The epidemic of COVID-19, which has taken the world as a prisoner and turned 2020 into an apocalyptic environment, seems to have put all humanity into a series of obscurity. This virus, which first appeared in the Wuhan city of China for a clear reason, was initially seen as a standard cold and was ignored. While this virus, which we have not seen in the news agenda, has increased its effect as time passes, and the world has been taken prisoner, the world has still continued to live negatively and believed it to be a temporary process for a short time. States that have become so careless and inoperable have not taken this virus seriously until humanity has come to their home country. Various members of the doctors in our country made statements and perhaps went to the programs in a planned way and made discourses far from the seriousness of the situation in order to pump people calmness. However, with the first incident in our country, the situations turned 180 degrees and became chaotic in the country for a short time. Since the view of the whole world, including our country, to the process is almost in this direction, it is too late for the World Health Organization to declare this virus as an epidemic and to enter the pandemic process. With the announcement of the epidemic and entering the pandemic process, while the efforts to find vaccines or drugs accelerate, states have started to apply different policies to control this virus among themselves. However, regardless of these policies, uncertainties will not disappear until a drug or vaccine that will provide any permanent solution is found. With the globalization of the world, homo-economicus, which is the model of the neo-classical trend in economies, is always rational and maximizes its benefits, and it is not so rational in this process that it is a model based on the benefits of its behavior.
The definition of Homo-economicus draws a profile that robotizes the human and takes it away from emotions and biases, but it has been proven by various studies that human beings cannot be rational in the face of uncertainties. Keynes, for example, emphasizes that human beings act impulsively without thinking, especially when there is a lack of information. Especially in such crisis situations, we show that we cannot remove psychology from analyzing the economy in these processes. The most important proposition of the behavioral economy is that individual behaviors have limited rationality and therefore individuals can often make decisions that do not comply with reason and logic. The behavioral economy argues that people do not always act “rationally” in making economic decisions, make decisions under many social, cultural and psychological influences, and that economic policies should be designed taking these factors into account. The tables that appear with the pandemic show that the behavioral economy has become more meaningful from the perspective of the behavioral economy and that behavioral economy is a field to be researched in the future.
The behavioral economy will explain the lag state of the world with late meanings for the destruction of this virus and seeing it as an epidemic with availability. Leave a person far from the city of Wuhan, it can be understood with the concept of being ready to not take someone seriously and fear this situation after not seeing someone with COVID-19 disease even in the news. A person who follows the process well will remember that before the virus arrives in their country, life is normal, airfields are open, there is not the slightest change in our social norms, hygiene products such as masks and disinfectants are easily available, and they are not even aware of market prices. No serious measures were taken until the incident and states did not inform their citizens seriously. After the case was seen, the severity of the situation was understood and it affected our behaviors suddenly and people became afraid of the situation.
States have followed different policies in the context of combating epidemic. Many countries introduced curfews to ensure social isolation and ensured citizens to stay at home. Some countries have adopted the herd immunity strategy and some countries have not taken the epidemic seriously. US President Donald Trump compared the coronavirus statistics collected within a few months of the case with flu statistics and did not take the case seriously by being deceived by the biased indicator of these data. Trump acted intuitively here, using the only information he had, causing him to make wrong decisions. Emotional responses of individuals as cognitive biases prevent them from asking important questions and obtaining new information.
This situation, which is also called as Representative heuristic by looking at representation, is also seen, that is, under uncertainty, the possibility of an event enables us to think towards the future. With this decision, social isolation was not ensured and serious problems are now seen in the USA. One of the reasons for our irrational behavior in the period of social isolation is its bias today (present bias).
People who start to make decisions and exhibit behaviors as if there was no tomorrow cannot think long term and tend to act with the information available in the short term.
We see that people who think that they have lost the control mechanism with our limited decision making mechanism move more with automated system activities. When we look at the countries where curfews are introduced, it is clear that the start and end dates of the ban are short, but people rushed into supermarkets. Other people seeing people flocking to supermarkets have increased anxiety and entered such a vicious circle.The physiological factor in Maslow’s pyramid, the need to endanger the need for food, has shown that they act with herd psychology in humans.
According to Duke University professor of psychology and behavioral economics, Dan Ariely, people who have not previously been guided by how to prepare for a possible epidemic have no specific behavioral pattern to follow in this conjuncture, and people without conduct have a look at what the people around do. At this point, “herd psychology” comes into play and can be easily adopted even if the reason for the action of others to buy a product is not understood. While our basic food needs and demand for hygienic products are more understandable, the toilet paper crisis, which is an intermediate agenda, can be examined as an interesting case. We can also make sense of people’s panic-driven stocking impulses with zero risk bias. People who know that it is not possible to reduce the risks of the epidemic in large amounts in the short term, willing to remove a small risk because of zero risk bias. Despite the fact that toilet paper has no purpose for preventing the epidemic, its stocking behavior was caused by the desire to reveal the risks, albeit small, and exhibited this behavior with the effect of avoiding regret.
David Savage, a professor of behavioral economics at the University of Newcastle in Australia, avoids the regret that we can experience because we don’t buy a product, thanks to the purchase action. Also stated that with the structure of the toilet paper that does not deteriorate and eventually being a product to be used as needed, it supports the stocking impulse by decreasing the risk of regretting. The epidemic has also started to change our daily routines.
he concept of social distance has emerged, the mask set has become mandatory, we have more information about hygiene than ever, the percentage of using online shopping has not reached a normal time, we have minimized our use of cash against the risk of virus infection. The digitalization process seems to have come a long way in the period of social isolation. Some of us adapted to this process easily and some of us had difficulties. We can explain the reason of the people who have difficulty with the status quo effect. Although the risky age group has a curfew, going to buy bread is due to its tendency not to spoil its stability unconsciously.
On the other hand, people tend to lose their liberties, albeit partially, and lead them to exhibit irrational behaviors with the effect of loss aversion. With the outbreak, we have started to change our perspective on the future and we are making our predictions accordingly. We are affected by our future ideas, from individuals who want to go on vacation, to individuals who produce ideas about the status of schools, to those who want to sit and chat in restaurants or cafes as before, even though we resist and resist this situation.
The behavioral economy explains that the decisions we make and take with type changes and adaptations are affected by the projection deviation. When you are at home right now, the benefit of dreaming of having fun with our friends outside or dreaming of going on vacation will not be the same when it is realized. With this awareness, it will be easier for us to limit our irrational movements. As our attitudes and attitudes towards hygiene change, our perspective on restaurants and cafes will also change. Maybe we may hesitate to go in the first place, and then we may have doubts about the materials used. In this case, even an industry that produces items suitable for the disposable food and beverage industry can occur. It is inevitable that the people who started to clean the products they bought will increase their sensitivity as their behavior changes in this direction.
In the states that are in the process of normalization, we see that some of the people act very comfortably while others act very cautiously. In order to maintain the economy, normalization steps should be taken beyond helicopter aids and social security waits in line with citizens’ taxes. It will have a negative impact on the economy in the two profiles of people. While it will create a compression on the health sector that acts comfortably, it will add an abstaining direction to the economy.
As the normalization processes progress here, taking some measures with nudging power will make the process more fluid.The intense demand increase for some products in the market is faced with the price increase in neo-classical economics. The price increases with the intense demand and in this way the demand and supply come to the balance condition. In the short term, under these conditions, the government can make “ceiling price” applications in order to prevent the consumers from paying more than normal, that is, the benefit of the transaction.
On the other hand, in order to control the behavior of the public and to reduce the demand-oriented intensity, the state or companies can make applications to encourage limited purchases over the price. For example, in Denmark, the first product that was bought in the sale of hand lotions was 5 dollars, while it was forced to give 95 dollars to buy the second product. With this change, a nudge was made to stop the individual’s stocking trend.
Markets in Germany have started to put a quota system for products. In our country, a high level explanation has been made that the demand for pasta will not be experienced in the process when the pasta demand is bouncing and the situation has been taken under control. As in the example of pasta, when the tendency of people to do such irrational movements is seen, the situation can be brought under control by priming the front person. In order to reduce the pace of the epidemic, we should add reminders to social distance from the busy markets. Orientation logos, which are designed to protect the social distance while waiting in line at the cash register, are a very accurate nudging movement. Since our only agenda is now coronavirus, we have already closed our eyes to other problems that exist in our world, and we have an ostrich effect.
There have been many outbreaks in the past and somehow have been overcome. If we apply what scientists have stated, we will overcome this epidemic, but while we are learning to wash our hands again in the process that we are thinking more than tomorrow, we can waste tons of water and continue to use intensive electricity during the period when internet usage increases. If we think of today and tomorrow equally, we will overcome this process in the best way, by evaluating the process we are in, in order not to look with regret at the time of this epidemic.
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