Economics

POST #21: The Choice Paradox’s Paradox

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The Choice Paradox is an interesting theory, first named as such by the economist Barry Schwartz, in his 2004 book of the same name, subtitled ‘Why More is Less’. The idea that being presented with more choice (over, for example, brands or types of a product) actually leads to less end happiness is one that I like. It seems satisfyingly counter-intuitive; surprising findings based on solid data. However, recent experiments have cast doubt on Schwartz’ thesis, and so you will have to excuse the strange title – the double ‘Paradox’ was too much to resist – and read on to make your own conclusions!

Imagine walking into a newsagents, and by the counter there are three or four different brands of chocolate. There aren’t many, and so your expectation of how good your choice will be is not too high. You evaluate each’s merits and detractions, and pick what you expect to be the best of the lot. As you bite into the Dairy Milk bar, you are pleasantly surprised – it’s actually quite yummy. End of story.

Contrast with this, second, scenario. You’ve just picked your newspaper, and you’re looking at the array of sweets on the counter. There’s at least sixteen, seventeen different options, and you think, there’s got to be the perfect choice here! You look, weighing up each one’s positives and negatives – it takes a while. You are suddenly experiencing a sort of paralysisWhat if you pick the wrong one? Eventually, you go for the Dairy Milk, and its perfectly good. But its not perfect, and you’re left wondering if you should have chosen something else, perhaps a packet of Polos. See? Your expectations were higher, so you were left dissatisfied.

And if you really had hated that chocolate bar? In situation one, the world is at fault. You did your best with the limited set of options. But in situation two, it was you who picked wrongly, you who made a bad decision. You who, after, will experience those depressed feelings.

Although that’s my own grossly simplified example, it highlights Barry Schwartz’s main points well enough. After explaining these ideas in a Ted Talk (at the bottom), he goes on to say:

The secret to happiness — this is what you all came for — the secret to happiness is low expectations.

So… the psychology of it sounds good to me. It’s at least partially relatable, and can be applied to all sorts of situations. One such is jam tasting in a gourmet food store. This experiment was carried out by Mark Lepper and Sheena Iyengar, and was described by Schwartz like this:

When researchers set up a display featuring a line of exotic, high-quality jams, customers who came by could taste samples, and they were given a coupon for a dollar off if they bought a jar. In one condition of the study, 6 varieties of the jam were available for tasting. In another, 24 varieties were available. In either case, the entire set of 24 varieties was available for purchase. The large array of jams attracted more people to the table than the small array, though in both cases people tasted about the same number of jams on average. When it came to buying, however, a huge difference became evident. Thirty percent of the people exposed to the small array of jams actually bought a jar; only 3 percent of those exposed to the large array of jams did so.

A twenty-seven percent difference in the buying of the jams – undeniably something was happening. But could that be down to exclusively the effects of choice, or even the effect of it at all? There are many other explanations to the increase in purchasing. A while ago, Freakonomics did a blog post with similar ideas (also linked at the bottom), and used the same quotation above. I was reading the comments, and this one particularly caught my eye as to the potential pitfalls of the experiment. It was written by Stan Hansen, and although the accuracy of it is questionable, it presents an alternative opinion.

Most people historically like a small number of jam flavors. Strawberry, Raspberry & Grape probably take a 80% collective market share. Introducing an experiment with 6 jams, and I am sure that those three were probably 3 of the 6, creates an environment where 50% of the choices are familiar. So when a customer walks up to the jam counter the outcome of “That jam tastes good, I should buy the jam” is 50%.
However introducing 24 jams is a different scenario. Now this time the odds of a customer picking a jam that is familiar is now down to 12.5%. And in this scenario, when presented with 24 jams, they probably are not going to jump for the most familiar, but rather try the crazy one – giving them a higher chance to go “Ewwww, I think I will pass on jam today.” I would take 50% over 12.5% any day.
I am not sure that the outcome of “Hmmm…. There are just so many choices, I think that I am confused and will move on” is as prevalent as originally thought. It is more likely that the odds of picking a gross jam were greater in experiment two.

Furthermore, when the psychologist Benjamin Scheibehenne decided to repeat a few of the experiments (including the jam one, and a nine others), he found not much evidence that lots of choice has negative effects. Curious, he and some colleagues decided to get together every study they could possibly find on the Choice Paradox. The result? The averages seemed to say that the amount of choice makes no difference at all. Hmmm.

But I still feel that there could be something in it. When I talked this over with my Dad, he immediately thought of Steve Jobs. In 1998, just after Jobs had returned to Apple, he consolidated all the existing computer models into the all-in-one iMac G3. It was a success; completely revitalising the brand. In fact, it can be seen as the starting moment of the rise to power that has led to the domination of Apple today in the consumer technology market.

So we end on a paradox; as to whether the Choice Paradox is paradoxical or not.

Any thoughts?

FURTHER READING:

https://www.ted.com/talks/barry_schwartz_on_the_paradox_of_choice?language=en

http://freakonomics.com/2009/12/02/is-the-paradox-of-choice-not-so-paradoxical-after-all/

https://en.wikipedia.org/wiki/Macintosh

 

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