The Paradox of Choice
This afternoon I watched a Google TechTalks entitled The Paradox of Choice - Why More Is Less given by Barry Schwartz on April 27, 2006. The talk does a wonderful job of summarizing the current state of choice and why in most cases it is making us feel worse. Some of the themes echoed what I read in The High Price of Materialism. Below are notes I took to summarize the key points.
Society as a whole believes these to be true: more freedom = more welfare, more choice = more freedom, so more choice - more welfare.
This means that choice and freedom are good. Allows autonomy. However, too much choice is also bad.
Three main ways too much choice can cause problems:
1) Paralysis
Unless people are able to articulate their preferences and then search for the matching product or service, they can become overwhelmed.
Choice isn't bad when everything is in alignable options such as how many of something you want.
Example is in a 401K. For every 10 additional funds offered as investment choices the participation rate drops by 2%. For every 10 additional funds the number of participants putting their money in a money market account goes up by 7%.
2) Decision and Performance Quality
Even if one can articulate preferences, the time to compare fully usually isn't there. This leads to using simplification strategies which then make people less accurate.
3) Satisfaction
When presented with too many choices people feel worse after the choice. Primary reasons: regret and anticipate regret and opportunity costs.
Difference between capability vs. usability or prospect vs. practice.
Everything suffers from comparison.
Need to balance talent, temperament, and time.
People feel time pressure. Feel worse after making a "want to do" lists versus a "have to do" list.
Escalation of expectations. Big difference from zero to subsistence but it levels off quickly after that.
Self blame. Good satiate, bad escalate.
View about amount of choice for a long time suffered from monotonicity assumption. Jump from zero choice to some choices extrapolated to lots of choice. However happiness with number of choices isn't always increasing, it goes down.
Too much choice has a leakage principle. Feelings before choice carry over once a choice has been made, particularly anxiety.
Using an agent can help. The agents separates choice from experience. Effective even when the agent doesn't know much more than the person the choice is being made for.
Best thing to do is create libertarian paternalism. Provide an intelligent default so that when the majority of people don't do anything (which will happen) the default is really what is best for them. Examples: switch to opt-out organ donation or opt-out 401K contribution instead of forcing people to opt-in.