I'm Pro-Choice
Too much choice may cause regret, but no choice is worse. Subjects who ate a chocolate selected by the experimenter, rather than the one they'd picked, were much less satisfied.
Forbes , March 26, 2005
In the early 20th century critics attacked product variety as being wasteful--a sign that markets were less efficient than central planning. Hence, the Chinese wore Mao suits, Americans got uniformly round automobile headlights and British authorities "rationalized" furniture designs.
A famous scene in the film Moscow on the Hudson has Robin Williams as a Soviet immigrant collapsing at the sight of an American coffee aisle, circa 1984. Imagine what would happen in Starbucks.
A free economy multiplies variety, the better to serve buyers with different tastes and different needs and to give people the chance to experience different goods at different times. Arguing that this plenitude is inefficient went out decades ago. The problem with markets, the detractors now say, is that all these choices make us unhappy.
"As the number of choices grows further, the negatives escalate until we become overloaded," writes psychologist Barry Schwartz in The Paradox of Choice
The book is a lucid overview of the psychological literature, and within its pages Schwartz, a professor at Swarthmore, sticks to personal advice. He urges readers not to fixate on finding the very best alternative but rather to set standards and accept the first choice that meets those criteria. The book makes no public policy recommendations. Since its publication, however, Schwartz has used his authority to opine against private Social Security accounts and for returning to steeply progressive income taxes, with a top rate of 90%. Neither policy is supported by the research he cites--or even by the idea that we'd be happier with fewer choices.
"Whether people are choosing jam in a grocery store or essay topics in a college class, the more options people have, the less likely they are to make a choice," he writes in an op-ed on Social Security. But the jam-and-essay study included a third experiment--the only one of the three that included a Social Security-style no-choice alternative--which he conveniently omits.
In that experiment, subjects were shown a group of Godiva chocolates. They were asked which chocolate they would buy for themselves, based on the name and look of each. Half chose from 6 chocolates and half chose from 30. Half of each group was then given the chocolate they'd picked. The other half got a different sample, selected by the experimenter.
People who picked from 6 chocolates were more satisfied than those who selected from 30. A bigger group seemed to make people more likely to worry that they hadn't picked the best chocolate.
But here's the Social Security angle: Subjects who ate a chocolate selected by the experimenter, rather than the one they'd picked, were much less satisfied than either group. Too much choice may cause regret, but no choice is worse.
Nor does choice research support a steeply graduated income tax system. That system wouldn't reduce choices. It would complicate them. Multiplying the number of tax brackets and making them steadily more punitive would force people to make complex tradeoffs about how much and whether to work.
Reducing incomes would increase anxiety and regret. When money is tight, each purchase becomes riskier. If you're deciding between apples and oranges and you make a mistake, you can't correct it with a second purchase. And you're much more likely to keep shopping to find the very best deal.
The fundamental problem with Schwartz's critique, however, isn't the author's leftist preferences. It's the difference between understanding the human mind and understanding market institutions. Psychology experiments often screen out the adjustments real people use to cope with choices, from brand loyalty to expert guidance. Markets, by contrast, produce not only more choice but also more ways to choose effectively.
If having too many choices is overwhelming, that suggests a new round of entrepreneurial opportunities. Offer customers abundant choices, but also help them search. Amazon does that with its many recommendation services. So does TiVo. So do Home Depot's Expo Design Centers, which offer interior design services along with hundreds of faucets and floor coverings.
"Mediated shopping"--experts and tools that narrow down the possibilities to a manageable number of likely candidates--looks like the wave of the future. It wouldn't be the first time businesses used social criticism as market research. Where do you think Starbucks got its strategy?