January 8, 2004
Arnold Kling
Psychologist Barry Schwartz says that we may be worse off with more choice.
"As a culture, we are enamored of freedom, self-determination, and variety, and we are reluctant to give up any of our options," he writes with characteristic directness. "But clinging tenaciously to all the choices available to us contributes to bad decisions, to anxiety, stress, and dissatisfaction - even to clinical depression."
As someone who often brings home the "wrong" chocolate chips from the grocery store, I can relate to the examples in the article. However, the argument against choice runs up against the following problem: which choices would you eliminate in order to make people happier?
Still, I think there is something to the point that our economy sometimes just shows people what they cannot have. I wrote an essay that describes Las Vegas in those terms.
For Discussion. How does the theory of monopolistic competition explain the profusion of choice (in breakfast cereals, for example)?
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CATEGORIES: Behavioral Economics and Rationality (268)
I seem to remember this being a theme in Amartya Sen's work?
Options are valuable, even when not exercised.
How many choices do consumers make each day? How would you even measure this?
One approach I'm interested in is to look at the amount of information in a consumer decision (as in reduction in entropy a la Shannon).
For example, if you buy Pepsi over Coke 99% of the time, it's not a "real" choice is it? If it's a genuine 50/50 thing, then there couldn't be any more choice. The "bandwidth of consumption" might be measured as H(X) = -E[log Px] for distribution Px.
What does entropy maximimisation have to say about consumption behaviours?
Very good topic. More proof that school uniforms should be required. Unfortunately, it gives the idea of the Yugo more credence. =)
Monopolistic competition describes pure competition, except that products are not homogenous, but differentiated. If you look at breakfast cereals, for example, they all serve the same purpose, but they are different in their makeup of sweets, content grains, branding, etc.
This monopolistic competition, I think, only increases choice. It adds another layer of choice, since you have a choice between which type of cereal to have for breakfast, in addition to what kind of breakfast. Now you can choose between eggs and cereal, and then again between egg-beaters or real eggs, or Cereal X or Cereal Y.
The entire aim of branding is to exploit this effect of monopolistic competition. Firms will emphasize the differences of their own product, thereby reaching consumers that value their production's qualities.
Monopolistic competition itself increases choice dramatically, which is a good thing. While it may add to the complexity of the information that consumers need to have, it allows much more freedom in consumption. And with consumers still retaining complete freedom of choice on each purchase, they will continue to choose the products that are of highest quality at lowest cost, and the brands that are not bought go bankrupt. M-competition further increases the productive efficiency of the market.
I think information may be the key element to understand this paradox. Even if it appears 'free', information has a cost.
Say you are presented with a choice with 3 options. This problem carries with it the cost of gathering information to decide which of the 3 options is the best. If you are already familiar with the subject, the information cost is very low because you probably already have the necessary info or know where to get it cheaply (like a mechanic who has just the right tool to address the problem). If I give you 4, 5, or more options you will feel pleased because the benefit of each additional option outweighs your very low information cost in making your decision.
This situation is like a 'Hank Hill' in a Home Depot. He's happy because he feels like a kid in a toystore. On the other hand, if you don't know much about the subject each option carries with it a huge information cost to determine if it is the right one for your to pick. Unlike Hank, this would be like a person who knows nothing about tools in a Home Depot. They would feel confused, lost and slightly intimidated.
I think this would explain why sometimes more choices leads to less happiness.
Arnold,
This is why you never get the right 'choc. chips'. Since your wife probably does most of the food shopping she knows the chips inside and out and knows which ones she likes and which ones she doesn't. To her the aisle filled with different chips represents a wonderful array of choices. To you, lacking information, it represents a minefield filled with 'wrong choices' that will only get you yelled at!
You know, the extra choices generates some good job opportunities. If you can be the expert that guides the ignorant through the world of choice, you can probably make a good living!
Why not conclude that yes, tons of choice can indeed become something of a burden (or at least something to wrangle with), but that on balance it beats too little choice, let alone choice that's restricted from above?
Perhaps both things are true. In any case, it seems silly to deny that choice is preferable to its opposite; but it runs counter to a lot of people's experience to deny that it can get to be a bit much too. I mean, not everyone is thrilled to have to devote lots of time and energy to wading through tons of choices ...
"You know, the extra choices generates some good job opportunities. If you can be the expert that guides the ignorant through the world of choice, you can probably make a good living!"
What do you think those 4 guys on Queer Eye For the Straight Guy Do?
B, my mother-in-law could make a good living being a shopping consultant.
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