The Paradox of Choice

Barry Schwartz is the author of The Paradox of Choice. One day, went to the store to buy a new pair of jeans. He said to the store person that he wanted a pair of blue jeans: 32 waist, 28 leg. She asked – do you want them stone washed, acid washed, torn, distressed? do you want zip fly or button fly? do you want them faded or regular? do you want them slim fit, easy fit, or relaxed fit? straight leg, skinny leg or extra baggy?

Barry just wanted “the regular kind”, but there’s no such thing any more

Buying jeans is a trivial matter, but its indicative of a much greater theme in the world today. When people have NO choice it becomes restrictive and unbearable. As choices increase, we feel a sense of autonomy, control, and liberation – variety brings us a feeling of power and positivity. BUT, as the number of choices KEEPS growing more and more, there are negative aspects of having TOO MANY choices. More choice no longer liberates, it debilitates.

This book argues that:

• We would be better off if we embraced certain voluntary constraints on our freedom of choice, instead of rebelling against them
• We would be better off seeking what was “good enough” instead of seeking the best
• We would be better off if we lowered our expectations about the results of decisions
• We would be better off if the decisions we made were nonreversible
• We would be better off if we paid less attention to what others around us were doing

Set Up – THE PROBLEM WITH CHOICE and THE PARADOX OF CHOICE

If you were taking a walk around your supermarket for the first time, you’d be totally overwhelmed. As you move from aisle to aisle, there is a seemingly unlimited number of options to choose from. Within each of those options, there is a huge number of brands to choose from, in different varieties and styles: 85 varieties of crackers, 285 types of cookies, 13 different brands of sports drinks, 64 flavours of sauces, 275 breakfast cereals… A serious paradox of choice.

But supermarkets are just one small part of the choices we have to make. Supermarkets are selling low-cost, non-durable goods, so the decisions we’re making here aren’t as important. Other far more costly and important areas are also swelling with choices. Think about going to university, a decision that lasts a number of years, costs tends of thousands of dollars, and could impact your future. Not only do you have hundreds of areas to choose from and thousands of different institutions to choose from, the number of subjects within each degree are increasing. Or think about entertainment. A generation or two ago there were three major TV channels to choose from, now we have hundreds of live channels plus a number of different on-demand streaming services. Or think about our options for pensions and savings accounts. One of Schwartz’s relatives used to have 14 option for pension plans at their firm. The union decided that this wasn’t enough. They exploded this to 155 different pension plans. And if none of these suited your needs, there was a 156th option which was a ‘build your own’, effectively giving you infinite choice. But there is a paradox of choice.

Is expanded choice good or bad?

Schwartz references a famous series of studies called “When Choice Is Demotivating”. One study was conducted at an organic food store that often had promotions of new brands and products on the weekends. This one involved jams – people were offered a free sample, then a $1 discount coupon to purchase a jam of their liking. There were 24 jams on display and available for purchase. One group was offered to taste test any of all 24 jams. The other group were only presented with 6 jams to taste before deciding. The results are not what you’d expect… you would assume that if someone was able to try a wider range of jams, they would find one they liked and purchase it. But, the exact opposite was the case. For the group that could choose between 6 flavours to taste, 30% of them ended up buying a jar of jam. Of the could that could try any of the 24 flavours, only 3% made a purchase. That’s a 10X difference in results! The paradox of choice on full display.

The conclusion from this study is that a large array of options forces a massive increase in effort associated with choosing. The consumers ended up deciding NOT to decide at all, and they didn’t buy. It’s too hard to choose the best one. We feel that there is a big risk of choosing a jam that isn’t the best, so we save ourselves the pain of future regret and wishing we’d chosen another flavour. Also, having more options actually decreases your enjoyment of your eventual decision – the attractiveness of your option is decreased when compared to more other great possibilities.

WHAT WE CAN DO ABOUT IT

CHOOSE WHEN TO CHOOSE: SECOND ORDER DECISIONS TO REDUCE THE NUMBER OF CHOICES YOU NEED TO MAKE

One way of easing the burden that freedom of choice imposes is to make decisions about when to make decisions. By creating a rule, you eliminate a series of future decisions. Choosing once saves you from choosing a hundred times in future.

An example is having the rule that when you’re in a car, you buckle up your seatbelt. That means you no longer need to make the decision. Rather than weighing up the risks and considering if the quick drive to the corner store a few blocks away via the backstreets to pick up a carton of milk means you need to put your seat belt on, you just automatically do it every time and no longer have to make a decision. Steve Jobs famously stocked up on jeans and turtle neck sweaters. By wearing the same thing every day, he no longer had to go through the agony of choosing what clothes to put on each morning.

MAKE YOUR DECISIONS NON-REVERSIBLE (don’t buy the option)

Almost everybody would prefer to have the option to change their mind. We’d prefer to buy from a store that had a returns policy. We’d prefer to sign up to a course that has a 30-day money back guarantee. But what we don’t realise is, the very option of being allowed to change our minds seems to increase the chances that we WILL change our minds.

When we change our minds about decisions, we are less satisfied with them. When a decision is final, we engage in a variety of psychological processes that enhance our feelings about the choice we made relative to the alternatives. It’s like – if we have the option to change our decision, we have to keep weighing up the decision on our minds. If the door is open to change our minds, we’ll constantly be assessing the decision we mind and deciding if we should change or not. Once the door is closed, we stop thinking about it – once the decision is final, the endowment effect takes over and we actually become a lot happier about our decision

If we think the grass is always greener, we’ll always be considering changing our minds. Schwartz suggests that we should consider making our most important decisions non-reversible. Firstly – we’ll consider them more thoroughly before making the decision (if we know we have a way out, we may be hastier in choosing). Secondly – once we make the commitment (say buying a house or choosing who we want to marry), we will stop thinking about all of the other options and thinking about changing our mind.

Once your decision is made, that’s the end of the story. You’ll be a lot happier about the choice you’ve made in the long run. This is the paradox of choice.

SATISFICE MORE, MAXIMISE LESS

Choosing wisely begins with developing a clear understanding of your goals. And the first choice you must make is between the goal of choose the ABSOLUTE BEST and the goals of choosing something GOOD ENOUGH.

Absolute best = “MAXIMISER”. Maximizers need to be assured that every purchase or decision was the best that could be made. The only way to know if you’re choosing the absolute best is to assess EVERY possible option and alternative.

Let’s say you’re shopping for a sweater at the shopping centre. You go into one store, find something that’s exactly what you’re looking for – the right colour, the right fit, and it’s within your expected price range. If you’re a maximizer, you’re not buying it yet. You haven’t assessed ALL of the available alternatives in all of the stores. You’ll keep this one in mind, but first you need to try on all of the other sweaters in this store, then you need to go to all of the other stores and look at their sweaters too.

Good enough = “SATISFICER”. The alternative to ‘maximizing’ is ‘satisficing’. To satisfice is to settle for something that is good enough and not worry about the possibility that there might be something better. If you’re shopping for that sweater, you buy that first good one that you find that matches what you wanted. You don’t worry that you might find one that’s slightly better elsewhere, or that another shop might have a similar one for $10 cheaper – once you find something that meets you criteria, you decide and then move on.

A satisficer has criteria and standards – they don’t just settle for something mediocre – but once something meets their criteria they accept it and don’t keep looking for more alternative that may or may not be better. They’re not look for the very best, they’re just looking for something that matches what they want.

Maximisers engage in more product comparisons and take longer to decide than satisficers. Maximisers are more likely to experience regret after a purchase, and generally feel less positive about their ability to make good decisions. Maximisers more likely to think about hypothetical alternatives. Masimisers savour positive events less and do not cope as well with negative events and they take longer to recover from setbacks. OVERALL – maximisers experience less satisfaction with life, are less happy, less optimistic, than satisficers.

We all maximise in some areas and satisfice in others. You may want to purchase the very best winter coat, but you’re fine with the going to a ‘good enough’ restaurant. You may want to go to the very best holiday destination, but you just want a reliable car that gets you from A to B. Someone else may want the perfect car, but is less concerned about what type of furniture goes in their living room. The key is to pick a very small number of areas that you care deeply about, then satisfice more on everything else.

That was the paradox of choice!