The Paradox of Choice: Why More Is Less

by Barry Schwartz

Before these options were available, a buyer like myself had to settle for an imperfect fit, but at least purchasing jeans was a five-minute affair. Now it was a complex decision in which I was forced to invest time, energy, and no small amount of self-doubt, anxiety, and dread.

When people have no choice, life is almost unbearable. As the number of available choices increases, as it has in our consumer culture, the autonomy, control, and liberation this variety brings are powerful and positive. But as the number of choices keeps growing, negative aspects of having a multitude of options begin to appear.

hand, the fact that some choice is good doesn’t necessarily mean that more choice is better.

Freedom is essential to self-respect, public participation, mobility, and nourishment, but not all choice enhances freedom. In particular, increased choice among goods and services may contribute little or nothing to the kind of freedom that counts.

A typical supermarket carries more than 30,000 items. That’s a lot to choose from. And more than 20,000 new products hit the shelves every year, almost all of them doomed to failure.

consumers tend to return to the products they usually buy, not even noticing 75% of the items competing for their attention and their dollars.

AMERICANS SPEND MORE TIME SHOPPING THAN THE MEMBERS OF any other society. Americans go to shopping centers about once a week, more often than they go to houses of worship, and Americans now have more shopping centers than high schools.

If we’re rational, they tell us, added options can only make us better off as a society. Those of us who care will benefit, and those of us who don’t care can always ignore the added options. This view seems logically compelling; but empirically, it isn’t true.

First, an industry of marketers and advertisers makes products difficult or impossible to ignore. They are in our faces all the time. Second, we have a tendency to look around at what others are doing and use them as a standard of comparison. If the person sitting next to me on an airplane is using an extremely light, compact laptop computer with a large, crystal-clear screen, the choices for me as a consumer have just been expanded, whether I want them to be or not. Third, we may suffer from what economist Fred Hirsch referred to as the “tyranny of small decisions.” We say to ourselves, “Let’s go to one more store” or “Let’s look at one more catalog,” and not “Let’s go to all the stores” or “let’s look at all the catalogs.”

the “voluntary simplicity” movement. Its core idea is that we have too many choices, too many decisions, too little time to do what is really important.

a majority of people want more control over the details of their lives, but a majority of people also want to simplify their lives. There you have it—the paradox of our times.

Perhaps confidence in the market is justified. But even if it is, it shifts the burden of making decisions from the government to the individual.

the doctors on duty asked Gawande whether he wanted his daughter intubated. This was a decision that he wanted the doctors—people he had never met before—to make for him:

The effect, however, was just the reverse. In addition to the normal workplace wardrobe, employees had to create a “workplace casual” wardrobe. It couldn’t really be the sweats and T-shirts you wore around the house on the weekend.

WE HAVE ANOTHER KIND OF FREEDOM OF CHOICE IN MODERN SOCIETY that is surely unprecedented. We can choose our identities.

The transformation of choice in modern life is that choice in many facets of life has gone from implicit and often psychologically unreal to explicit and psychologically very real. So we now face a demand to make choices that is unparalleled in human history.

To say that we know what we want, therefore, means that these three utilities align, with expected utility being matched by experienced utility, and experienced utility faithfully reflected in remembered utility.

Unfortunately, providing consumers with useful decision-making information is not the point of all this advertising. The point of advertising is to sell brands.

The avalanche of electronic information we now face is such that in order to solve the problem of choosing from among 200 brands of cereal or 5,000 mutual funds, we must first solve the problem of choosing from 10,000 web sites offering to make us informed consumers.

most people give substantial weight to this kind of anecdotal “evidence,” perhaps so much so that it will cancel out the positive recommendation found in Consumer Reports. Most of us give weight to these kinds of stories because they are extremely vivid and based on a personal, detailed, face-to-face account.

the frequency of newspaper coverage and the respondents’ estimates of the frequency of death were almost perfectly correlated. People mistook the pervasiveness of newspaper stories about homicides, accidents, or fires—vivid, salient, and easily available to memory—as a sign of the frequency of the events these stories profiled.

the group predictions are better than the predictions of any individual.

department stores seem to have some of their merchandise on sale most of the time, to give the impression that customers are getting a bargain. The original ticket price becomes an anchor against which the sale price is compared.

Even if companies sell almost none of their highest-priced models, they can reap enormous benefits from producing such models because they help induce people to buy their cheaper (but still extremely expensive) ones.

What determines whether a given price represents a discount or a surcharge? Consumers certainly can’t tell from the price itself. In addition to the current price, potential buyers would need to know the standard or “reference” price. If the reference price of gas is $1.55, then those who pay cash are getting a discount. If the reference price is $1.45, then those who use credit are paying a surcharge.

when making choices among alternatives that involve a certain amount of risk or uncertainty, we prefer a small, sure gain to a larger, uncertain one.

When the possibilities involve losses, however, we will risk a large loss to avoid a smaller one.

based on one presentation, people chose risk, and based on the other, certainty. Just as in the matter of discounts and surcharges, it is the framing of the choice that affects our perception of it, and in turn affects what we choose.

the difference between the two cases has to do with the way in which we frame our “psychological accounts.”

A sure $100 and a fifty-fifty chance for $200 are in some sense equivalent. The fact that the payoff for the risky choice is double the payoff for the sure thing exactly compensates for the fact that the chances you’ll get the payoff are halved. But if you look at the graph, you’ll see that psychologically, you won’t feel twice as good with $200 in your pocket as you will with $100 in your pocket. You’ll feel about 1.7 times as good. So to make the gamble psychologically worthwhile to you, I’d have to offer you something like $240 for a heads. Thus, Kahneman and Tversky point out, people tend to avoid taking risks—they are “risk averse”—when they are deciding among potential gains, potential positive outcomes.

Notice that the curve falls steeply at the beginning and then gradually levels off. This reflects what might be called the “decreasing marginal disutility of losses.” Losing the first $100 hurts worse than losing the second $100. So although losing $200 may be twice as bad objectively as losing $100, it is not twice as bad subjectively.

Losing $100 produces a feeling of negativity that is more intense than the feelings of elation produced by a gain. Some studies have estimated that losses have more than twice the psychological impact as equivalent gains. The fact is, we all hate to lose, which Kahneman and Tversky refer to as loss aversion.

This phenomenon is called the endowment effect. Once something is given to you, it’s yours. Once it becomes part of your endowment, even after a very few minutes, giving it up will entail a loss.

The endowment effect helps explain why companies can afford to offer money-back guarantees on their products. Once people own them, the products are worth more to their owners than the mere cash value, because giving up the products would entail a loss.

That’s all that should matter. But it isn’t all that matters. To stay home is to incur a loss of $50, and people hate losses, so they drag themselves out to the game.

means that decisions require more effort. It makes mistakes more likely. It makes the psychological consequences of mistakes more severe.

Maximizers need to be assured that every purchase or decision was the best that could be made. Yet how can anyone truly know that any given option is absolutely the best possible? The only way to know is to check out all the alternatives.

The alternative to maximizing is to be a satisficer. To satisfice is to settle for something that is good enough and not worry about the possibility that there might be something better. A satisficer has criteria and standards. She searches until she finds an item that meets those standards, and at that point, she stops. As soon as she finds a sweater that meets her standard of fit, quality, and price in the very first store she enters, she buys it—end of story. She is not concerned about better sweaters or better bargains just around the corner.

maximizers aspire to achieve that goal. Thus, they spend a great deal of time and effort on the search, reading labels, checking out consumer magazines, and trying new products. Worse, after making a selection, they are nagged by the options they haven’t had time to investigate. In the end, they are likely to get less satisfaction out of the exquisite choices they make than will satisficers. When reality requires maximizers to compromise—to end a search and decide on something—apprehension about what might have been takes over.

believe that the goal of maximizing is a source of great dissatisfaction, that it can make people miserable—especially in a world that insists on providing an overwhelming number of choices, both trivial and not so trivial.

when all the costs (in time, money, and anguish) involved in getting information about all the options are factored in, satisficing is, in fact, the maximizing strategy. In other words, the best people can do, all things considered, is to satisfice.

people with high maximization scores experienced less satisfaction with life, were less happy, were less optimistic, and were more depressed than people with low maximization scores.

If you’re a satisficer and you choose something that’s good enough to meet your standards, you are less likely to care if something better is just around the corner. But if you’re a maximizer, such a discovery can be a source of real pain.

Whereas maximizers might do better objectively than satisficers, they tend to do worse subjectively. Imagine a maximizer who succeeds in buying a sweater after an extensive search—a better sweater than any but the luckiest satisficer would end up with. How does he feel about the sweater? Is he frustrated at how much time and work went into buying it? Is he imagining unexamined alternatives that might be better?

So we have to ask ourselves what counts when we assess the quality of a decision. Is it objective results or subjective experiences? What matters to us most of the time, I think, is how we feel about the decisions we make.

Getting the best objective result may not be worth much if we feel disappointed with it anyway.

I’m not saying that satisficers do not have standards. Satisficers may have very high standards. It’s just that they allow themselves to be satisfied once experiences meet those standards.

But maximizing is not a measure of efficiency. It is a state of mind. If your goal is to get the best, then you will not be comfortable with compromises dictated by the constraints imposed by reality.

perfectionists have very high standards that they don’t expect to meet, whereas maximizers have very high standards that they do expect to meet.

Perhaps if I spent some more time looking for better deals, I’d have more money. If I spent more time on my work, perhaps I’d be a better teacher. But I accept these “losses.”