Petrol pandemonium

The government has changed its advice, but why did we panic in the first place? A psychologist expla

Any rational person in the UK who doesn't want to be left without petrol has probably topped their vehicle up recently or at least thought about doing so. After all, the people running the country, before changing their advice today, had advised drivers to do this, amid fears of a country-wide strike by tanker drivers.

When consumer behaviour changes on a mass scale in this way, the media usually work up a lather, pronouncing that the country is in the grip of "panic buying" or "mass hysteria". In fact, most drivers are behaving calmly, doing the sensible thing based on the information they've received.

The situation began a few days ago when, for political and practical purposes, the coalition government started to publicise the strike threat and talk about the contingency plans they were putting in place. The last thing any government wants is to be blamed for not planning ahead or to be accused of not giving people due warning. By putting contingencies in place and encouraging stockpiling, the coalition also presumably hoped to undermine the potential impact of a strike, thereby dissuading the tanker drivers from fulfilling their threats in the first place.

Unfortunately, the government's early announcements and warnings invoked three of the most powerful principles in the social psychology of persuasion, as outlined by the doyen of the field, Robert Cialdini, Regents' Professor Emeritus of Psychology and Marketing at Arizona State University, in his book Influence: Science and Practice.

The first of these is "authority" - we tend to listen to people we perceive as knowledgeable or having privileged information. Despite the lousy reputation of politicians, when several members of the coalition said repeatedly that fuel could run low, many people believed them and started changing their buying habits.

Second is the "scarcity principle" - we instinctively want what we can't have and value highly that which is rare. Once people started to believe that fuel is in short supply and that it could run out, they immediately wanted it more and were willing to work harder to get it, for example by queuing or taking unplanned detours to forecourts. For other examples of this effect in action, just look at the way parents behave around Christmas time when rumours emerge that a trendy toy is due to sell out; or consider the way Concorde tickets became hot property the moment it was announced the jet would soon fly no more.

The last relevant factor is known as "social proof" or "social norms" and is perhaps the most powerful of all. Time and again research has shown that we tend to look at how other people are behaving (or how we think they're behaving) to help choose how we should behave ourselves. Take the context of binge drinking by university students, where it's been found that most undergrads massively overestimate how much their peers drink and then use this mistaken yardstick to guide their own drinking patterns.

With regard to the fuel situation, many people probably decided that they weren't too concerned and some may still feel that way. But the sight on the news of people queuing for fuel is incredibly compelling. Because it's human nature to copy each other, if we see that everyone else is filling up, we're likely to do the same. Twenty-four hour rolling news online and TV makes this factor more powerful today than ever before.

The net result of all this is that some fuel pumps around the country are running dry even though the strike may not even happen. Of course, lack of fuel in the pumps serves to fuel the news story, creating a self-perpetuating situation - though to call it hysteria or panic is hyperbole. Only now the message has been communicated from trusted sources that there's plenty of fuel, and that most people aren't stockpiling, will normal service likely be resumed.

Dr Christian Jarrett is a psychologist and author of The Rough Guide To Psychology

Photo: Getty Images
Photo: Getty Images
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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR