By Jayson Lusk
Last week was a whirlwind of trip and event cancellations, movement of courses online, and the dusting off of emergency and contingency plans. This week is likely to bring more social-distancing and quarantining measures. The ultimate toll and impacts of the coronavirus are highly uncertain at present. Nonetheless, it might be useful to speculate a bit about impacts of coronavirus and the events surrounding it on food markets.
1. Grocery buying behavior. It has been fascinating to watch online, and in my own local grocery stores, which items consumers are choosing to stock-up on. The run on toilet paper, for example, seems on the surface of it, downright irrational. After all, COVID-19 does not cause digestive issues. As irrational as the initial movement to toilet paper may seem, it isn’t crazy for subsequent consumers to then stock up too. After all, it doesn’t take much for a reasonable person to see that if all other consumers are buying up all the toilet paper, that they’d better off getting theirs before none is left. There is a long and interesting economics literature on information cascades and herding behavior, which shows that even if you disagree with what other people are doing, it is sometimes sensible to go along with the crowd.