PSYCH/GralInt-TED Talks-Sheena Iyengar: The art of choosing & more /Barry Schwartz: The Paradox of Choice

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Sheena Iyengar: The art of choosing


Filmed Jul 2010 • Posted Jul 2010 • TEDGlobal 2010


Sheena Iyengar studies how we make choices -- and how we feel about the choices we make. At TEDGlobal, she talks about both trivial choices (Coke v. Pepsi) and profound ones, and shares her groundbreaking research that has uncovered some surprising attitudes about our decisions.

Sheena Iyengar studies how people choose (and what makes us think we're good at it).






































Transcript:


Today, I'm going to take you around the world in 18 minutes. My base of operations is in the U.S., but let's start at the other end of the map, in Kyoto, Japan, where I was living with a Japanese family while I was doing part of my dissertational research 15 years ago. I knew even then that I would encounter cultural differences and misunderstandings, but they popped up when I least expected it.

On my first day, I went to a restaurant, and I ordered a cup of green tea with sugar. After a pause, the waiter said, "One does not put sugar in green tea." "I know," I said. "I'm aware of this custom. But I really like my tea sweet." In response, he gave me an even more courteous version of the same explanation. "One does not put sugar in green tea." "I understand," I said, "that the Japanese do not put sugar in their green tea, but I'd like to put some sugar in my green tea." (Laughter) Surprised by my insistence, the waiter took up the issue with the manager. Pretty soon, a lengthy discussion ensued, and finally the manager came over to me and said, "I am very sorry. We do not have sugar." (Laughter) Well, since I couldn't have my tea the way I wanted it, I ordered a cup of coffee, which the waiter brought over promptly. Resting on the saucer were two packets of sugar.

My failure to procure myself a cup of sweet, green tea was not due to a simple misunderstanding. This was due to a fundamental difference in our ideas about choice. From my American perspective, when a paying customer makes a reasonable request based on her preferences, she has every right to have that request met. The American way, to quote Burger King, is to "have it your way," because, as Starbucks says, "happiness is in your choices." (Laughter) But from the Japanese perspective, it's their duty to protect those who don't know any better -- (Laughter) in this case, the ignorant gaijin -- from making the wrong choice. Let's face it: the way I wanted my tea was inappropriate according to cultural standards, and they were doing their best to help me save face.

Americans tend to believe that they've reached some sort of pinnacle in the way they practice choice. They think that choice, as seen through the American lens best fulfills an innate and universal desire for choice in all humans. Unfortunately, these beliefs are based on assumptions that don't always hold true in many countries, in many cultures. At times they don't even hold true at America's own borders. I'd like to discuss some of these assumptions and the problems associated with them. As I do so, I hope you'll start thinking about some of your own assumptions and how they were shaped by your backgrounds.

First assumption: if a choice affects you, then you should be the one to make it. This is the only way to ensure that your preferences and interests will be most fully accounted for. It is essential for success. In America, the primary locus of choice is the individual. People must choose for themselves, sometimes sticking to their guns, regardless of what other people want or recommend. It's called "being true to yourself." But do all individuals benefit from taking such an approach to choice? Mark Lepper and I did a series of studies in which we sought the answer to this very question. In one study, which we ran in Japantown, San Francisco, we brought seven- to nine-year-old Anglo- and Asian-American children into the laboratory, and we divided them up into three groups.

The first group came in, and they were greeted by Miss Smith, who showed them six big piles of anagram puzzles. The kids got to choose which pile of anagrams they would like to do, and they even got to choose which marker they would write their answers with. When the second group of children came in, they were brought to the same room, shown the same anagrams, but this time Miss Smith told them which anagrams to do and which markers to write their answers with. Now when the third group came in, they were told that their anagrams and their markers had been chosen by their mothers. (Laughter) In reality, the kids who were told what to do, whether by Miss Smith or their mothers, were actually given the very same activity, which their counterparts in the first group had freely chosen.

With this procedure, we were able to ensure that the kids across the three groups all did the same activity, making it easier for us to compare performance. Such small differences in the way we administered the activity yielded striking differences in how well they performed. Anglo-Americans, they did two and a half times more anagrams when they got to choose them, as compared to when it was chosen for them by Miss Smith or their mothers. It didn't matter who did the choosing, if the task was dictated by another, their performance suffered. In fact, some of the kids were visibly embarrassed when they were told that their mothers had been consulted. (Laughter) One girl named Mary said, "You asked my mother?"

(Laughter)

In contrast, Asian-American children performed best when they believed their mothers had made the choice, second best when they chose for themselves, and least well when it had been chosen by Miss Smith. A girl named Natsumi even approached Miss Smith as she was leaving the room and tugged on her skirt and asked, "Could you please tell my mommy I did it just like she said?" The first-generation children were strongly influenced by their immigrant parents' approach to choice. For them, choice was not just a way of defining and asserting their individuality, but a way to create community and harmony by deferring to the choices of people whom they trusted and respected. If they had a concept of being true to one's self, then that self, most likely, [was] composed, not of an individual, but of a collective. Success was just as much about pleasing key figures as it was about satisfying one's own preferences. Or, you could say that the individual's preferences were shaped by the preferences of specific others.

The assumption then that we do best when the individual self chooses only holds when that self is clearly divided from others. When, in contrast, two or more individuals see their choices and their outcomes as intimately connected, then they may amplify one another's success by turning choosing into a collective act. To insist that they choose independently might actually compromise both their performance and their relationships. Yet that is exactly what the American paradigm demands. It leaves little room for interdependence or an acknowledgment of individual fallibility. It requires that everyone treat choice as a private and self-defining act. People that have grown up in such a paradigm might find it motivating, but it is a mistake to assume that everyone thrives under the pressure of choosing alone.

The second assumption which informs the American view of choice goes something like this. The more choices you have, the more likely you are to make the best choice. So bring it on, Walmart, with 100,000 different products, and Amazon, with 27 million books and Match.com with -- what is it? -- 15 million date possibilities now. You will surely find the perfect match. Let's test this assumption by heading over to Eastern Europe. Here, I interviewed people who were residents of formerly communist countries, who had all faced the challenge of transitioning to a more democratic and capitalistic society. One of the most interesting revelations came not from an answer to a question, but from a simple gesture of hospitality. When the participants arrived for their interview, I offered them a set of drinks: Coke, Diet Coke, Sprite -- seven, to be exact.

During the very first session, which was run in Russia, one of the participants made a comment that really caught me off guard. "Oh, but it doesn't matter. It's all just soda. That's just one choice." (Murmuring) I was so struck by this comment that from then on, I started to offer all the participants those seven sodas, and I asked them, "How many choices are these?" Again and again, they perceived these seven different sodas, not as seven choices, but as one choice: soda or no soda. When I put out juice and water in addition to these seven sodas, now they perceived it as only three choices -- juice, water and soda. Compare this to the die-hard devotion of many Americans, not just to a particular flavor of soda, but to a particular brand. You know, research shows repeatedly that we can't actually tell the difference between Coke and Pepsi. Of course, you and I know that Coke is the better choice.

(Laughter)

For modern Americans who are exposed to more options and more ads associated with options than anyone else in the world, choice is just as much about who they are as it is about what the product is. Combine this with the assumption that more choices are always better, and you have a group of people for whom every little difference matters and so every choice matters. But for Eastern Europeans, the sudden availability of all these consumer products on the marketplace was a deluge. They were flooded with choice before they could protest that they didn't know how to swim. When asked, "What words and images do you associate with choice?" Grzegorz from Warsaw said, "Ah, for me it is fear. There are some dilemmas you see. I am used to no choice." Bohdan from Kiev said, in response to how he felt about the new consumer marketplace, "It is too much. We do not need everything that is there." A sociologist from the Warsaw Survey Agency explained, "The older generation jumped from nothing to choice all around them. They were never given a chance to learn how to react." And Tomasz, a young Polish man said, "I don't need twenty kinds of chewing gum. I don't mean to say that I want no choice, but many of these choices are quite artificial."

In reality, many choices are between things that are not that much different. The value of choice depends on our ability to perceive differences between the options. Americans train their whole lives to play "spot the difference." They practice this from such an early age that they've come to believe that everyone must be born with this ability. In fact, though all humans share a basic need and desire for choice, we don't all see choice in the same places or to the same extent. When someone can't see how one choice is unlike another, or when there are too many choices to compare and contrast, the process of choosing can be confusing and frustrating. Instead of making better choices, we become overwhelmed by choice, sometimes even afraid of it. Choice no longer offers opportunities, but imposes constraints. It's not a marker of liberation, but of suffocation by meaningless minutiae. In other words, choice can develop into the very opposite of everything it represents in America when it is thrust upon those who are insufficiently prepared for it. But it is not only other people in other places that are feeling the pressure of ever-increasing choice. Americans themselves are discovering that unlimited choice seems more attractive in theory than in practice.

We all have physical, mental and emotional (Laughter) limitations that make it impossible for us to process every single choice we encounter, even in the grocery store, let alone over the course of our entire lives. A number of my studies have shown that when you give people 10 or more options when they're making a choice, they make poorer decisions, whether it be health care, investment, other critical areas. Yet still, many of us believe that we should make all our own choices and seek out even more of them.

This brings me to the third, and perhaps most problematic, assumption: "You must never say no to choice." To examine this, let's go back to the U.S. and then hop across the pond to France. Right outside Chicago, a young couple, Susan and Daniel Mitchell, were about to have their first baby. They'd already picked out a name for her, Barbara, after her grandmother. One night, when Susan was seven months pregnant, she started to experience contractions and was rushed to the emergency room. The baby was delivered through a C-section, but Barbara suffered cerebral anoxia, a loss of oxygen to the brain. Unable to breathe on her own, she was put on a ventilator. Two days later, the doctors gave the Mitchells a choice: They could either remove Barbara off the life support, in which case she would die within a matter of hours, or they could keep her on life support, in which case she might still die within a matter of days. If she survived, she would remain in a permanent vegetative state, never able to walk, talk or interact with others. What do they do? What do any parent do?

In a study I conducted with Simona Botti and Kristina Orfali, American and French parents were interviewed. They had all suffered the same tragedy. In all cases, the life support was removed, and the infants had died. But there was a big difference. In France, the doctors decided whether and when the life support would be removed, while in the United States, the final decision rested with the parents. We wondered: does this have an effect on how the parents cope with the loss of their loved one? We found that it did. Even up to a year later, American parents were more likely to express negative emotions, as compared to their French counterparts. French parents were more likely to say things like, "Noah was here for so little time, but he taught us so much. He gave us a new perspective on life."

American parents were more likely to say things like, "What if? What if?" Another parent complained, "I feel as if they purposefully tortured me. How did they get me to do that?" And another parent said, "I feel as if I've played a role in an execution." But when the American parents were asked if they would rather have had the doctors make the decision, they all said, "No." They could not imagine turning that choice over to another, even though having made that choice made them feel trapped, guilty, angry. In a number of cases they were even clinically depressed. These parents could not contemplate giving up the choice, because to do so would have gone contrary to everything they had been taught and everything they had come to believe about the power and purpose of choice.

In her essay, "The White Album," Joan Didion writes, "We tell ourselves stories in order to live. We interpret what we see, select the most workable of the multiple choices. We live entirely by the imposition of a narrative line upon disparate images, by the idea with which we have learned to freeze the shifting phantasmagoria, which is our actual experience." The story Americans tell, the story upon which the American dream depends, is the story of limitless choice. This narrative promises so much: freedom, happiness, success. It lays the world at your feet and says, "You can have anything, everything." It's a great story, and it's understandable why they would be reluctant to revise it. But when you take a close look, you start to see the holes, and you start to see that the story can be told in many other ways.

Americans have so often tried to disseminate their ideas of choice, believing that they will be, or ought to be, welcomed with open hearts and minds. But the history books and the daily news tell us it doesn't always work out that way. The phantasmagoria, the actual experience that we try to understand and organize through narrative, varies from place to place. No single narrative serves the needs of everyone everywhere. Moreover, Americans themselves could benefit from incorporating new perspectives into their own narrative, which has been driving their choices for so long.

Robert Frost once said that, "It is poetry that is lost in translation." This suggests that whatever is beautiful and moving, whatever gives us a new way to see, cannot be communicated to those who speak a different language. But Joseph Brodsky said that, "It is poetry that is gained in translation," suggesting that translation can be a creative, transformative act. When it comes to choice, we have far more to gain than to lose by engaging in the many translations of the narratives. Instead of replacing one story with another, we can learn from and revel in the many versions that exist and the many that have yet to be written. No matter where we're from and what your narrative is, we all have a responsibility to open ourselves up to a wider array of what choice can do, and what it can represent. And this does not lead to a paralyzing moral relativism. Rather, it teaches us when and how to act. It brings us that much closer to realizing the full potential of choice, to inspiring the hope and achieving the freedom that choice promises but doesn't always deliver. If we learn to speak to one another, albeit through translation, then we can begin to see choice in all its strangeness, complexity and compelling beauty.

Thank you.

(Applause)

Bruno Giussani: Thank you. Sheena, there is a detail about your biography that we have not written in the program book. But by now it's evident to everyone in this room. You're blind. And I guess one of the questions on everybody's mind is: How does that influence your study of choosing because that's an activity that for most people is associated with visual inputs like aesthetics and color and so on?

Sheena Iyengar: Well, it's funny that you should ask that because one of the things that's interesting about being blind is you actually get a different vantage point when you observe the way sighted people make choices. And as you just mentioned, there's lots of choices out there that are very visual these days. Yeah, I -- as you would expect -- get pretty frustrated by choices like what nail polish to put on because I have to rely on what other people suggest. And I can't decide. And so one time I was in a beauty salon, and I was trying to decide between two very light shades of pink. And one was called "Ballet Slippers." And the other one was called "Adorable." (Laughter) And so I asked these two ladies, and the one lady told me, "Well, you should definitely wear 'Ballet Slippers.'" "Well, what does it look like?" "Well, it's a very elegant shade of pink." "Okay, great." The other lady tells me to wear "Adorable." "What does it look like?" "It's a glamorous shade of pink." And so I asked them, "Well, how do I tell them apart? What's different about them?" And they said, "Well, one is elegant, the other one's glamorous." Okay, we got that. And the only thing they had consensus on: well, if I could see them, I would clearly be able to tell them apart.

(Laughter)

And what I wondered was whether they were being affected by the name or the content of the color, so I decided to do a little experiment. So I brought these two bottles of nail polish into the laboratory, and I stripped the labels off. And I brought women into the laboratory, and I asked them, "Which one would you pick?" 50 percent of the women accused me of playing a trick, of putting the same color nail polish in both those bottles. (Laughter) (Applause) At which point you start to wonder who the trick's really played on. Now, of the women that could tell them apart, when the labels were off, they picked "Adorable," and when the labels were on, they picked "Ballet Slippers." So as far as I can tell, a rose by any other name probably does look different and maybe even smells different.

BG: Thank you. Sheena Iyengar. Thank you Sheena.

(Applause)



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Sheena Iyengar: How to make choosing easier

Filmed Nov 2011 • Posted Jan 2012 • TEDSalon NY2011


We all want customized experiences and products -- but when faced with 700 options, consumers freeze up. With fascinating new research, Sheena Iyengar demonstrates how businesses (and others) can improve the experience of choosing.

Sheena Iyengar studies how people choose (and what makes us think we're good at it).





























Transcript:



Do you know how many choices you make in a typical day? Do you know how many choices you make in typical week? I recently did a survey with over 2,000 Americans, and the average number of choices that the typical American reports making is about 70 in a typical day. There was also recently a study done with CEOs in which they followed CEOs around for a whole week. And these scientists simply documented all the various tasks that these CEOs engaged in and how much time they spent engaging in making decisions related to these tasks. And they found that the average CEO engaged in about 139 tasks in a week. Each task was made up of many, many, many sub-choices of course. 50 percent of their decisions were made in nine minutes or less. Only about 12 percent of the decisions did they make an hour or more of their time. Think about your own choices. Do you know how many choices make it into your nine minute category versus your one hour category? How well do you think you're doing at managing those choices?

Today I want to talk about one of the biggest modern day choosing problems that we have, which is the choice overload problem. I want to talk about the problem and some potential solutions. Now as I talk about this problem, I'm going to have some questions for you and I'm going to want to know your answers. So when I ask you a question, since I'm blind, only raise your hand if you want to burn off some calories. (Laughter) Otherwise, when I ask you a question, and if your answer is yes, I'd like you to clap your hands. So for my first question for you today: Are you guys ready to hear about the choice overload problem? (Applause) Thank you.

So when I was a graduate student at Stanford University, I used to go to this very, very upscale grocery store; at least at that time it was truly upscale. It was a store called Draeger's. Now this store, it was almost like going to an amusement park. They had 250 different kinds of mustards and vinegars and over 500 different kinds of fruits and vegetables and more than two dozen different kinds of bottled water -- and this was during a time when we actually used to drink tap water. I used to love going to this store, but on one occasion I asked myself, well how come you never buy anything? Here's their olive oil aisle. They had over 75 different kinds of olive oil, including those that were in a locked case that came from thousand-year-old olive trees.

So I one day decided to pay a visit to the manager, and I asked the manager, "Is this model of offering people all this choice really working?" And he pointed to the busloads of tourists that would show up everyday, with cameras ready usually. We decided to do a little experiment, and we picked jam for our experiment. Here's their jam aisle. They had 348 different kinds of jam. We set up a little tasting booth right near the entrance of the store. We there put out six different flavors of jam or 24 different flavors of jam, and we looked at two things: First, in which case were people more likely to stop, sample some jam? More people stopped when there were 24, about 60 percent, than when there were six, about 40 percent. The next thing we looked at is in which case were people more likely to buy a jar of jam. Now we see the opposite effect. Of the people who stopped when there were 24, only three percent of them actually bought a jar of jam. Of the people who stopped when there were six, well now we saw that 30 percent of them actually bought a jar of jam. Now if you do the math, people were at least six times more likely to buy a jar of jam if they encountered six than if they encountered 24.

Now choosing not to buy a jar of jam is probably good for us -- at least it's good for our waistlines -- but it turns out that this choice overload problem affects us even in very consequential decisions. We choose not to choose, even when it goes against our best self-interests. So now for the topic of today: financial savings. Now I'm going to describe to you a study I did with Gur Huberman, Emir Kamenica, Wei Jang where we looked at the retirement savings decisions of nearly a million Americans from about 650 plans all in the U.S. And what we looked at was whether the number of fund offerings available in a retirement savings plan, the 401(k) plan, does that affect people's likelihood to save more for tomorrow. And what we found was that indeed there was a correlation. So in these plans, we had about 657 plans that ranged from offering people anywhere from two to 59 different fund offerings. And what we found was that, the more funds offered, indeed, there was less participation rate.

So if you look at the extremes, those plans that offered you two funds, participation rates were around in the mid-70s -- still not as high as we want it to be. In those plans that offered nearly 60 funds, participation rates have now dropped to about the 60th percentile. Now it turns out that even if you do choose to participate when there are more choices present, even then, it has negative consequences. So for those people who did choose to participate, the more choices available, the more likely people were to completely avoid stocks or equity funds. The more choices available, the more likely they were to put all their money in pure money market accounts. Now neither of these extreme decisions are the kinds of decisions that any of us would recommend for people when you're considering their future financial well-being.

Well, over the past decade, we have observed three main negative consequences to offering people more and more choices. They're more likely to delay choosing -- procrastinate even when it goes against their best self-interest. They're more likely to make worse choices -- worse financial choices, medical choices. They're more likely to choose things that make them less satisfied, even when they do objectively better. The main reason for this is because, we might enjoy gazing at those giant walls of mayonnaises, mustards, vinegars, jams, but we can't actually do the math of comparing and contrasting and actually picking from that stunning display. So what I want to propose to you today are four simple techniques -- techniques that we have tested in one way or another in different research venues -- that you can easily apply in your businesses.

The first: Cut. You've heard it said before, but it's never been more true than today, that less is more. People are always upset when I say, "Cut." They're always worried they're going to lose shelf space. But in fact, what we're seeing more and more is that if you are willing to cut, get rid of those extraneous redundant options, well there's an increase in sales, there's a lowering of costs, there is an improvement of the choosing experience. When Proctor & Gamble went from 26 different kinds of Head & Shoulders to 15, they saw an increase in sales by 10 percent. When the Golden Cat Corporation got rid of their 10 worst-selling cat litter products, they saw an increase in profits by 87 percent -- a function of both increase in sales and lowering of costs. You know, the average grocery store today offers you 45,000 products. The typical Walmart today offers you 100,000 products. But the ninth largest retailer, the ninth biggest retailer in the world today is Aldi, and it offers you only 1,400 products -- one kind of canned tomato sauce.

Now in the financial savings world, I think one of the best examples that has recently come out on how to best manage the choice offerings has actually been something that David Laibson was heavily involved in designing, which was the program that they have at Harvard. Every single Harvard employee is now automatically enrolled in a lifecycle fund. For those people who actually want to choose, they're given 20 funds, not 300 or more funds. You know, often, people say, "I don't know how to cut. They're all important choices." And the first thing I do is I ask the employees, "Tell me how these choices are different from one another. And if your employees can't tell them apart, neither can your consumers."

Now before we started our session this afternoon, I had a chat with Gary. And Gary said that he would be willing to offer people in this audience an all-expenses-paid free vacation to the most beautiful road in the world. Here's a description of the road. And I'd like you to read it. And now I'll give you a few seconds to read it and then I want you to clap your hands if you're ready to take Gary up on his offer. (Light clapping) Okay. Anybody who's ready to take him up on his offer. Is that all? All right, let me show you some more about this. (Laughter) You guys knew there was a trick, didn't you. (Honk) Now who's ready to go on this trip. (Applause) (Laughter) I think I might have actually heard more hands.

All right. Now in fact, you had objectively more information the first time around than the second time around, but I would venture to guess that you felt that it was more real the second time around. Because the pictures made it feel more real to you. Which brings me to the second technique for handling the choice overload problem, which is concretization. That in order for people to understand the differences between the choices, they have to be able to understand the consequences associated with each choice, and that the consequences need to be felt in a vivid sort of way, in a very concrete way. Why do people spend an average of 15 to 30 percent more when they use an ATM card or a credit card as opposed to cash? Because it doesn't feel like real money. And it turns out that making it feel more concrete can actually be a very positive tool to use in getting people to save more.

So a study that I did with Shlomo Benartzi and Alessandro Previtero, we did a study with people at ING -- employees that are all working at ING -- and now these people were all in a session where they're doing enrollment for their 401(k) plan. And during that session, we kept the session exactly the way it used to be, but we added one little thing. The one little thing we added was we asked people to just think about all the positive things that would happen in your life if you saved more. By doing that simple thing, there was an increase in enrollment by 20 percent and there was an increase in the amount of people willing to save or the amount that they were willing to put down into their savings account by four percent.

The third technique: Categorization. We can handle more categories than we can handle choices. So for example, here's a study we did in a magazine aisle. It turns out that in Wegmans grocery stores up and down the northeast corridor, the magazine aisles range anywhere from 331 different kinds of magazines all the way up to 664. But you know what? If I show you 600 magazines and I divide them up into 10 categories, versus I show you 400 magazines and divide them up into 20 categories, you believe that I have given you more choice and a better choosing experience if I gave you the 400 than if I gave you the 600. Because the categories tell me how to tell them apart.

Here are two different jewelry displays. One is called "Jazz" and the other one is called "Swing." If you think the display on the left is Swing and the display on the right is Jazz, clap your hands. (Light Clapping) Okay, there's some. If you think the one on the left is Jazz and the one on the right is Swing, clap your hands. Okay, a bit more. Now it turns out you're right. The one on the left is Jazz and the one on the right is Swing, but you know what? This is a highly useless categorization scheme. (Laughter) The categories need to say something to the chooser, not the choice-maker. And you often see that problem when it comes down to those long lists of all these funds. Who are they actually supposed to be informing?

My fourth technique: Condition for complexity. It turns out we can actually handle a lot more information than we think we can, we've just got to take it a little easier. We have to gradually increase the complexity. I'm going to show you one example of what I'm talking about. Let's take a very, very complicated decision: buying a car. Here's a German car manufacturer that gives you the opportunity to completely custom make your car. You've got to make 60 different decisions, completely make up your car. Now these decisions vary in the number of choices that they offer per decision. Car colors, exterior car colors -- I've got 56 choices. Engines, gearshift -- four choices. So now what I'm going to do is I'm going to vary the order in which these decisions appear. So half of the customers are going to go from high choice, 56 car colors, to low choice, four gearshifts. The other half of the customers are going to go from low choice, four gearshifts, to 56 car colors, high choice.

What am I going to look at? How engaged you are. If you keep hitting the default button per decision, that means you're getting overwhelmed, that means I'm losing you. What you find is the people who go from high choice to low choice, they're hitting that default button over and over and over again. We're losing them. They go from low choice to high choice, they're hanging in there. It's the same information. It's the same number of choices. The only thing that I have done is I have varied the order in which that information is presented. If I start you off easy, I learn how to choose. Even though choosing gearshift doesn't tell me anything about my preferences for interior decor, it still prepares me for how to choose. It also gets me excited about this big product that I'm putting together, so I'm more willing to be motivated to be engaged.

So let me recap. I have talked about four techniques for mitigating the problem of choice overload -- cut -- get rid of the extraneous alternatives; concretize -- make it real; categorize -- we can handle more categories, less choices; condition for complexity. All of these techniques that I'm describing to you today are designed to help you manage your choices -- better for you, you can use them on yourself, better for the people that you are serving. Because I believe that the key to getting the most from choice is to be choosy about choosing. And the more we're able to be choosy about choosing the better we will be able to practice the art of choosing.

Thank you very much.

(Applause)


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Barry Schwartz: The paradox of choice

Filmed Jul 2005 • Posted Sep 2006 • TEDGlobal 2005




Psychologist Barry Schwartz takes aim at a central tenet of western societies: freedom of choice. In Schwartz's estimation, choice has made us not freer but more paralyzed, not happier but more dissatisfied.

Barry Schwartz studies the link between economics and psychology, offering startling insights into modern life. Lately, working with Ken Sharpe, he's studying wisdom.




































Transcript:



I'm going to talk to you about some stuff that's in this book of mine that I hope will resonate with other things you've already heard, and I'll try to make some connections myself, in case you miss them. I want to start with what I call the "official dogma." The official dogma of what? The official dogma of all western industrial societies. And the official dogma runs like this: if we are interested in maximizing the welfare of our citizens, the way to do that is to maximize individual freedom. The reason for this is both that freedom is in and of itself good, valuable, worthwhile, essential to being human. And because if people have freedom, then each of us can act on our own to do the things that will maximize our welfare, and no one has to decide on our behalf. The way to maximize freedom is to maximize choice.

The more choice people have, the more freedom they have, and the more freedom they have, the more welfare they have.

This, I think, is so deeply embedded in the water supply that it wouldn't occur to anyone to question it. And it's also deeply embedded in our lives. I'll give you some examples of what modern progress has made possible for us. This is my supermarket. Not such a big one. I want to say just a word about salad dressing. 175 salad dressings in my supermarket, if you don't count the 10 extra-virgin olive oils and 12 balsamic vinegars you could buy to make a very large number of your own salad dressings, in the off-chance that none of the 175 the store has on offer suit you. So this is what the supermarket is like. And then you go to the consumer electronics store to set up a stereo system -- speakers, CD player, tape player, tuner, amplifier -- and in this one single consumer electronics store, there are that many stereo systems. We can construct six-and-a-half-million different stereo systems out of the components that are on offer in one store.

You've got to admit that's a lot of choice. In other domains -- the world of communications. There was a time, when I was a boy, when you could get any kind of telephone service you wanted, as long as it came from Ma Bell. You rented your phone. You didn't buy it. One consequence of that, by the way, is that the phone never broke. And those days are gone. We now have an almost unlimited variety of phones, especially in the world of cell phones. These are cell phones of the future. My favorite is the middle one -- the MP3 player, nose hair trimmer, and creme brulee torch. And if by some chance you haven't seen that in your store yet, you can rest assured that one day soon you will. And what this does is it leads people to walk into their stores asking this question. And do you know what the answer to this question now is? The answer is "No." It is not possible to buy a cell phone that doesn't do too much.

So, in other aspects of life that are much more significant than buying things, the same explosion of choice is true. Health care -- it is no longer the case in the United States that you go to the doctor, and the doctor tells you what to do. Instead, you go to the doctor, and the doctor tells you, "Well, we could do A, or we could do B. A has these benefits, and these risks. B has these benefits, and these risks. What do you want to do?" And you say, "Doc, what should I do?" And the doc says, "A has these benefits and risks, and B has these benefits and risks. What do you want to do?" And you say, "If you were me, Doc, what would you do?" And the doc says, "But I'm not you." And the result is -- we call it "patient autonomy," which makes it sound like a good thing, but what it really is is a shifting of the burden and the responsibility for decision-making from somebody who knows something -- namely, the doctor -- to somebody who knows nothing and is almost certainly sick and thus not in the best shape to be making decisions -- namely, the patient.

There's enormous marketing of prescription drugs to people like you and me, which, if you think about it, makes no sense at all, since we can't buy them. Why do they market to us if we can't buy them? The answer is that they expect us to call our doctors the next morning and ask for our prescriptions to be changed. Something as dramatic as our identity has now become a matter of choice, as this slide is meant to indicate. We don't inherit an identity; we get to invent it. And we get to re-invent ourselves as often as we like. And that means that everyday, when you wake up in the morning, you have to decide what kind of person you want to be. With respect to marriage and family, there was a time when the default assumption that almost everyone had is that you got married as soon as you could, and then you started having kids as soon as you could. The only real choice was who, not when, and not what you did after.

Nowadays, everything is very much up for grabs. I teach wonderfully intelligent students, and I assign 20 percent less work than I used to. And it's not because they're less smart, and it's not because they're less diligent. It's because they are preoccupied, asking themselves, "Should I get married or not? Should I get married now? Should I get married later? Should I have kids first, or a career first?" All of these are consuming questions. And they're going to answer these questions, whether or not it means not doing all the work I assign and not getting a good grade in my courses. And indeed they should. These are important questions to answer. Work -- we are blessed, as Carl was pointing out, with the technology that enables us to work every minute of every day from any place on the planet -- except the Randolph Hotel.

(Laughter)

There is one corner, by the way, that I'm not going to tell anybody about, where the WiFi works. I'm not telling you about it because I want to use it. So what this means, this incredible freedom of choice we have with respect to work, is that we have to make a decision, again and again and again, about whether we should or shouldn't be working. We can go to watch our kid play soccer, and we have our cell phone on one hip, and our Blackberry on our other hip, and our laptop, presumably, on our laps. And even if they're all shut off, every minute that we're watching our kid mutilate a soccer game, we are also asking ourselves, "Should I answer this cell phone call? Should I respond to this email? Should I draft this letter?" And even if the answer to the question is "no," it's certainly going to make the experience of your kid's soccer game very different than it would've been. So everywhere we look, big things and small things, material things and lifestyle things, life is a matter of choice. And the world we used to live in looked like this. That is to say, there were some choices, but not everything was a matter of choice. And the world we now live in looks like this. And the question is, is this good news, or bad news? And the answer is yes.

(Laughter)

We all know what's good about it, so I'm going to talk about what's bad about it. All of this choice has two effects, two negative effects on people. One effect, paradoxically, is that it produces paralysis, rather than liberation. With so many options to choose from, people find it very difficult to choose at all. I'll give you one very dramatic example of this: a study that was done of investments in voluntary retirement plans. A colleague of mine got access to investment records from Vanguard, the gigantic mutual fund company of about a million employees and about 2,000 different workplaces. And what she found is that for every 10 mutual funds the employer offered, rate of participation went down two percent. You offer 50 funds -- 10 percent fewer employees participate than if you only offer five. Why? Because with 50 funds to choose from, it's so damn hard to decide which fund to choose that you'll just put it off until tomorrow. And then tomorrow, and then tomorrow, and tomorrow, and tomorrow, and of course tomorrow never comes. Understand that not only does this mean that people are going to have to eat dog food when they retire because they don't have enough money put away, it also means that making the decision is so hard that they pass up significant matching money from the employer. By not participating, they are passing up as much as 5,000 dollars a year from the employer, who would happily match their contribution. So paralysis is a consequence of having too many choices. And I think it makes the world look like this.

(Laughter)

You really want to get the decision right if it's for all eternity, right? You don't want to pick the wrong mutual fund, or even the wrong salad dressing. So that's one effect. The second effect is that even if we manage to overcome the paralysis and make a choice, we end up less satisfied with the result of the choice than we would be if we had fewer options to choose from. And there are several reasons for this. One of them is that with a lot of different salad dressings to choose from, if you buy one, and it's not perfect -- and, you know, what salad dressing is? -- it's easy to imagine that you could have made a different choice that would have been better. And what happens is this imagined alternative induces you to regret the decision you made, and this regret subtracts from the satisfaction you get out of the decision you made, even if it was a good decision. The more options there are, the easier it is to regret anything at all that is disappointing about the option that you chose.

Second, what economists call "opportunity costs." Dan Gilbert made a big point this morning of talking about how much the way in which we value things depends on what we compare them to. Well, when there are lots of alternatives to consider, it is easy to imagine the attractive features of alternatives that you reject, that make you less satisfied with the alternative that you've chosen. Here's an example. For those of you who aren't New Yorkers, I apologize.

(Laughter)

But here's what you're supposed to be thinking. Here's this couple on the Hamptons. Very expensive real estate. Gorgeous beach. Beautiful day. They have it all to themselves. What could be better? "Well, damn it," this guy is thinking, "It's August. Everybody in my Manhattan neighborhood is away. I could be parking right in front of my building." And he spends two weeks nagged by the idea that he is missing the opportunity, day after day, to have a great parking space. Opportunity costs subtract from the satisfaction we get out of what we choose, even when what we choose is terrific. And the more options there are to consider, the more attractive features of these options are going to be reflected by us as opportunity costs. Here's another example. Now this cartoon makes a lot of points. It makes points about living in the moment as well, and probably about doing things slowly. But one point it makes is that whenever you're choosing one thing, you're choosing not to do other things. And those other things may have lots of attractive features, and it's going to make what you're doing less attractive.

Third: escalation of expectations. This hit me when I went to replace my jeans. I wear jeans almost all the time. And there was a time when jeans came in one flavor, and you bought them, and they fit like crap, and they were incredibly uncomfortable, and if you wore them long enough and washed them enough times, they started to feel OK. So I went to replace my jeans after years and years of wearing these old ones, and I said, you know, "I want a pair of jeans. Here's my size." And the shopkeeper said, "Do you want slim fit, easy fit, relaxed fit? You want button fly or zipper fly? You want stonewashed or acid-washed? Do you want them distressed? You want boot cut, you want tapered, blah blah blah ..." On and on he went. My jaw dropped, and after I recovered, I said, "I want the kind that used to be the only kind."

(Laughter)

He had no idea what that was, so I spent an hour trying on all these damn jeans, and I walked out of the store -- truth! -- with the best-fitting jeans I had ever had. I did better. All this choice made it possible for me to do better. But I felt worse. Why? I wrote a whole book to try to explain this to myself. (Laughter) The reason I felt worse is that, with all of these options available, my expectations about how good a pair of jeans should be went up. I had very low -- I had no particular expectations when they only came in one flavor. When they came in 100 flavors, damn it, one of them should've been perfect. And what I got was good, but it wasn't perfect. And so I compared what I got to what I expected, and what I got was disappointing in comparison to what I expected. Adding options to people's lives can't help but increase the expectations people have about how good those options will be. And what that's going to produce is less satisfaction with results, even when they're good results. Nobody in the world of marketing knows this, because if they did, you wouldn't all know what this was about. The truth is more like this.

(Laughter)

The reason that everything was better back when everything was worse is that when everything was worse, it was actually possible for people to have experiences that were a pleasant surprise. Nowadays, the world we live in -- we affluent, industrialized citizens, with perfection the expectation -- the best you can ever hope for is that stuff is as good as you expect it to be. You will never be pleasantly surprised because your expectations, my expectations, have gone through the roof. The secret to happiness -- this is what you all came for -- the secret to happiness is low expectations.

(Laughter)

(Applause)

I want to say -- just a little autobiographical moment -- that I actually am married to a wife, and she's really quite wonderful. I couldn't have done better. I didn't settle. But settling isn't always such a bad thing. Finally, one consequence of buying a bad-fitting pair of jeans when there is only one kind to buy is that when you are dissatisfied, and you ask why, who's responsible, the answer is clear: the world is responsible. What could you do? When there are hundreds of different styles of jeans available, and you buy one that is disappointing, and you ask why, who's responsible? It is equally clear that the answer to the question is you. You could have done better. With a hundred different kinds of jeans on display, there is no excuse for failure. And so when people make decisions, and even though the results of the decisions are good, they feel disappointed about them; they blame themselves.

Clinical depression has exploded in the industrial world in the last generation. I believe a significant -- not the only, but a significant -- contributor to this explosion of depression, and also suicide, is that people have experiences that are disappointing because their standards are so high, and then when they have to explain these experiences to themselves, they think they're at fault. And so the net result is that we do better in general, objectively, and we feel worse. So let me remind you. This is the official dogma, the one that we all take to be true, and it's all false. It is not true. There's no question that some choice is better than none, but it doesn't follow from that that more choice is better than some choice. There's some magical amount. I don't know what it is. I'm pretty confident that we have long since passed the point where options improve our welfare.

Now, as a policy matter -- I'm almost done -- as a policy matter, the thing to think about is this: what enables all of this choice in industrial societies is material affluence. There are lots of places in the world, and we have heard about several of them, where their problem is not that they have too much choice. Their problem is that they have too little. So the stuff I'm talking about is the peculiar problem of modern, affluent, Western societies. And what is so frustrating and infuriating is this: Steve Levitt talked to you yesterday about how these expensive and difficult-to-install child seats don't help. It's a waste of money. What I'm telling you is that these expensive, complicated choices -- it's not simply that they don't help. They actually hurt. They actually make us worse off.

If some of what enables people in our societies to make all of the choices we make were shifted to societies in which people have too few options, not only would those people's lives be improved, but ours would be improved also. This is what economists call a "Pareto-improving move." Income redistribution will make everyone better off -- not just poor people -- because of how all this excess choice plagues us. So to conclude. You're supposed to read this cartoon, and, being a sophisticated person, say, "Ah! What does this fish know? You know, nothing is possible in this fishbowl." Impoverished imagination, a myopic view of the world -- and that's the way I read it at first. The more I thought about it, however, the more I came to the view that this fish knows something. Because the truth of the matter is that if you shatter the fishbowl so that everything is possible, you don't have freedom. You have paralysis. If you shatter this fishbowl so that everything is possible, you decrease satisfaction. You increase paralysis, and you decrease satisfaction. Everybody needs a fishbowl. This one is almost certainly too limited -- perhaps even for the fish, certainly for us. But the absence of some metaphorical fishbowl is a recipe for misery, and, I suspect, disaster. Thank you very much.

(Applause)