Further, when we see someone else hoarding (or see an accumulation of hoarding stories on social media), we tend to override our more reasoned calculations and join the crowd. Scarcity becomes a perception, even if it isn’t a reality.
The hoarding of toilet paper is mostly bemusing, as restocking is rapidly catching up to demand. Where hoarding is more serious is when it involves essentials that are not made locally, like preventative face masks. They are in short supply at medical centers, even as boxes of them sit in people’s basements.
Students of history will remember that a similar mania surrounded Dutch tulip bulbs 400 years ago. While consumers have become more sophisticated in some ways since then, some of our baser instincts remain very much the same.
Carl R. Tannenbaum is executive vice president and chief economist at Northern Trust. Ryan James Boyle is a vice president and senior economist within the Global Risk Management division of Northern Trust. Vaibhav Tandon is an associate economist within the Global Risk Management division of Northern Trust.