Every semester I tell my Principles of Microeconomics students the following true story.
One afternoon during my sophomore year of high school (1973-74), my friend Kerry Dugas and I were walking back from school to my house. We noticed a mildly unusual sight: my father’s pick-up truck arriving home at the same time as we were. (Dad usually got home from work about two hours later in the day.) Also, the bed of his truck was loaded with something covered by a canvas tarpaulin.
“Hi Dad. Watcha got in the truck?” He raised part of the tarpaulin to reveal toilet paper. Lots of toilet paper. He’d stocked up on toilet paper. Ever attentive to his family’s needs, Dad sprung into action after hearing of a coming shortage of toilet paper. He wasn’t about to let his wife, four kids, and father (who was living with us) be inconvenienced by such a shortage.
Kerry and I helped Dad to transfer the precious insurance against future inconvenience from his truck into his work shed, where it would be safely stored for ready accessibility when most other Americans were scrambling frantically about seeking flushable, downy-soft, yet-not-too-easily shredded paper tissues.
In teaching, I use this blast from my past when discussing the determinants of demand – one of which is expectations of the future availability of the good in question. Because my father came to expect that toilet paper would be much more difficult to acquire tomorrow, his demand for it increased today.
Until this afternoon, though, I had no idea that the great toilet-paper scare was the doing of Tonight Show host Johnny Carson. I learned of Carson’s role only just now when my colleague Dan Klein shared with me this passage from Robert Dogde’s 2006 book, The Strategist: The Life and Times of Thomas Schelling:
[In 1973] oil-producing Arab nations unleashed … an embargo on oil shipments to countries supporting Israel. By the time the embargo was lifted in 1974, the price of oil had quadrupled, and Americans were trying a variety of schemes to cope with the apparent oil shortage … On December 19, 1973, Johnny Carson opened The Tonight Show by quipping: “You know what’s disappearing from the supermarket shelves? Toilet paper. There is an acute shortage of toilet paper in the United States.” This was a joke, but the idea of a toilet paper shortage was disturbing enough to cause an unusually large number of people to decide they should stock up “just in case.”
The next morning, 20 million viewers headed to the supermarket and emptied the shelves of the available supplies, resulting in a short-lived toilet paper shortage, perhaps the only shortage ever caused by a single person. People made their decision to buy toilet paper based on the the decision they anticipated other people would make, which was also to buy more paper. People also anticipated that others were making a decision that was being made by many viewers of the show: The mentality that “I’m deciding to buy more, and I know he’s deciding to buy more” sent people rushing to get to the market first. People were thinking vicariously about what other people were thinking and what those people were thinking the same people were thinking — nobody wanted to be caught unprepared. The shortage was short lived, and Carson apologized for having brought it on.
Here’s a YouTube clip of Carson on toilet paper: