The corona panic gives us a fascinating insight into human nature and herd psychology. Here’s 7 take-aways:
So there’s a bubble in hand-sanitiser right now.
Yep. Thanks to panic around the Corona-virus, which hasn’t claimed a single life in Australia, The Age is reporting that demand for hand-sanitiser has mushroomed, and prices have doubled!
Is there any evidence that hand-sanitiser is effective in stopping the spread of Corona-virus? No, not really. Is there any evidence that using hand-sanitiser is more effective than washing your hands with soap? The Victorian Health Department doesn’t think so, so long as you wash your hands for a good 20 seconds.
But none of that matters.
Corona-panic is here! It’s practically the same as zombies invading the mainland. Only hand-sanitiser and face-masks can save us.
Now, I don’t want to trivialise the corona-virus. It’s now killed more people than SARS, and we do need to remain vigilant for the next global pandemic.
And I certainly don’t like the exponential shape of the chart of total cases in Hubei province:
But, the spread of corona-panic is eclipsing the spread of the virus itself ten to one.
It’s one of the reasons why I’m not going long face-masks or hand sanitiser. In fact, there’s probably money to be made short-selling them.
After the SARS outbreak – a price spike in face-masks caused a flurry of new face-mask production. After the virus petered out, leaving a glut on the market, the price of face masks collapsed from $1 each, to less than 30 cents.
But I do think that this is giving us a very interesting insight into herd-behaviour, panics, and bubble behaviour.
There’s seven insights I’m drawing from the current panic:
1. Seed of truth
All bubbles and panics have a seed of truth. The tulip bubble was based on strong demand for tulip bulbs. The dot-com boom was based on the revolutionary power of the internet. These things never come from nowhere.
Bubbles and panics need to impact your immediate reality to take hold. If the corona virus was something that potentially gave you cancer and killed you in 30 years, we’d probably just shelve it along with other problems like our retirement nest egg and that weird mole on our fore-arm.
The idea that you could be dead within the week really focuses the mind.
3. Panic short-circuits our rational responses
Once panic has taken hold (or FOMO in the case of a bubble), our rational responses are sidelined. We’re wired to fight or fight, not stop and think.
If people did think about it, they would realise that the risks to Australia are still minimal, and even if they did escalate, a sock would be a pretty good substitute for a 50c face-mask. But they’re not thinking about it. The fight or flight response has taken hold.
4. Very visual
Part of the corona-panic’s viral nature is based on its visual impact. Footage of Chinese nurses in full-body haz-mat suits, or that one guy lying dead on the side of the road give us something to latch on to.
5. Primed in the collective consciousness
I think, in Australia in particular, we are primed for a virus outbreak. Every flu season we see ads for virus protection, and we’re pretty obsessive about our anti-bacterial surface cleaners etc.
We are well-trained to be scared of viruses.
6. A sense of “we’re due”
The other thing that the Corona-virus taps into is a belief that another global pandemic is only a matter of time. It’s been a long time since the last plague, but no one believes that we’ve banished that evil for good. It’s only a matter of time, and it simply becomes more and more likely with every passing day.
7. We want it to happen
This is probably the most controversial, but I think we want it to happen. Not that we want specific individuals in China to die or anything, but as long as it remains abstract – as long as it’s affecting people we don’t know in places we’ve never heard of – then it’s a bit exciting. It’s the same it we get from horror or action movies.
Not that I think anyone would ever admit this, but the prospect of a global pandemic gives us a bit of a thrill… so long as we’re pretty sure we’ll be one of the survivors. And that gives the story legs.
People are stupid
Now, we could file this under the general heading of “people are stupid”, in a manila folder that is full to over-flowing, but that’s not really the point.
Humans are complex and messy animals, with instinctual programming that isn’t well suited to handling the complex problems of the 21st century.
Weird outcomes like the corona-panic are just one of the manifestations of that glitch.
Now, I’m not looking to make money on this particular case of stupid, but I am always ready to play the herd when the herd starts moving.
It’s one of the safest bets in the market.