcohol swabs for the insulin injections they need.
“Who was hoarding all of these alcohol swabs?” you ask.
They were in the hands of the panic-buyers who used them to wipe down their furniture.
For Singaporeans who were just heading to the supermarket for their routine grocery trips, they had to wait in line for hours when they could have spent that time on more productive tasks.
Some even gave up and simply left their groceries everywhere.
Additional resources had to be allocated to clean up the aftermath of panic buying.
Worse if perishable items went bad because they were left out in the open without refrigeration for a prolonged period time because the supermarket staff needed time to sort out and return the products back to their respective shelves.
And that’s an unnecessary cost which we didn’t need to incur in the first place.
Increase in Food Wastage
Hoarding of food with little intention of consuming them can lead to an increase in food wastage as well.
Writer’s Note: “Stock up on Chicken Essence for what?”
Instead of storing items with a long shelf life — like canned food — which can probably help you outlast a war or a famine if you know how to ration.
These hoarders simply buy whatever they can get their hands on.
Or whatever everyone seemed to be getting.
The worst thing is that there is no guarantee that these impulse purchases will be put to good use.
Once their expiry or best buy dates are up, they’ll probably be thrown out if these panic-buyers can’t finish them in time.
I mean, seriously, who’s going to be able to finish that many bottles of chicken essence and abalone? And what kind of diet is that?
Prices of Essentials Will Increase Due to These “Imaginary Demands”
You know how we’re already seeing a surge in prices for surgical masks and instant noodles on platforms like Carousell?
This short-term price surge is due to an imaginary demand that was artificially created by these hoarders.
This is bad for society at large because if the demand for essentials is kept irrationally high over a prolonged period of time.
It will drive up the price of essentials so much so that something simple like a bowl of rice will cost an exorbitant amount even though in reality, there’s a huge supply of it lying in every Singaporean household’s storerooms.
Implications on Personal Finance
Panic buying will usually lead to overshopping and overspending.
A key characteristic of panicked shoppers is that their purchase intent is mainly informed by fear and peer pressure (aka FOMO).
This desensitises them to price.
And if the price of a good is no longer a factor to consider when they’re only concerned with buying as much as they can…
Hoarding will eventually lead to you spending more than you can afford on stuff which you don’t actually need and have no plan of using at all.
In short, Singaporeans are shooting themselves in the foot if they refuse to stay united during this period of time. Everyone needs to be considerate, just buy what you need, and play ball.
The Psychology Behind Panic Buying and Hoarding of Essentials
To get to the root of the problem, here are a few reasons why Singaporeans panic buy:
Dramatic Events Require a Dramatic Response
The COVID-19 coronavirus pandemic is a dramatic event which affected the world.
Yet, there is little we can do as individuals, other than to wash our hands regularly and to avoid mass gatherings.
Both washing our hands regularly and avoiding mass gathering are simple day-to-day actions which most of us are already practising.
Panic buying is perhaps a psychological response to compensate for the sense of helplessness felt amongst Singaporeans.
It’s also a way which we comfort ourselves and tell ourselves that we’re doing something dramatic enough to protect our loved ones.
Even though hoarding is unnecessary, doing so helps these groups of people calm down in the short-term.
The advent of this pandemic pretty much caused us to throw our beliefs and everything we know out the window.
Leaving us with lingering feelings of uncertainty and anxiety.
If history is any indication, humans will readily absorb any information that they are exposed to in times of crises.
And if we’re clouded by uncertainties, the rampant spread of fake news and misinformation through social media and word-of-mouth will very quickly create an environment where we are no longer able to differentiate what is real and what is not.
If we lack the proper education or resources to understand how we should deal with the calamity at hand, we’ll naturally overreact to ANY news or information.
As quoted by the BBC, “If everyone else on the Titanic is running for the lifeboats, you’re going to run too, regardless if the ship’s sinking or not”.
Stockpiling and panic buying is the physical manifestation of our anxieties fuelled by the fear of missing out.
It’s worse in this day and age where we can observe others doing the same thing on social media, which makes us question if we should be doing the same.
Singaporeans Can and Must Do Better
While the spread of COVID-19 Coronavirus is a test on how our leadership can guide us out of these dark times.
The real-est test is on us, Singaporeans.
Unlike most countries, we lack the natural resources to fall back on as a safety net in times of crisis.
But sometimes we forget that our population and human talent are precious commodities which can help us to weather these times of duress.
Considering that we have one of the best education systems and have one of the highest literacy rates in the world, we should have confidence in our safeguards and should work together to find ways to survive collectively.
From observing stricter standards of hygiene to fostering a better sense of kampung spirit by not hoarding for our own selfish needs.
We can and must do better to educate ourselves with regard to what we can do as a community to weather this pandemic together.