Consumer Behaviour during Crises: Preliminary Research on How Coronavirus Has Manifested Consumer Panic Buying, Herd Mentality, Changing Discretionary Spending and the Role of the Media in Influencing Behaviour

The novel coronavirus (COVID-19) pandemic spread globally from its outbreak in China in early 2020, negatively affecting economies and industries on a global scale. In line with historic crises and shock events including the 2002-04 SARS outbreak, the 2011 Christchurch earthquake and 2017 Hurricane Irma, COVID-19 has significantly impacted global economic conditions, causing significant economic downturns, company and industry failures, and increased unemployment. To understand how conditions created by the pandemic to date compare to the aforementioned shock events, we conducted a thorough literature review focusing on the presentation of panic buying and herd mentality behaviours, changes to discretionary consumer spending as defined by Maslow’s Hierarchy of Needs, and the impact of global media on these behaviours. The methodology utilised to analyse panic buying, herd mentality and altered patterns of consumer discretionary spending (according to Maslow’s theory) involved an analysis of consumer spending data, largely focused on Australian and American markets. Here, we analysed the volume and timing of consumer spending patterns; the volumes of spending on specific, highly-demanded consumer goods during the investigative period; and the distribution of spending on luxury and non-durable goods to identify the occurrence of these consumer behaviours. Moreover, to identify the presence of the media in influencing consumer behaviour we focused on web traffic to media sites, alongside keyword and phrase data mining. We conclude that, to date, consumer behaviour during the COVID-19 crisis appears to align with behaviours exhibited during historic shock events. We hope to contribute to the body of research on the early months of this pandemic before longer-term studies are available.

THE EFFECT OF DISCRETIONARY SPENDING ON INCUMBENT VICTORIES IN ELECTIONS

Purpose of the study: This study aims to investigate the opportunistic behavior of local government heads in Indonesia using discretionary spending (grant spending, social assistance, and financial assistance) to win an election. Methodology: The study uses logistic regression on 133 samples of district/municipal governments in Indonesia prior to the election period. Main findings: The study finds no evidence that the average proportion and growth of discretionary expenditure affects the electability of incumbents in Indonesia’s local government head elections. That is, the use of discretionary spending is not sufficiently effective to attract sympathy from voters. Applications of the study: The results of the study provide inputs, especially for incumbents, to help focus more on performance, as it is proven that it leads to a higher probability of being re-elected, rather than the use of discretionary spending as an election-winning strategy. Government and NGOs should inform voters to be more cautious about the opportunistic behavior of their leaders. Novelty/originality of the study: Although some previous studies have examined the use of discretionary spending by incumbents, there has been little research, which provides evidence that such spending for political purposes can in fact help to win elections.