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‘In his account, Defoe noted an acute shortage of horses for hire even though people were hardly traveling, as well as frequent food shortages due to sellers’ stockpiling efforts.’
‘In his account, Defoe noted an acute shortage of horses for hire even though people were hardly traveling, as well as frequent food shortages due to sellers’ stockpiling efforts.’ Photograph: Gary Calton/The Observer
‘In his account, Defoe noted an acute shortage of horses for hire even though people were hardly traveling, as well as frequent food shortages due to sellers’ stockpiling efforts.’ Photograph: Gary Calton/The Observer

History tells how people act in pandemics – selfishly, but also with surprising altruism

This article is more than 3 years old
Utteeyo Dasgupta

In his book A Journal of the Plague Year, Daniel Defoe describes 17th-century behavior that is unmistakably familiar today

Pandemics usher in death, uncertainty and restrictions and lockdowns. They also provide an ideal laboratory for economists to study behavior under constraints. Strange as it may seem, our behavior today is little different than it was 355 years ago.

In a recent article published in the Economic Inquiry, Chandan Jha, Sudipta Sarangi and I dug into the descriptions of the 1665 English plague in Daniel Defoe’s book, A Journal of the Plague Year, which although not published until 1722 is believed to be based on firsthand accounts from the time. We found that although institutions have evolved, medical science has improved and the internet has fundamentally changed the ways we communicate, our core responses to acute constraints remain unmistakably familiar.

Artificial shortages and panic buying, for example, are rampant during pandemics. In his account, Defoe noted an acute shortage of horses for hire even though people were hardly traveling, as well as frequent food shortages due to sellers’ stockpiling efforts. Fast forward to current times and the media is rife with reports of overpriced face masks, sanitizers and groceries, along with the curious case of the vanishing toilet rolls that magically reappear at local convenience stores for higher prices.

Economics can predict this behavior. As the Nobel prize-winning economist Gary Becker pointed out, one needs to think in terms of costs and benefits faced by the potential law-breaker to predict unlawful behavior. The benefits of engaging in artificial shortages and consequent price-gouging activities are higher during a pandemic; the costs, that of being detected and punished, are either the same or possibly lower during times of such chaos. The implications are unmistakable: opportunistic trading increases during pandemics.

When it comes to opportunism and fleecing the meek, pandemic constraints also allow quackery to flourish. While Defoe recorded a rise of charlatans and religious healers during the plague of the 17th century, our responses have not been much different in the 21st century. The Economist magazine writes about vendors hawking colloidal silver and “holistic” practitioners pandering oil of oregano and “Spirit Dust” as panacea for Covid 19.

Fear of the disease along with a missing antidote leads to increased demand for miraculous cures. Economic models of herding behavior suggest ways in which such irrational behavior can flourish. Another Nobel prize-winning economist, Abhijit Banerjee, noted that even if one does not have clear information about the quality of a product, observing other people purchasing it can often propel people to ignore their own information and follow others, leading to a case of the blind leading the blind. Because waiting for more efficacious remedies may have dire consequences, especially during a pandemic, we are prepared to get on the bandwagon more readily.

What we learn from economic behavior during a pandemic, however, need not always be dismal. In fact, pandemics often bring about charitable and altruistic behavior. As the “father” of behavioral economics, Adam Smith, noted in 1790: “How selfish soever man may be supposed, there are evidently some principles in his nature, which interest him in the fortune of others, and render their happiness necessary to him, though he derives nothing from it except the pleasure of seeing it.” Recent models of human behavior proposed by the prominent economist Ernst Fehr have purposely introduced altruism, the warm glow of giving, and other moral motives to allow for richer predictions of human behavior.

Defoe observed that villagers who remained untouched by the plague regularly left food for infected city-dwellers. Here and now, I read about nurses in overcrowded hospitals playing musical instruments after a grueling day’s work to help Covid patients relax, the prominent opera singer singing from her balcony to uplift her neighbors, strangers buying groceries for the elderly to shield them from the exposure, as well as sharp increases in the number of food banks and volunteers to facilitate food donation in local communities.

Perhaps pandemics act as a reality check reminding us of the ephemeral and vulnerable nature of our existence, the ultimate constraint that we each face –allowing us to discover that our inner-most instincts are more about cooperation and giving, and less about competition and grabbing.

  • Utteeyo Dasgupta is associate professor of economics at Wagner College, and research fellow at IZA

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