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

This Talk Choice and satisfaction

This Talk Choice and satisfaction Freedom, choice, wealth, and welfare

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

Is this good news or bad news? YES!

285 Brands of Cookies 75 Iced Teas 40 Toothpastes 230 Soups 175 Salad Dressings 275 Cereals 110 Televisions 30 VCRs and 50 DVD Players 6.5 Million Stereo Systems!!

Phone service: Local, long distance, cellular

Health Care: Direct marketing of drugs “Patient autonomy”

Retirement plans

Work: When to do it

Physical appearance: Botox Cosmetic Surgery

Marital and family arrangements

Identity

MAXIMIZING SATISFICING

Thus a paradox: Freedom of choice becomes tyranny of choice

Americans are richer than ever before

Americans are sadder than ever before

Americans are richer than ever before Americans are sadder than ever before Why?

Americans are richer than ever before Americans are sadder than ever before Why? Too much choice is part of the answer

What Too Much Choice Does Jams in a gourmet food store

What Too Much Choice Does Jams in a gourmet food store Chocolates in the laboratory

What Too Much Choice Does Jams in a gourmet food store Chocolates in the laboratory Snacks, soft drinks and beer in convenience stores

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

With so much choice, people may do better…

but they feel worse

Why Choice Makes People Miserable: 1. Regret and anticipated regret

Why Choice Makes People Miserable: 1. Regret and anticipated regret 2. Opportunity costs

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

Where to go on vacation? 1. Beaches of the Caribbean

Where to go on vacation? 1. Beaches of the Caribbean 2. Golf at Hilton Head

Where to go on vacation? 1. Beaches of the Caribbean 2. Golf at Hilton Head 3. Awesome power of the Rockies

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

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

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…

Why couldn’t I have found a place with beautiful beaches and great golf, and awesome power, and culture

The lesson of opportunity costs:

The more options you offer, the less attractive each of them will seem

Why Choice Makes People Miserable: 1. Regret 2. Opportunity costs 3. Escalation of expectations

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

Why Choice Makes People Miserable: 1. Regret 2. Opportunity costs 3. Escalation of expectations 4. Self-blame

Choice and Satisfaction: Conclusions As options increase, selection decreases

Choice and Satisfaction: Conclusions As options increase, selection decreases As options increase, satisfaction decreases

Freedom, choice, wealth, and welfare: Implications of the research

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!!

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)

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 government’s 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

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