Coronavirus

Did Anti-Price Gouging Laws Lead to More COVID-19 Deaths?

A new paper finds that the shortages produced by emergency price controls led to more social interactions as people searched for scarce goods. Additional COVID-19 deaths weren't far behind.

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Price gouging laws are generally derided by economists for causing shortages during emergencies. During the COVID-19 pandemic, have they also led to more deaths? A provocative new paper published today by Utah State University's Center for Growth and Opportunity posits that the shortages caused by government-imposed price controls led to increased numbers of people visiting retail stores in search of scarce products. That overcrowding in stores, the researchers argue, led to more COVID-19 cases and deaths.

"While mitigation policies primarily sought to decrease social contact among individuals to flatten the infection curve, price-gouging regulation may act against this goal by creating shortages that result in increased consumer searches for goods," write the study's authors, economists Rik Chakraborti and Gavin Roberts. "The crowds that this produced led to more crowding in stores, and thus more COVID-19 cases and deaths."

In their paper released today, the two used cellphone mobility data compiled in the Device Exposure Index (DEX), which measures how many devices a smartphone is exposed to at commercial locations, to see whether those shortages led to more social interactions as people traveled around town looking for goods.

Using the DEX, Chakraborti and Roberts found that "activation of price-gouging regulation led the average individual's social contacts to increase by at least 3.3 other devices per device per day" when holding constant income effects, large nationwide daily changes to the number of social contacts, and measures of the pandemic's severity, which includes cases, deaths, and whether a lockdown order was in effect.

The price control-induced increase in social contacts, the study found, led to 57 to 184 additional daily confirmed COVID-19 cases in the average state where anti-price gouging laws were in effect. Those policies also produced an additional 12 to 17 daily COVID-19 deaths on average per state.

The additional deaths caused by price gouging laws make up about 25 percent of all COVID-19 deaths from early April in those states, according to the study.

Chakraborti, a professor at Christopher Newport University, tells Reason that the pandemic has provided a unique opportunity to study the empirical effects of price gouging laws.

Economic theory has long predicted that emergency limits on price increases will lead to shortages by encouraging consumers to buy more of a product than they need, while limiting the incentive of entrepreneurs to increase supply.

Measuring the impact of price gouging laws, however, is difficult given that the natural disasters for which they are invoked usually affect only a few states at most, all of which are likely to impose price controls at the same time.

The pandemic, in contrast, has been a nationwide phenomenon that saw states impose restrictions on price increases in a staggered fashion, or not at all. That, says Chakraborti, allows researchers to better tease out the impact of price gouging laws on the availability of goods, and, in the context of the pandemic, COVID-19 deaths.

In a previous study published in the Journal of Private Enterprise in January, Chakraborti and Roberts established that price gouging did produce expected shortages of high-demand products like toilet paper and hand sanitizer by looking at Google search trends for those items. The thinking there was that shortages on store shelves would lead to more people looking online for products.

DEX data also breaks down its data by income quartile based on the estimated census block location of a household.

Chakraborti and Roberts were also able to measure increased searches and social contacts by income group by looking at DEX data on the estimated location of a cellphone owner's household down to the census block level and then cross-referencing that with income levels in that census block. They found that poorer households experienced a greater increase in social contacts.

"That's pretty surprising and flies completely in the face of the typical fairness argument that people make" for price control, says Chakraborti. "It's almost a regressive tax on the poor because they have to go out and search for these products more."

This is obviously just one study, so its conclusions should be treated with a grain of salt. Nevertheless, the paper is more evidence of the unintended consequences that come with price controls.

During a pandemic, some of those unintended consequences could be deadly.

NEXT: Cuomo's Office Covered Up Nursing Home Death Toll Last Summer

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  1. Duh.

    People that were unable to procure and shove an entire roll of toilet paper up their ass at least once a day were the most obvious victims. A roll a day keeps the coof away.

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  2. So exactly how does the cell phone determine if the person carrying it is wearing a “cloth face covering” that completely prevents transmission of the Communist Chinese Virus?

    Or is Fauci still lying?

    This ‘study’ is full of other questionable assumptions.

    1. I’m unaware of anyone who claims that wearing a mask “completely prevents transmission,” but it does make for an easy straw man to slay.

      1. Why do you continue to play the fool around here you fucking asswipe.

        1. What a compelling argument! You must be a genius!

          1. Outed yourself again, moron. LOL

            1. You have ZERO reasons to believe that I post under multiple names here, other than, you are fearful that (OMG!) there might be MORE THAN ONE person out there, who is capable of writing eloquently enough to persuade other intelligent and flexible-minded (open-minded) people that individual freedom is a REALLY good idea! So you engage in wish fulfillment fantasy, telling yourself that they are all one and the same, so that you and your fellow authoritarians can out-number them more easily. Good luck with that, mind-reader who failed!
              You believe crap that is totally false, w/o evidence to back yourself up! Just like Rob Misek and the other fantasy-addicted authoritarians around here!

              1. Fuck off, sarc.

                Also, see above.

                #4got2logout

                This ain’t the first time either … and, the last time you outed yourself, you copied and pasted the same stupid response.

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                    1. Fuck off, sarc.

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                    2. Fuck off, sarc.

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                    1. What literary genius! Did Mommy help you write that?

              2. You have ZERO reasons to believe that I post under multiple names here

                He only says it to make you react.

                Do you enjoy pointless arguments with dishonest trolls? Do you enjoy being called names by someone who peaked in high school?

                If not, then STOP REACTING!

                1. LOL

                  Nice try, idiot.

                2. The fact that you step in to defend SQRSLY, of all posters, is proof positive that you are SQRSLY.

                  So damaged.

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      2. $. 05

      3. Nah, we just point out that if masks don’t completely prevent transmission, their “effectiveness” is only prolonging the “crisis”. The hospitals are in no danger. Therefore there’s no reason to “flatten the curve.” We want to be over this ASAP without hospitals being overwhelmed.

        Like Florida.

        1. Nah, we just point out that if masks don’t completely prevent transmission, their “effectiveness” is only prolonging the “crisis”.

          So this only ends after everyone gets sick?

          1. Is that really what you derived from the above statement?

            1. Yes. As he is an idiot.

  3. How could that be? Everyone was wearing the magic masks!

    1. People are supposed to keep 6 feet apart from one another during this pandemic. The store manager(s) in question should’ve limited the number of people who enter the store at one time to shop. They displayed bad, dangerous judgement during this pandemic, as did the people crowding into the store just because of a discount.

  4. This is obviously just one study, so its conclusions should be treated with a grain of salt. Nevertheless, the paper is more evidence of the unintended consequences that come with price controls.

    No it is not. It is evidence that if you want to create your own agenda, then it is possible to conduct a quantitative statistical study that justifies that agenda as long as you don’t care much about the ethics/rationality of how the study is structured.

    The price-gouging price controls stuff here in the US was about toilet paper and hand sanitizer. Now maybe you can argue that Americans died of covid because they were searching for TP rather than wiping their butts with their hands at home without hand sanitizer. OK – well hella hypothesis I guess.

    In an even earlier timeframe, South Korea had a problem with masks. Chinese had emptied pharmacy shelves in Korea of masks and sent those to China by late January. Once covid started appearing in Korea for real (about three weeks later – AFTER there had been roughly three weeks of letting price freely try to solve the problem), those shortages became obvious and the immediate effect was long lines at pharmacies and the beginnings of price gouging and diversion of masks to outside the ‘regular’ distribution channels of that product. IOW – Koreans too were in the early stages of having to wander around more than normal trying to find masks.

    The difference is that Korea did public health early. Realized that masks were more important than toilet paper. And realized that ‘price-gouging’ was not the solution if the problem is that the product is going to be distributed in an entirely different location – which is in fact always the primary outcome of ‘price-gouging’. They chose a different regulatory approach – and the problem of mask distribution to the entire population was addressed within about four days.

    1. Central planning for the win!

      1. When the issue is framed as ‘get a mask onto everyone’s face’, then allocating by price doesn’t work because the virus isn’t recognizing price signals. Course if that’s not how you want to frame the issue, then you should at least be honest.

        Since TP had no relevance to anything, then I agree that spending time trying to price control TP was a total waste of time by stupid people arguing about that on either side of the argument. But hey – you do you.

        And the fact is that the death toll among Americans is overwhelmingly among the POOR older. The people who are least able to a)pay whatever to secure supply and b)pay whatever to ensure someone else will shop for them and deliver to them. ’empty shelf’ has precisely the same consequence as ’empty wallet’.

        1. JFree proves top be a jack ass one more time:

          “When the issue is framed as ‘get a mask onto everyone’s face’, then allocating by price doesn’t work because the virus isn’t recognizing price signals. Course if that’s not how you want to frame the issue, then you should at least be honest. ”

          Hint: The virus is not the customer, but aside from that idiotic presumption, allocating by price does work; those with the greater perceived need will pay a premium.
          You must show up here to prove that sophistry is still alive and with us.

          1. Well I certainly believe there are exceptions to the general rule that our goal should have been to keep everyone alive.

            1. “Well I certainly believe there are exceptions to the general rule that our goal should have been to keep everyone alive.”

              Exceptions to what general rule?

              1. I see the request that you qualify your post is beyond your abilities; I do not find that surprising.

    2. OK, JFree deserves more shit piled on him:
      “The difference is that Korea did public health early. Realized that masks were more important than toilet paper.”
      Since you’re a lying piece of lefty shit, I’m sure you do not have a cite proving that claim.

      “And realized that ‘price-gouging’ was not the solution if the problem is that the product is going to be distributed in an entirely different location – which is in fact always the primary outcome of ‘price-gouging’. They chose a different regulatory approach – and the problem of mask distribution to the entire population was addressed within about four days.”
      I’m sure you think there is a cogent thought buried in that word-salad, and I’m equally sure you have zero evidence for whatever fantasy you imagine that point to be.

      1. Evidence – of what Korea actually did re masks.

        This particular article is from Mar 5 2020. The tail end of what they did re this. A day when the US had 175 confirmed cases – South Korea 6300. Three weeks later, the US broke 100,000 – South Korea 9500.

        1. “Evidence – of what Korea actually did re masks.”

          From the article:

          “South Korea will seek to evenly distribute face masks to people and ban mask exports in principle to better handle a sharp supply shortage amid the fast spread of the new coronavirus, the prime minister said Thursday….”

          So they were ‘seeking to’ do something. Ya know, the USSR was constantly ‘seeking’ to provide enough food for it’s population.

          1. They DID do that. Within just a few days after that announcement from the top the distribution of mask to the general public was done – because that announcement was more a press release than an executive order (which had started a couple weeks before). The peak of new active cases in that first wave happened a couple days after the general distribution of masks. Hospitals got a sufficient supply of masks within a couple weeks after that. Daegu (the one city that was mostly in lockdown and that had been since late Feb) got a sufficient supply of masks within that same timeframe – but their lockdown was generally lifted by mid-April because the bottleneck for them there was contact tracing and quarantine of positives of everyone in that church/cult.

            Fact is – South Korea did NOT simply let the market pricing system handle masks. You can bemoan that for ideological reasons. But the fact is that it worked. So that when you LIE about whether it worked or not – by comparing it to Soviet central planning of food and deliberately sticking your head up your ass in reading the article itself – that undermines YOUR credibility. Which is nothing new since you have no credibility about anything do you.

        2. Oh, and why would an ‘even’ distribution of masks be preferable to a price-driven distribution?
          Lemme guess; you’re a fucking lefty ignoramus, right?

  5. I’d wager that governors locking their states down killed more people than price gouging.

    1. False comparison; empirical evidence against the leftist agenda.

    2. I’d wager that over the next 5 years or so the lockdowns and their after effects will kill more people than the virus has.

    3. Governors who refused to abide by the rules such as mask mandates, social distancing, and brief lockdowns killed more people.

  6. Was there a widespread shortage of goods because of price-gouging laws, or was it just good ol’ fashioned demand?

    There was a shortage of goods caused by the inability to channel goods from the institutional/commercial market into direct to consumer sales. Much (although not most) of this WAS caused by laws and regulations on packaging and retailing.

    1. I remember trying to find some of that prime meat and seafood that restaurants were no longer buying. It was reported that stuff was going to the landfill. Restaurants were cited for selling unprepared food to retail customers for use at home and wholesale food distributors couldn’t let people in to their warehouses for “health and safety laws and liability.

  7. This is considered science these days.

  8. OK, I read the abstract and skimmed to see what data they were using and what assumptions/presumptions they made. That paper is such garbage I wouldn’t use it to wipe my ass during a toilet paper shortage.

  9. No.
    Each and every death is the fault of Trump and no other cause at all.
    Didn’t Reason get the election ‘results’?

  10. The campaign against HCQ and zinc, which Reason enthusiastically participated in, certainly cost lives

    1. Well if true then at least those were lives of stupid people proven to be completely useless. that’s more like a Darwin Award.

  11. You Tube is now removing videos of Trumps CPAC speech after/because it went viral
    https://thefederalist.com/2021/03/05/youtube-is-wiping-trumps-cpac-speech-unless-the-videos-discredit-it/

    1. “All according to policy, so nothing to see here.”

      I see they learned from police unions.

  12. Something something.. correlation, something something.. causation.

  13. stores weren’t spreader-hubs

  14. Interesting. Unsurprising once the study authors laid out the mechanism. I would never have thought to run that analysis, though. Good on them for confirming and quantifying the effect.

  15. Anyone who could afford a 41,500 Toto toilet seat could streeech their toilet paper supply thus confirming the studies show of bias against the 99%

  16. Ask a silly question get a silly answer.

    It did result in more couples having sex at the beginning to be followed by “I’m getting a divorce as soon as this thing is over” six months later.

  17. “Isn’t it great we get to spend so much time together now that we are working from home in lockdown”

    Tick tick tick

    1. Did you notice that not many veterans were flipping out about the lack of TP? Most veteran’s have a never ending, lifetime supply of TP sent to them daily, free of charge, from mortgage companies like New Day USA! Thanks Admiral Douchebag!

  18. The main culprit that has lead to more Covid deaths in the U.S. is the simple fact that only 12% of Americans are metabolically healthy. Japan and South Korea are among the countries with the lowest obesity rates. So it really doesn’t matter how many masks were available by when in either country. They were less susceptible to the worst outcomes of the virus due to the overall health of the citizenry more than anything else.

    1. I wish it was easier to say this, but we all know where it leads. Who are the most obese Americans? Blacks and hispanics.

    2. “[O]nly 12% of Americans are metabolically healthy.” Do you have a cite for this. If this is another way of saying 88% of Americans are overweight, I call BS. We have plenty of fatties, but we also have many people who are in good shape. If this figure relies on BMI, then I see the problem. BMI overstates the number of overweight and obese people, especially among men. It is considered common knowledge that the US is the most overweight nation in the world. This common knowledge is incorrect. The US is actually #9. #1? Mexico (think “Fluffy”).

  19. I’m glad someone actually bothered to research this because the cognitive dissonance that really irked me early on with the initial Covid restrictions in March/April 2020 was that we were supposed to limit ourselves to essential travel, but essential travel was unrestricted. There were many nationwide stories of empty shelves and shortages of basic goods like paper products, chicken, bananas and vegetables. I’m not advocating for rationing, but it was interesting that we were supposed to be so concerned about close proximity and the answer was to create conditions where we had tons of people in close proximity for 1-2 hours at a time.

    1. Are you asking for more restrictions? Because this is how you get more restrictions.

  20. I think this is really reaching. I blame God.

    1. The Prime Mover has nothing to do with this.

    2. Piss off. This is NOT my fault.

  21. The Covid vaccine is 2021’s toilet paper. No need to worry though you can always use the Washington Post however.

  22. Flagged for review: whoever runs the Reason website, along with Welsh who, as manager, needs to be fired.
    Let him find a real job, where incompetence leads to a pink slip.

  23. Scalpers do not produce anything. They simply disrupt the supply chain.

    1. Bullshit.
      Idiotic statement from econ-ignoramus.

  24. Completely free markets with fully available information automatically produce the optimum results for each individual. People can decide on the level of risk they are willing to take to obtain items.

    ANY interference with this will produce a sub-optimal situation. This is usually minor, but sometimes it can become huge….

    1. Not much decision making when media and politicians are whipping up panic.

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