This post is mostly a ripoff from Wikipedia because who ever wrote about the topic did a pretty good job of summarizing the main ideas behind Barry Schwartz’s work.The Paradox of Choice – Why More Is Less is a 2004 book by Mr. Schwartz. In the book, Schwartz argues the controversial thesis that eliminating consumer choices can greatly reduce anxiety for shoppers. Kind of communism in a way but wait! There is more…

How we choose

Schwartz describes that a consumer’s strategy for most good decisions will involve these steps:

  1. Figure out your goal or goals. The process of goal-setting and decision making begins with the question: “What do I want?” When faced with the choice to pick a restaurant, a CD, or a movie, one makes their choice based upon how one would expect the experience to make them feel, expected utility. Once they have experienced that particular restaurant, CD or movie, their choice will be based upon a remembered utility. To say that you know what you want, therefore, means that these utilities align. Nobel Prize winning psychologist Daniel Kahneman and his colleagues have shown that what we remember about the pleasurable quality of our past experiences is almost entirely determined by two things: how the experiences felt when they were at their peak (best or worst), and how they felt when they ended.
  2. Evaluate the importance of each goal. Daniel Kahneman and Amos Tversky have researched how people make decisions and found a variety of rules of thumb that often lead us astray. Most people give substantial weight to anecdotal evidence, perhaps so much so that it cancels out expert evidence. The researchers called it the availability heuristic describing how we assume that the more available some piece of information is to memory, the more frequently we must have encountered it in the past. Salience will influence the weight we give any particular piece of information.
  3. Array the options. Kahneman and Tversky found that personal “psychological accounts” will produce the effect of framing the choice and determining what options are considered as subjects to factor. For example, an evening at a concert could be just one entry in a much larger account, of say a “meeting a potential mate” account. Or it could be part of a more general account such as “ways to spend a Friday night”. Just how much an evening at a concert is worth will depend on which account it is a part of.
  4. Evaluate how likely each of the options is to meet your goals. People often talk about how “creative accountants can make a corporate balance sheet look as good or bad as they want it to look.” In many ways Schwartz views most people as creative accountants when it comes to keeping their own psychological balance sheet.
  5. Pick the winning option. Schwartz argues that options are already attached to choices being considered. When the options are not already attached, they are not part of the endowment and choosing them is perceived as a gain. Economist Richard Thaler provides a helpful term sunk costs.
  6. Modify goals. Schwartz points out that later one uses the consequences of their choice to modify their goals, the importance assigned to them, and the way future possibilities are evaluated.

Why we suffer

Schwartz integrates various psychological models for happiness showing how the problem of choice can be addressed by different strategies. What is important to note is that each of these strategies comes with its own bundle of psychological complication.

  • Choice and Happiness. Schwartz discusses the significance of common research methods that utilize a Happiness Scale. He sides with the opinion of psychologists David Myers and Robert Lane. who independently conclude that the current abundance of choice often leads to depression and feelings of loneliness. Schwartz draws particular attention to Lane’s assertion that Americans are paying for increased affluence and freedom with a substantial decrease in the quality and quantity of community. What was once given by family, neighborhood and workplace now must be achieved and actively cultivated on an individual basis. The social fabric is no longer a birthright but has become a series of deliberated and demanding choices.
  • Freedom or Commitment. Schwartz connects this issue to economist Albert Hirschman’s research into how populations respond to unhappiness: they can exit the situation, or they can protest and voice their concerns. While free-market governments give citizens the right to express their displeasure by exit, as in switching brands, Schwarts maintains that social relations are different. Instead, we usually give voice to displeasure, hoping to project influence on the situation.
  • Second-Order Decisions. Law professor Cass Sunstein uses the term “second-order decisions” for decisions that follow a rule. Having the discipline to live “by the rules” eliminates countless troublesome choices in one’s daily life. Schwartz shows that these second-order decisions can be divided into general categories of effectiveness for different situations: presumptions, standards, and cultural codes. Each of these methods are useful ways people use to parse the vast array of choices they confront.
  • Missed Opportunities. Schwartz finds that when people are faced with having to choose one option out of many desirable choices, they will begin to consider hypothetical trade-offs. Their options are evaluated in terms of missed opportunities instead of the opportunity’s potential. Schwartz maintains that one of the downsides of making trade-offs is it alters how we feel about the decisions we face; afterwards, it affects the level of satisfaction we experience from our decision. While psychologists have known for years about the harmful effects of negative emotion on decision making, Schwartz points to recent evidence showing how positive emotion has the opposite effect: in general, subjects are inclined to consider more possibilities when they are feeling happy.

Or summarized in a different way, we have the following factors:

  • Regret and anticipated regret
  • Opportunity costs
  • Escalation of expectations
  • Self-blame

You can extract this information from the videos located at the beginning of the post, which I highly recommend to preview.

Conclusions

I started this post by saying that the concepts behind The Paradox of Choice are similar to those found within the communist doctrines. I cannot remember much of the time when my home country was under communist regime but I’ve heard a lot of stories about what was back then. Although people had less choice and very often they had been forced to do things against their will, in general, they were a lot happier. This fits quite nicely with what Schwartz said at some point in his lecture: people usually find themselves being happier in the past, perhaps because of the lack of choice (paraphrased). I believe it is a personal thing but that idea is something I find true in many different ways.

Another example, I guess, of the The Paradox of Choice is mirrored by the folks at 37signals, which work I find quite fascinating and interesting to follow. Here follows a few snippets from their book Getting Real which refer to the concepts why less is usually more:

Conventional wisdom says that to beat your competitors you need to one-up them. If they have four features, you need five (or 15, or 25). If they’re spending x, you need to spend xx. If they have 20, you need 30…

…The answer is less. Do less than your competitors to beat them. Solve the simple problems and leave the hairy, difficult, nasty problems to everyone else. Instead of oneupping, try one-downing. Instead of outdoing, try underdoing…

We’ll cover the concept of less throughout this book, but for starters, less means:

  • Less features
  • Less options/preferences
  • Less people and corporate structure
  • Less meetings and abstractions
  • Less promises

(Getting Real: Build Less)

Follow the videos and the research and make up your own mind about what makes you happier: Less or More.