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2011-02-09

Choice is a paradox: there can be too much of it

This blog post is a summary of the talk “The Paradox of Choice – Why More Is Less” by Barry Schwartz (he has also written a book about it).
The commonly accepted syllogism is:
  • More freedom ⇒ more welfare
  • More choice ⇒ more freedom
  • Thus: More choice ⇒ more welfare
The talk argues that this isn’t always true. Examples of how choice has increased in the US:
  • Three-fold increase in cereal brands in the 1990s.
  • There used to be a telephony monopoly and a single phone model. Now you have many options and models.
  • People self-medicate, make their own medical choices.
  • People choose how they look via plastic surgery. If they are unattractive, it is their fault.
  • Flexible work situations: your choice when to work and when not. A choice that you have to make frequently, because the tools are always there (smartphones).
  • Marital and familial arrangements: nothing is set in stone. Generally positive, but also keeps people constantly worried.
Schwartz explicitly states that choice and freedom are good. All previous examples are real improvements. But this talk is about the dark side of this development.
  • Survey: “There is currently more choice than I need...” (Europe, consumer products).
  • Answers: Clothing 65%, washing machines 80%, savings accounts 75%, utilities 75%, cars 80%, cleaning products 80%, cell phones 78%.
  • No matter what product category, there was always a majority stating that there was too much choice.
Effects of too much choice:
  1. Paralysis
    • 6 versus 24 flavors of jam on display at a shop. More people came to the table in the latter case, but only one tenth bought something.
    • Writing essays for extra credit: 30 versus 6 available topics. Fewer people participated in the latter case.
    • Speed dating: More matches are made if there are 6 choices than if there are 12.
    • The number of mutual funds that an employer makes available affect the participation of employees: For every 10 funds, participation goes down 2%.
      • Not participating meant passing up a significant amount of money (matching money).
      • This runs counter to conventional wisdom.
    • Effects of reducing the assortment of groceries: strong brands gain, higher-priced brands gain, store brands lose. Shoppers assess variety by how many units there are. One can reduce brands by 25% without a perceived decrease in variety, while customers buy more and report greater ease of shopping.
    • 2 caveats:
      • No paralysis if you know beforehand exactly what you want (very rare).
      • No paralysis if options are alignable on the same scale (e.g. same product in different quantities).
  2. Decision and performance quality decreases. If there is too much to judge thoroughly, you adopt a simpler strategy.
    • Example: If there were too many options for retirement funding, people more often put money into their savings account (wasting money).
  3. Decreased satisfaction. You do better, but feel worse.
    • Study: digital CD players. People prefer a player with 21 features to one with 7 (but admit decreased usability). After they have actually used both of them, they chose the simpler one.
Why does satisfaction decrease?
  • Regret. With many options you can easily image that something else would have been better.
  • Opportunity costs. No choice is the best in all respects. The more alternatives there are, the easier one will identify attractive features that are missing from one’s choice.
    • Study: Choice between $2 or a good pen. 75% choose the pen. Choice between $2, 1 good pen, 2 cheaper pens. 45% chose one of the two pen options. Explanation: None of the pen options was clearly better, so money was the easier choice.
    • Study: When you ask someone what they would pay for a plane ticket, people are willing to pay more if asked directly (“How much would you pay for a ticket to Los Angeles?”) than if additionally mentioning alternatives (“There are many nice destinations in the US: Los Angeles, New York City, San Francisco. How much would you pay for a ticket to Los Angeles?).
  • As an aside: When do people feel time pressure? If you ask one group what things they still have to do and another one what things they would still like to do, then the latter group felt more time pressure.
  • Higher expectations with more options.
  • Self-blame: With more options, you made the wrong choice.
There are two decision styles: maximizers (only the best, perfectionism) and satisficers (good enough, compromise). If you are a maximizer, you can never be sure, you are never done, and you need to examine all alternatives.
  • Study: Maximizers get better jobs, but they are more pessimistic, anxious, stressed, etc.
One can reach a point where having more choice makes things worse. That is, the benefits of more choice don’t grow monotonically. Hitherto, only the benefits of little choice had been scientifically examined and extrapolated to large choice.
How can choice paralysis be prevented?
  • Delegate your choices. The people making your choices for you don’t even have to vastly more knowledgeable or intelligent than you, just not having to make a choice pays off.
  • Libertarian paternalism. 28% of licensed drivers in the US are organ donors, 85% of Americans think that organ donation is good. In Europe: 90% are donors. Difference: organ donation is opt-in in the US and opt-out in Europe.
    • Conclusion: Provide citizens with a choice, but ensure that if they do nothing, a choice is made for them that is in their best interest. 
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