I typically find the argument that increased choice in the modern world is “tyrannising” us to be less than compelling. On this blog, I have approvingly quoted Jim Manzi’s warning against extrapolating the results of an experiment on two Saturdays in a particular store - the famous jam experiment - into “grandiose claims about the benefits of choice to society.” I recently excerpted a section from Bob Sugden’s excellent The Community of Advantage: A Behavioural Economist’s Defence of the Market on the idea that choice restriction “appeals to culturally conservative or snobbish attitudes of condescension towards some of the preferences to which markets cater.”
Despite this, I liked a lot of Barry Schwartz’s The Paradox of Choice: Why More Is Less. I still disagree with some of Schwartz’s recommendations, his view that the “free market” undermines our well-being, and that areas such as “education, meaningful work, social relations, medical care” should not be addressed through markets. I believe he shows a degree of condescension toward other people’s preferences. However, I found that for much of the diagnosis of the problem I agreed with Schwartz, even if that doesn’t always extend to recommending the same treatment.
Schwartz’s basic argument is that increased choice can negatively affect our wellbeing. It can damage the quality of our decisions. We often regret our decisions when we see the trade-offs involved in our choice, with those trade-offs often multiplying with increased choice. We adapt to the consequences of our choices, meaning that the high search costs of search may not be recovered.
The result is that we are not satisfied with our choices. Schwartz argues that once our basic needs are met, much of what we are trying to achieve is satisfaction. So if the new car, phone or brand of salad dressing don’t deliver satisfaction, are we worse off?
The power of Schwartz’s argument varies with the domain. When he deals with shopping, it is easy to see that the choices would be overwhelming to someone who wanted to examine all of the options (do we need all 175 salad dressings that are on display?). People report that they are enjoying shopping less, despite shopping more. But it is hard to feel that a decline in our enjoyment of shopping or the confusion we face looking at a sea of salad dressings is a serious problem.
Schwartz spends little time examining the benefits of increased consumer choice for individuals whose preferences are met, or the effect of the accompanying competition on price and quality. Schwartz has another book in which he tackles the problems with markets, so having not read it I can’t say he doesn’t have a case. But that case is absent from The Paradox of Choice.
In fairness to Schwartz, he does state that it is big jump to extrapolate the increased complexity of shopping into claims that too much choice can “tyrannise”. Schwartz even notes that we do OK with many consumer choices. We implicitly execute strategies such as picking the same product each time.
Schwartz’s argument is more compelling when we move beyond consumer goods into important high-stakes decisions such as those about our health, retirement or work. A poor choice there can have large effects on both outcomes and satisfaction. These choices are of a scale that genuinely challenges our wellbeing.
The experimental evidence that we struggle with high-stakes choices is more persuasive evidence of a problem than experiments involving people having difficulty choosing jam. For instance, when confronted with a multitude of retirement plans, people tend to simply split between them rather than consider the merits or appropriate allocation. Tweak the options presented to them and you can markedly change the allocations. When faced with too many choices, they may simply not choose.
Schwartz’s argument about our failures when choosing draws heavily from the heuristics and biases literature, and a relatively solid part of the literature at that: impatience and inter-temporal inconsistency, anchoring and adjustment, availability, framing and so on. But in some ways, this isn’t the heart of Schwartz’s case. People are susceptible to error even when there are few choices, which is the typical scenario in the experiments in which these findings are made. And much of Schwartz’s case would hold even if we were not susceptible to these biases.
Rather, much of the problem that Schwartz identifies comes when we approach choices as maximisers instead of satisficers. Maximisation is the path to disappointment in a world of massive choice, as you will almost certainly not select the best option. Maximisers may not even make a choice as they are not comfortable with compromises and will tend to want to keep looking.
Schwartz and some colleagues created a maximisation scale, where survey respondents rate themselves against statements such as “I never settle for second best.” Those who rated high on the maximisation were less happy with life, less optimistic, more depressed and score high on regret. Why this correlation? Schwartz believes there is a causal role and that learning how to satisfice could increase happiness.
What makes this result interesting is that maximisers make better decisions when assessed objectively. Is objective or subjective success more important? Schwartz considers that once we have met our basic needs, what matters most is how we feel. Subjective satisfaction is the most important criteria.
I am not convinced that the story of satisfaction from particular choices flows into overall satisfaction. Take a particular decision and satisfice, and perhaps satisfaction for that particular decision is higher. Satisfice for every life decision, and what does your record of accomplishment look like? What is your assessment of satisfaction then? At the end of the book, Schwartz does suggest that we need to “choose when to choose”, and leave maximisation for the important decisions, so it seems he feels maximisation is important on some questions.
I also wonder about the second order effects. If everyone satisficed to achieve higher personal satisfaction, what would we lose? How much do we benefit from the refusal of maximisers such as Steve Jobs or Elon Musk to settle for second best. Would a more satisfied world have less of the amazing accomplishments that give us so much value? Even if there were a personal gain to taking the foot off the pedal, would this involve broader cost?
An interesting thread relating to maximisation concerns opportunity costs. Any economist will tell you that opportunity cost - the opportunity you forgo by choosing an option - is the benchmark against which options should be assessed. But Schwartz argues that assessing opportunity costs has costs in itself. Being forced to make decisions with trade-offs makes people unhappy, and considering the opportunity costs makes those trade-offs salient.
The experimental evidence on considering trade-offs is interesting. For instance, in one experiment a groups of doctors were given a case history and a choice between sending the patient to a specialist or trying one other medication first. 75% choose the medication. Give the same choice to another group of doctors, but with the addition of a second medication option, and this time only 50% chose medication. Choosing the specialist is a way of avoiding a decision between the two medications. When there are trade-offs, all options can begin to look unappealing.
Another problem lurking for maximisers is regret, as the only way to avoid regret is to make the best possible decision. People will often avoid decisions if they could cause regret, or they aim for the regret minimising decision (which might be considered a form of satisficing).
There are some problems that arise even without the maximisation mindset. One is that expectations may increase with choice. Higher expectations create a higher benchmark to achieve satisfaction, and Schwartz argues that these expectations may lead to an inability to cope rather than more control. High expectations create the burden of meeting them. For example, job options are endless. You can live anywhere in the world. The nature of your relationships - such as decisions about marriage - have a flexibility far above that of our recent past. For many, this creates expectations that are unlikely to be met. Schwartz does note the benefits of these options, but the presence of a psychological cost means the consequences are not purely positive.
Then there is unanticipated adaptation. People tend to predict bigger hypothetical changes in their satisfaction than that reported by those who experienced the events. Schwartz draws on the often misinterpreted paper that compares the happiness of lottery winners with para- and quadriplegics. He notes that the long-term difference in happiness between the two groups is smaller than you would expect (although I am not sure what you would expect on a 5-point scale). The problem with unanticipated adaptation is that the cost of search does not get balanced by the subjective benefit that the chooser was anticipating.
So what should we do? Schwartz offers eleven steps to reduce the burden of choosing. Possibly the most important is the need to choose when to choose. Often it is not that any particular choice is problematic (although some experiments suggest they are). Rather, it is the cumulative effect that is most damaging. Schwartz suggests picking those decisions that you want to invest effort in. Choosing when to choose allows adequate time and attention when we really want to choose. I personally do this: a wardrobe full of identical work shirts (although this involved a material initial search cost), a regular lunch spot, and many other routines.
Schwartz also argues that we should consider the opportunity costs of considering opportunity costs. Being aware of all the possible trade-offs, particularly when no option can dominate on all dimensions, is a recipe for disappointment. Schwartz suggests being a satisficer and only consider other options when you need to.
The final recommendation I will note is the need to anticipate adaptation. I personally find this a useful tool. Whenever I am making a new purchase I tend to recall a paragraph in Geoffrey Miller’s Spent, which often changes my view on a purchase:
You anticipate the minor mall adventure: the hunt for the right retail environment playing cohort-appropriate nostalgic pop, the perky submissiveness of sales staff, the quest for the virgin product, the self-restraint you show in resisting frivolous upgrades and accessories, the universe’s warm hug of validation when the debit card machine says “Approved,” and the masterly fulfillment of getting it home, turned on, and doing one’s bidding. The problem is, you’ve experienced all this hundreds of times before with other products, and millions of other people will experience it with the same product. The retail adventure seems unique in prospect but generic in retrospect. In a week, it won’t be worth talking about.
Miller’s point in that paragraph was about the signalling benefits of consumerism, but I find a similar mindset useful when thinking about the adaptation that will occur.