We’ve seen over the last week a great illustration of why government and companies ought to listen to behavioural economists – and social researchers generally for that matter.
I bought fuel on the way into my meeting in London on Friday, though my tank had enough petrol to get me there and back. Why?
Not because I was thrown into a panic by the prospect of a strike. It was because I’d heard Mr Maude’s statement, assumed a significant proportion of people (feeling unsure of what to do) would play safe and fill up their car; and I’d seen on the news people doing just that. So the calculation was: if I don’t fill up soon, I may find myself unable to, as a lot of other people will be having this same thought. And it only takes a small proportion of the driving public to do some extra filling up to make quite a big impact on supplies. This is all without any actual fuel shortage from the tanker drivers’ dispute, in which no strike had actually been called.
That this is a communications cock-up by the government is pretty much beyond dispute by this stage. The defence by Lib Dem minister Sarah Teather and a back-bench Conservative MP on Question Time on Thursday was half-hearted and was met with an unusually visceral derision by the audience. The public’s verdict was confirmed in today’s newspapers: in one poll, 81 per cent blamed the government for the queues at the pumps: The Independent: Government Blamed For Needless Fuel Panic.
Francis Maude seems to feel hard done to, that he was using faultless logic. See what you make of his responses to Dermot Murnaghan here:
The thing is, it was faultless logic until it came into contact with real life. It reminded me of Sunstein and Thaler’s criticisms of assumptions old school economists used to make about how people act: as “econs”, rationally acting beings without any discernible human traits.
The reason Francis Maude’s advice was a very poor piece of government communication was that he assumed everyone in the public would receive the message as he meant it – in full, with complete attention and an eye to the nuances. There appeared to be no awareness on his part of how it would be interpreted: to the do-I-don’t-I-fill-up driver, he was a senior government minister saying, ‘Do.’
Repeatedly in the interview, though, he gives clues to why he appears to have stumbled unawares into this mistake. He doesn’t, he says, need to tell people what to do: it is for them to choose. The government’s role is just to provide them with clear information and the rest takes care of itself. There is an implicit assumption that people are rational actors who, left to their own devices, will act sensibly both for their own good and for the common good. That’s quite an assumption and, frankly, an unfounded one. What led him to it is unclear, but it certainly wasn’t the analysis of real life human behaviour. I hope he feels a little less sure about it now.
To be fair to Mr. Maude, he means to treat people like grown-ups and trust them to make their own good judgements. The problem is, in emergency situations it fails on a number of levels. In emergency situations people do look to those in charge to tell them what to do – and they expect to be looked after. Mr. Maude’s libertarian instincts may have led him to neglect the different role government has in such situations. If he had been with me on my recent work in an area prone to flooding, listening to people at serious flood risk and emergency responders, he might not have made his gaffe. In fact, five minutes with the fire chief I interviewed would have sufficed.
And what lessons are we drawing in the media about all this: why did people queue up at petrol stations? I’ve seen two main ideas and both miss the point.
The more basic version is that the people doing this were being stupid or did not listen properly. Yet people did listen: the problem was they were given mixed messages. “We told people not to panic buy fuel,” say the government. Yes, but you also told people to buy fuel. Indeed it was not really panic at all, it only looks like panic when a lot of people act in their own self interest to the wider detriment. But we were all doing (1) what the government advised us to do and (2) what was necessitated by the simple fact of other people doing it. The importance of filling the tank then grows exponentially as time passes and fuel resources diminish.
The slightly more sophisticated explanation in the media is that this was ‘herd behaviour’: which was explained as people seeing other people buying fuel and blindly copying them. Again this misunderstands the phenomenon and indeed what herd behaviour is in humans. Of course we copy what people around us are doing: we do it as a strategy to help us make decisions or work out a way through an unfamiliar situation. But I don’t think the fuel buying this week was about simple copying, where we don’t know what to do and so take guidance from others. It was more calculated than that for most of us: once some extra people started buying petrol, there was a real prospect supplies could run out. Buying sooner rather than later became the only rational course of action if you wanted to make sure you had petrol. So it was decision-making informed by judgements about how others would behave in the future – motivated by the need to pre-empt future purchasers, rather than copy past purchasers.
If it were about simply copying, then people would have copied others even if petrol supplies were infinite. But this surely would not have happened. The point was that people were looking ahead to the dwindling supplies of fuel that remained and solving the problem of how to get their share. Far from blind, knee-jerk copying, it was simply a rational response to increased competition for a limited resource which is distributed on a first-come-first-served basis.
So a kind of herd behaviour, yes of course: we are social animals and it pervades most of what we do. But herd behaviour does not mean people following each other like sheep; we are human and human herds act in human ways. Rational calculation is part of human herd behaviour, it’s not separate from it.
The government, to be fair, had the foresight to set up the Behavioural Insights Unit and it has been making progress: The Economist: Nudge, Nudge, Think, Think. Perhaps this week, the government wished it had paid a bit more attention to the wisdom of Halpern & Co.
- | UK Panicking over petrol: The silliest country in the world! (truthaholics.wordpress.com)
- David Cameron seeks to reassure motorists that fuel will not run out (guardian.co.uk)
- Will Maude be allowed out? (newstatesman.com)
- Letters: History repeats itself in petrol panic farce (guardian.co.uk)
- Taking us for fuels: Tories spark panic buying at the pumps as tanker driver strikes looms (mirror.co.uk)
4 thoughts on “Fuel “panic”: when laissez-faire crisis management met the rational herd”
Great analysis on this topic Simon. Agree wholeheartedly. Especially like two of the points:
a) the intended effect vs. the actual effect of Maude’s communication – ‘faultless logic until it came into contact with real life’ – sums it up well;
b) the herd behaviour being ‘motivated by the need to pre-empt future purchasers, rather than copy past purchasers’ – spot on.
Thanks for the kind comment, Simon. Ultimately, the episode is about the eternal communication dilemma: the tension between the duty of the communicator to cover the relevant facts comprehensively and the needs of the audience to extract something useful from the communication. Good communication favours the latter very strongly. What’s interesting with Maude is that I suspect there is political belief at the heart of his gaffe – that he sees simplifying communication as “dumbing down” and is at best uncomfortable with it. The irony is, he’s usually not a bad communicator – a decent performer on Newsnight, the Today programme etc – but you do sense in him the educated person’s distaste for over-simplification. Admirable or not, in getting clear messages across to the public in a hurry, it is the last thing you need.