THE PARADOX OF CHOICE

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THE PARADOX OF CHOICE

• Barry Schwartz
• Collaborators
• Andrew Ward
• Sonja Lyubomirsky
• Katherine White
• Darrin Lehman
• John Monterosso
• Jane Gillham
• Jamin Halberstadt
• Sheena Sethi-Iyengar

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This Talk

• Choice and satisfaction

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This Talk

• Choice and satisfaction
• Freedom, choice, wealth, and welfare

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This Talk

• Choice and satisfaction
• Freedom, choice, wealth, and welfare
• What to do about food

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• Is this good news or bad news?

YES!
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285 Brands of Cookies
110 Televisions

• 230 Soups

75 Iced Teas
6.5 Million Stereo Systems!!
175 Salad Dressings
40 Toothpastes
275 Cereals
30 VCRs and 50 DVD Players
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• Phone service
• Local, long distance, cellular

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• Health Care
• Direct marketing of drugs
• Patient autonomy

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• Retirement plans

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• Work When to do it

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• Physical appearance
• Botox
• Cosmetic Surgery

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• Marital and family arrangements

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• Identity

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MAXIMIZING SATISFICING
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Thus a paradox Freedom of choice
becomes tyranny of choice
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Americans are richer than ever before
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Americans are richer than ever before Americans
are sadder than ever before
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Americans are richer than ever before Americans
are sadder than ever before Why?
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Americans are richer than ever before Americans
are sadder than ever before Why? Too much
choice is part of the answer
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What Too Much Choice Does

• Jams in a gourmet food store

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What Too Much Choice Does

• Jams in a gourmet food store
• Chocolates in the laboratory

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What Too Much Choice Does

• Jams in a gourmet food store
• Chocolates in the laboratory
• Snacks, soft drinks and beer in convenience
  stores

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What Too Much Choice Does

• Jams in a gourmet food store
• Chocolates in the laboratory
• Snacks, soft drinks and beer in convenience
  stores
• 401(k) participation in the workplace

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• With so much choice, people may do better

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• With so much choice, people may do better
• but they feel worse

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Why Choice Makes People Miserable

• 1. Regret and anticipated regret

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Why Choice Makes People Miserable

• 1. Regret and anticipated regret
• 2. Opportunity costs

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• Offer participants 2 or a good pen 75
  choose pen

Offer participants 2, or 1 good pen, or 2
cheaper pens 45 choose either pen
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Where to go on vacation? 1. Beaches of the
Caribbean
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Where to go on vacation? 1. Beaches of the
Caribbean 2. Golf at Hilton Head
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Where to go on vacation? 1. Beaches of the
Caribbean 2. Golf at Hilton Head 3. Awesome
power of the Rockies
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Where to go on vacation? 1. Beaches of the
Caribbean 2. Golf at Hilton Head 3. Awesome
power of the Rockies 4. Culture of New York
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Where to go on vacation? 1. Beaches of the
Caribbean 2. Golf at Hilton Head 3. Awesome
power of the Rockies 4. Culture of New
York Choose your Number 1
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Where to go on vacation? 1. Beaches of the
Caribbean 2. Golf at Hilton Head 3. Awesome
power of the Rockies 4. Culture of New
York Choose your Number 1 Go, have a good time,
but
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Why couldnt I have found a place with beautiful
beaches and great golf, and awesome power, and
culture
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The lesson of opportunity costs
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The lesson of opportunity costs The more
options you offer, the less attractive each of
them will seem
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Why Choice Makes People Miserable

• 1. Regret
• 2. Opportunity costs
• 3. Escalation of expectations

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• The lesson of expectations
• What matters to satisfaction is whether
  experience meets expectations or not

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Why Choice Makes People Miserable

• 1. Regret
• 2. Opportunity costs
• 3. Escalation of expectations
• 4. Self-blame

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Choice and Satisfaction Conclusions

• As options increase, selection decreases

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Choice and Satisfaction Conclusions

• As options increase, selection decreases
• As options increase, satisfaction decreases

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Freedom, choice, wealth, and welfare Implicati
ons of the research
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The Official Dogma

• Maximize welfare, not wealth
• This means maximize freedom
• This means maximize choice
• Markets maximize freedom
• Wealth enhances freedom

• More wealth means more choice
• More choice means more freedom
• More freedom means more welfare
• NOT!!

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Libertarian Paternalism

• And car insurance
• And organ donation
• Pay attention to default options (the
  paternalism part)
• But usually let people opt out (the libertarian
  part)

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What to Do About Food

• Experience goods but there are too many to
  experience
• Credence goods but informational asymmetry has
  become the rule
• Is the governments role just to insure safety,
  or is it also to promote welfare?
• If promoting welfare is part of the mission,
  barriers to entry might well be part of the policy

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What to Do About Food (cont.)

• The Consumer Reports problem
• Principle of the flat maximum
• The Zagat Guide model selective review and
  rating
• But how can a federal agency possible do this?
• Perhaps in partnership with private, non-profit
  evaluation services

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