Talk #93: Barry Schwartz - The Paradox of Choice

choices

The current dogma is that to maximize the welfare of every citizen, we must maximize freedom, and for that, we must maximize choice.

In a typical supermarket, you will find 175 salad dressings. In an electronic store, we can construct 6.5 million stereo systems.

The problems with so many choices are:

  • Life becomes a continuous sequence of choices that can be made every second. Your doctor won't tell you what to do, but present you with options. This leads to "patient autonomy", but in effect it shifts the decision-making from someone who knows something (the doctor) to someone who knows nothing, and is almost certainly sick and not in the best shape to be making decisions. You can work virtually from anywhere in the world. Should you pick up a call or draft a letter on your laptop while you watch your child's game?

  • Choice paralysis: in a study done on 1,000,000 employees in 2,000 different workplaces on choosing mutual funds for their retirement plan, for every 10 extra mutual funds that employees were offered, 2% more did not choose anything. These employees lost in the process up to $5,000, the matching money from their employer.

  • If a decision turns out imperfect, it is easy to imagine there was a better decision to be made. Hence, regret will very likely occur, as well as anticipated regret.

  • Opportunity cost: even if the choice we made is great, we could have made an even better choice. Cartoon: if all millionaires living on a busy New York street with scarce parking went on vacation, each can think "Damn, if I were home, I could park anywhere".

  • Unrealistic expectations: With so many options, one has to be perfect. It is very easy to imagine there exists a "perfect" product, service, or lifestyle choice; hence, reality will prove any actual choice to be a disappointment. It becomes impossible to be pleasantly surprised.

  • Self-blame: If there are so many choices and you make a choice that turns out bad, who is to blame? You. Clinical depression has exploded in industrialized nations.

The key to happiness: low expectations.

The cause of the choice paradox is affluence. On the other hand, in other parts of the world, choice is too little. The proposed solution is income redistribution. This will make happier not only the beneficiaries of extra income, but those who would have less money and less choices to make.

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