The psychologist Barry Schwartz‘s book The Paradox of Choice (here’s his TED talk on the topic) was, for me at least, very persuasive. It made a compelling if counterintuitive argument: even though many people (economists especially) argue that more choice is almost always a good thing, Schwartz argued that too much choice is actually a bad thing, causing decision paralysis and unhappiness. That’s a simplistic rendering of Schwartz’s argument — there’s an obvious difference between having a lot of political candidates to choose from in an election and having a lot of flavors of jam to choose from in a supermarket — but that’s the gist.
Here’s how Schwartz describes the very memorable jam study, by the psychologists Mark Lepper and Sheena Iyengar:
When researchers set up [in a gourmet food store] 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.
Perhaps this result simply confirmed my personal bias, but it did resonate with me, and I often think of the jam experiment when I venture into a store — and, also often, promptly walk out without buying anything if the choice set is too large.
So it was a bit surprising to read Tim Harford‘s column here, in the Financial Times, which argues that the “paradox of choice” may not be real at all. Harford builds his case on both the profit-maximizing behavior of real firms as well as continuing research in the field:
It is hard to find much evidence that retailers are ferociously simplifying their offerings in an effort to boost sales. Starbucks boasts about its “87,000 drink combinations”; supermarkets are packed with options. This suggests that “choice demotivates” is not a universal human truth, but an effect that emerges under special circumstances.
Benjamin Scheibehenne, a psychologist at the University of Basel, was thinking along these lines when he decided (with Peter Todd and, later, Rainer Greifeneder) to design a range of experiments to figure out when choice demotivates, and when it does not.
But a curious thing happened almost immediately. They began by trying to replicate some classic experiments — such as the jam study, and a similar one with luxury chocolates. They couldn’t find any sign of the “choice is bad” effect. Neither the original Lepper-Iyengar experiments nor the new study appears to be at fault: the results are just different and we don’t know why.
After designing 10 different experiments in which participants were asked to make a choice, and finding very little evidence that variety caused any problems, Scheibehenne and his colleagues tried to assemble all the studies, published and unpublished, of the effect.
The average of all these studies suggests that offering lots of extra choices seems to make no important difference either way. There seem to be circumstances where choice is counterproductive but, despite looking hard for them, we don’t yet know much about what they are. Overall, says Scheibehenne: “If you did one of these studies tomorrow, the most probable result would be no effect.” Perhaps choice is not as paradoxical as some psychologists have come to believe. One way or another, we seem to be able to cope with it.
It is of course important to make a distinction between choice and complexity. One reason behind the smart nudge of having new employees at a company be automatically enrolled in a 401(k) plan is that the stack of paperwork and the large, complex set of options will turn some employees off from joining if left to their own devices.
But asking someone who knows nothing about investing to suddenly think about asset allocation, to choose between fixed-income and equity products, between value and growth funds, etc., is a lot more complex than asking her to choose between strawberry jam and marmalade. So even if jam studies of the future prove inconclusive, it still seems wise to streamline choices whose complexity might otherwise hamper a good outcome.
(Hat tip: Marginal Revolution)