Is the Paradox of Choice Not So Paradoxical After All?

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)

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  1. Tristan says:

    The difference between picking one of 24 gourment jams, and picking out an allocation for your 401K is that there’s no expert telling you that 1 of the jams is much better then the rest, or that 1 is much worse. Everyone pretty much agrees that any jam that you like is a good choice.

    With asset allocation (or any other similiar subject) there are lots of experts telling you that there’s essentially 1 correct choice, many sub-optimal choices and some terrible choices, and there are are way more combinations to pick from.

    When an employee is automatically set up in a 401K plan on the other hand, even if their contribution just goes in to a money market fund, they’re being told that any choice is a lot better then doing nothing, and that therefore the difference between different asset allocations isn’t as big a deal.

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  2. Arlen says:

    Could people have gotten better at making choices over the last decade? Are we getting more used to more options? Could the original experiment have targeted (intentionally or otherwise) a certain cohort that is less “skilled” at narrowing a field of options?

    It doesn’t seem unreasonable to think that people in the internet age are more used to coping (and thriving) with having almost infinite options.

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  3. Jon says:

    It does not follow that because retailers aren’t reducing the number of options they make available to the consumer, the paradox of choice does not exist.

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  4. Ben says:

    Is it just me, or does the experimental approach of Scheibehenne et al. smack of hasty and incomplete science? They did ten different experiments to elucidate the effect of the paradox of choice as demonstrated by an earlier experiment, yet NONE of those experiments tried to replicate the original?

    That there is some factor that can cause people to not buy jam is incontrovertible. The real question is whether that was an unanticipated confounding factor in the original experiment, or whether, in contrast, Scheibehenne’s own experiments had some confounding factor that prevented them from seeing the same results. Perhaps the additional 18 varieties of the jam were labeled “NOW WITH 20% LESS RAW SEWAGE”. Perhaps there’s a giant “DON’T SWEAT THE SMALL STUFF” poster right outside Scheibehenne’s lab. Regardless of where the difference lay, isn’t it disingenuous for Scheibehenne to simply throw up his hands and say “it’s a conundrum”? This isn’t a conundrum yet. It’s just not enough science.

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  5. Rick says:

    I think that last point is likely the key. In a context in which we are reasonably informed about our choices or comfortable making a choice despite a lack of knowledge due to the insignificance of the consequences (such as with jam), consumption choice is not that difficult. I would posit that choice of consumption is not the challenge, but rather the choice of what information to gather in advance of such a consumption choice that truly creates the issues Schwartz describes.

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  6. Greg says:

    I agree with Jon. Paradox of choice conclusions do not follow after retailer activity. Retailers have motivations other than — and usually stronger than — the paradox of choice when stocking their shelves, from vendor agreements to minimizing risk.

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  7. PaulD says:

    I think the person who is casually interested in the product does better with restricted choice, whereas the person who has a keen interest in the product (and thus understands all the variations/options) does well with a wider selection.

    For example, I’m a chocolate snob, and when I go down the candy aisle a good selection is essential. Lindt Bittersweet (made in Switzerland) is my chocolate of choice — I won’t touch the new Lindt Excellence line produced in Germany. (Yes, I have tasted it, and it’s just not the same.)

    I think a good compromise is to (pardon the pun) take a page from the Independent bookstore playbook: give lots of selection but recommend a particular product (say, with a little place-setting card) for newbies who aren’t sure what to get.

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  8. Cervantes says:

    >>Starbucks boasts about its “87,000 drink combinations”<< The key word here is combinations. How different are the 87,000 drinks from each other? How many ingredients does it take to produce 87,000 combinations? How much knowledge do you need to aquire in ordrer to imagine how the combination of these will taste? The deeper question is not choice, it is cost of information, and imagined cost of ignorance.

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    • Chad Lawson says:

      Thank you for pointing that out. I was locked on that sentence for a couple of minutes before I could move on.

      Starbucks may have 87,000 combinations but each comes from N decisions with P choices each where N and P are both small numbers.

      I’m glad I’m not the only one who locked onto that.

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