UCI Podcast: Coronavirus crisis and economic recovery

Hi, I’m Pat Harriman and this is the UCI Podcast. Joining me today is Eric Spangenberg, dean of the UCI Paul Merage School of Business, to talk about economic recovery in the time of coronavirus. He’s a professor of marketing and psychological science and an expert in consumer behavior. Dean Spangenberg is a highly cited and widely recognized international scholar. He has authored or co-authored more than 50 journal articles and book chapters, as well as dozens of other works across several key areas of research in marketing and consumer psychology.

Dean Spangenberg, thank you for joining the UCI podcast.

My pleasure, thanks for having me on.

Effectively fighting the spread of COVID-19 presents a collective action problem. This is a situation where all individuals would be better off cooperating but fail to do so because of conflicting individual interests that discourage joint action. In other words, when personal interests are put ahead of community good. As a consumer behavior expert, what insights can you share with us about the relationship between collective action in terms of the coronavirus crisis and keeping Orange County open for business?

My first comment is that even though we’ve heard it many times, it bears repeating that what we are experiencing is unprecedented for all of us; we’ve never experienced anything like this pandemic in our lifetimes. My next thought is that we (Orange County residents) did a great job of sheltering in place. Now, it is almost as if a subset of people feel licensed to get back to normal in a sense, because we had done our collective part by sheltering in place for a few months. Now “allowed” by the governor to get back out in public, many people seem to have kind of gone off the rails and they are not engaging in appropriate social distancing practices or wearing masks. I must say that I’m encouraged by the anecdotal evidence suggesting that there do seem to be a lot of citizens around the county are doing the right things. I’ve seen pretty conscientious behavior from a lot of people whether it be essential service workers, people in the grocery stores, bike shop employees and patrons or at the doctor’s office–lots of people are wearing face coverings and maintaining appropriate social distance.

There are, however, always some bad apples and as the saying goes, a few bad apples can spoil the whole barrel. What we’re talking about here are behaviors based on at least a couple of psychological theories. First, I would consider the principle of social proof.  People generally look to others in their social circle (or leadership within society broadly defined) for “proof” as to what is acceptable or appropriate behavior (e.g., friends, celebrity endorsers, athletes, or political leaders). Thus, if we look around us and don’t see others (or referent others—that is, people we follow or want to be like) wearing a mask, we see that as acceptable behavior. The other thing I see potentially in play here is the principle of “reactance behavior.”  That is, when someone tells a person (or group of people) to do something, or that they should not do something, “reactance” occurs in the form of opposing what the authority figure is advocating. Under the circumstances we are talking about, we are seeing people reacting to a view that is inconsistent with health science and community interests. I know reactance sounds a bit childish in many respects, but it is not an uncommon response to people being told what to do, particularly for some types of people. Unfortunately, under our current circumstances, the consequences can be deadly for some in our community.

Coronavirus continues to wreak havoc on the economy, due to lockdowns on all but essential businesses. New research from Goldman Sachs suggests that a national mask mandate would save $1 trillion, by preventing a 5 percent GDP loss, as face coverings reduce the spread of the virus and could serve as a substitute for strict lockdown measures. What do you think the impact of a national mandate would have on the Orange County economy?

The Goldman research makes a lot of assumptions, but they are not entirely implausible. Let’s say they are correct and a 5 percent GDP loss can be avoided by broad-based use of face coverings.  That $1 trillion is a national savings estimate. The annual GDP of OC is around $300 billion…larger than that of some countries. Using the Goldman research estimate, pervasive use of face coverings in OC could be worth $150,000,000 to our local economy. Framing pervasive use of face coverings in this manner may be enough to convince some in opposition to their use of their value and shift behavior. This would still, of course require people to believe health scientists and follow their advice…something a subset of the population has been loath to do since the outset of the pandemic. I do think an enforced mandate would be of enormous value to OC, the state and the nation, but it seems the political will to take such action is lacking at some levels right now.

COVID-19 has intertwined the issues of economic health and public health in our collective consciousness that will last for generations. Do you think businesses will keep some of coronavirus-induced changes in place after the pandemic is past?

Certainly, people will be more physically distant from those they don’t know well into the future. I do think we are already seeing different “classes” of health-concerned people primarily based on age and race. COVID-19 is disproportionately impacting black and brown people as well as the elderly.  I haven’t been to a restaurant or bar since the gradual re-opening, but I would warrant the populations most at risk are less represented in those environments than other demographic segments…and this pattern may well stretch into the future. Businesses that do the best job of making their clientele feel safe will engender loyalty and likely continue such practices as long as market segments see value in such actions and attributes.

We are likely only in the early innings of this game and it may go into extra innings. We are already seeing impacts on children and their perception of others as a result of our experiences. There will likely be ramifications with regard to how relationships are developed and what constitutes acceptable behavior for the next generation emerging from our experiences. How children learn about safety and trusting others has certainly been impacted. Kids, however, are resilient and my opinion is that they will bounce back better and quicker than adults. Much of our ongoing behaviors as consumers and business practices will depend on how widespread fatalities associated with the virus become in any given region.  If a person never knows anyone who suffers from and/or dies from the virus, it doesn’t seem as real. Back to the idea of social proof, if we’ve seen people grappling face-to-face with the virus, we consider what might constitute acceptable behavior differently than if it is an abstract concept that others in hotspots around the nation have dealt with, or are currently facing.  It’s an unfortunate reality, but people often need first hand experience in order to learn…at least many people do.

Any final insights or perspectives you’d like to share on how Orange County can safely and successfully stay open for business during the pandemic?

Let’s not make our own grim history but learn from the history of others.  SARS hit Hong Kong in 2013. It traumatized that city, but it also prepared it for COVID-19. People in Hong Kong know to take appropriate cautionary measures for the good of the entire community; mask wearing there is commonplace. In New York City, we’ve seen almost 23K deaths due to Covid, in Hong Kong, a city nearly the same size, there have been fewer than 10. Importantly, I encourage listeners to consciously avoid negative reactance behaviors. Be a positive factor in the equation of social proof: Let others see you wear a mask, social distance, and if given the choice between outside or in, stay outside. If we are personally selfish and don’t play it smart, our economy will be cut back by the virus’s indiscriminate impact regardless of what our government says is allowable behavior…businesses will be forced to close if there are insufficient customers healthy enough to patronize them or consumer fear the consequences of shopping.

We really are all in this together, and that means we should each consider how our individual actions will make a difference—whether positive or negative. It might sound a bit corny, but I’d paraphrase JFK and say: Ask not what your community can do for you, but what you can do for your community during this pandemic.

Well thank you Dean Spangenberg. And thank you for listening to the UCI Podcast, which is a production of UCI Strategic Communications & Public Affairs.

My pleasure.