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Preparing for a pandemic: spending dynamics and panic buying during the COVID‐19 first wave

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  • Martin O'Connell
  • Áureo de Paula
  • Kate Smith
Abstract
In times of heightened uncertainty, consumers face incentives to build up precautionary stocks of essential supplies. We study consumer spending dynamics during one such time, the first infection wave of the COVID‐19 pandemic, using household scanner data covering fast‐moving consumer goods in the United Kingdom. We document large increases in demand for storable products, such as food staples and household supplies, in the days before lockdown. Households in all socio‐economic groups exhibit unusually high demand pre‐lockdown, but there is a clear gradient, with the largest demand spikes for wealthier households. Although stories of people purchasing extreme amounts received a lot of attention, higher aggregate demand was mainly driven by more households than usual choosing to buy storable products, with only small increases in average quantities bought on a given trip. Temporary limits on the number of units per transaction, introduced following the demand spike, are therefore unlikely to lead to the avoidance of stock‐outs.

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  • Martin O'Connell & Áureo de Paula & Kate Smith, 2021. "Preparing for a pandemic: spending dynamics and panic buying during the COVID‐19 first wave," Fiscal Studies, John Wiley & Sons, vol. 42(2), pages 249-264, June.
    • Handle: RePEc:wly:fistud:v:42:y:2021:i:2:p:249-264
    DOI: 10.1111/1475-5890.12271
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    1. Péter Elek & Anikó Bíró & Petra Fadgyas‐Freyler, 2021. "Income gradient of pharmaceutical panic buying at the outbreak of the COVID‐19 pandemic," Health Economics, John Wiley & Sons, Ltd., vol. 30(9), pages 2312-2320, September.
    2. O’Connell, Martin & Smith, Kate & Stroud, Rebekah, 2022. "The dietary impact of the COVID-19 pandemic," Journal of Health Economics, Elsevier, vol. 84(C).
    3. Bisin, Alberto & Moro, Andrea, 2022. "Spatial‐SIR with network structure and behavior: Lockdown rules and the Lucas critique," Journal of Economic Behavior & Organization, Elsevier, vol. 198(C), pages 370-388.
    4. Xiqian Cai & JunJie Wu & Wenchao Xu & Jialiang Zhu, 2024. "Negative emotions increase unhealthy eating: Evidence from the Wuhan lockdown during COVID‐19," Health Economics, John Wiley & Sons, Ltd., vol. 33(4), pages 604-635, April.
    5. Emanuela Ciapanna & Gabriele Rovigatti, 2022. "The Grocery Trolley Race in Times of Covid-19: Evidence from Italy," Italian Economic Journal: A Continuation of Rivista Italiana degli Economisti and Giornale degli Economisti, Springer;Società Italiana degli Economisti (Italian Economic Association), vol. 8(2), pages 471-498, July.
    6. Schmidt, Robert C. & Westbrock, Bastian & Hoegen, Hendrik, 2023. "A simple model of panic buying," Journal of Economic Behavior & Organization, Elsevier, vol. 216(C), pages 268-286.
    7. Jean Hindriks & Leonardo Madio & Valerio Serse, 2021. "Promotion Ban and Heterogeneity in Retail Prices during the Great Lockdown," CESifo Working Paper Series 9074, CESifo.
    8. John Gathergood & Fabian Gunzinger & Benedict Guttman-Kenney & Edika Quispe-Torreblanca & Neil Stewart, 2020. "Levelling Down and the COVID-19 Lockdowns: Uneven Regional Recovery in UK Consumer Spending," Papers 2012.09336, arXiv.org, revised Dec 2020.
    9. Sarin Raju & T. M. Rofin & S. Pavan Kumar, 2024. "Pricing decisions during panic buying and its effect on a dual-channel supply chain under different channel power structures," Journal of Revenue and Pricing Management, Palgrave Macmillan, vol. 23(2), pages 83-95, April.
    10. Mina Angelova & Teofana Dimitrova & Daniela Pastarmadzhieva, 2021. "The Effects of Globalization: Hyper Consumption and Environmental Consumer Behavior during the Covid-19 Pandemic," International Journal of Economics & Business Administration (IJEBA), International Journal of Economics & Business Administration (IJEBA), vol. 0(4), pages 41-54.
    11. Sebastian Schmidt & Christoph Benke & Christiane A Pané-Farré, 2021. "Purchasing under threat: Changes in shopping patterns during the COVID-19 pandemic," PLOS ONE, Public Library of Science, vol. 16(6), pages 1-15, June.
    12. Kento Tango & Yoshiyuki Nakazono, 2023. "Subjective Monetary Policy Shocks," TUPD Discussion Papers 34, Graduate School of Economics and Management, Tohoku University.
    13. J. Michael Collins & Amrita Kulka, 2023. "Saving by buying ahead: stockpiling in response to lump‐sum payments," Fiscal Studies, John Wiley & Sons, vol. 44(4), pages 451-484, December.
    14. Junichi Kikuchi & Ryoya Nagao & Yoshiyuki Nakazono, 2021. "Fear of COVID-19 Contagion: The Idiosyncratic Effects of an Aggregate Pandemic Shock," ISER Discussion Paper 1144, Institute of Social and Economic Research, Osaka University.
    15. Zuokas, Danas & Gul, Evren & Lim, Alvin, 2022. "How did COVID-19 change what people buy: Evidence from a supermarket chain," Journal of Retailing and Consumer Services, Elsevier, vol. 68(C).
    16. Mohammad Alamgir Hossain & Md. Maruf Hossan Chowdhury & Ilias O. Pappas & Bhimaraya Metri & Laurie Hughes & Yogesh K. Dwivedi, 2023. "Fake news on Facebook and their impact on supply chain disruption during COVID-19," Annals of Operations Research, Springer, vol. 327(2), pages 683-711, August.
    17. Arnet, Sandro & Nißen, Marcia & von Wangenheim, Florian, 2024. "Don’t be a hamster! Social appeals to curb panic buying at the point-of-sale," Journal of Retailing and Consumer Services, Elsevier, vol. 79(C).

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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • D18 - Microeconomics - - Household Behavior - - - Consumer Protection
    • I30 - Health, Education, and Welfare - - Welfare, Well-Being, and Poverty - - - General

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