Does having more choice make us happier? Is there a point where too many options leave us confused or uncertain? Certainly most would agree that some level of choice makes us happier. But, in wealthy countries like the United States, have we crossed the point where the plethora of options makes us less satisfied? For even the most basic choices like what to eat- there are literally thousands of options to choose from and hundreds of microdecisions that need to be made every day. Other things like choosing investment options, picking out a salad dressing, or selecting your next travel destination have hundreds and hundreds of choices.
A paradox is simply a statement that suggests an apparent contradiction that may be true. And the paradox surrounding choice is simply that. Contrary to popular belief, we may actually be happier with fewer options. Classical economists would suggest that more options give us the opportunity to find an object that provides the absolute highest satisfaction. But in reality, we are often constrained with time and mental energy; therefore, the idea of having a limited set of options may actually make us more relaxed. In addition, when there are fewer choices, there is actually less mental energy spent thinking about what might have been or what you didn’t choose.
Is More Better?
The quest for more is often the driving force behind many of our lifestyle decisions. We are driven to more money, bigger houses, more stuff, and more responsibility. In the lifestyle design realm, we are often driven by the quest for more time, more opportunity, more influence, more choice, and more relaxation. Is more always better? I think it is difficult to decide- and to fully balance- the concept of enough. Especially when it comes to choice. I think the holy grail of financial independence is greater choice. But what do we choose when we have all the choices in the world? Is unlimited choice freeing for some and restricting to others? And where exactly is the balance?
Apple has perfected this. How many iPhone versions does it produce at one time? 1, 2? It is impressive that the most profitable electric giant intentionally limits the number of models for its flagship device. But, whether you love them or hate them, you must admit that this strategy has worked. By limiting our choices, companies can often reduce the guilt associated with making the wrong decision. When there are two options it is easier to decide than if there are 500 similar products. In addition, with fewer options, the liability of making the wrong choice is limited to the small selections of objects available. When we have unlimited choice, we, as consumers, mentally shoulder the responsibility of making the absolute best decision. As Barry Schwartz said, if the store only has one pair of jeans available and they suck, it is that company’s fault for making bad jeans. If there are a hundred different choices, then there must be the perfect one out there; but it takes lots of time and energy to find it. And if we don’t, we are left with the notion that we are at fault and there is still something better out there.
TED Talk – The Paradox of Choice.
Although the video is quite old at this point, the content is still amazing. In one of the best behavioral economics books available, Barry Schwartz explains in detail the Paradox of Choice – Why More Is Less. His 19 minute TED talk is awesome.
Limiting Options for Sanity
In an age of growing options, curation and personalized interest have an even greater role. In a society with truly unlimited options, we simply do not have enough mental energy and time to make every micro-decision that could be made every day. The paradox of choice can also be used to explain some of the satisfaction that the minimalism movement is bringing to overconsumptive societies. Some of the implications or practical ways we can benefit from the paradox include:
- Having fewer items of clothing, but have ones you really like
- Shopping at smaller stores that have curated selections (ie. Aldi, TJs)
- Limit the volume of toys your children have
- Make a list of foods you know how to cook and enjoy that you can pull from when it gets late and you are hungry
- Help Focus on the things you have
- Find people you trust and listen to their opinions
- Free yourself from the guilt associated with unlimited choices
- Are there any areas where you intentionally limit your choices?
Investing and Personal Finance
Researchers at Columbia University have shown that too many options lead to inaction. For example, when given different investment options, larger incriminates of fund options actually decreased the percentage of participation. When we have tons of options we also have plenty of bad options as well. This produces a mental hesitation that keeps many individuals from taking the necessary steps to begin the investing process.
As the old general said, “a great plan now is better than a perfect plan tomorrow”. I believe this holds true in investing. Often, the first step of action is more important than the exact efficiency of funds selection. If you must insist on learning a little before you jump in, read a Random Walk Down Wall Street and park your money in a simple total stock market index fund. If you do these two things you will be ahead of about 90% of all other investors.
The Paradox of Choice
So, is limiting a choice to find greater happiness a paradox? Which areas of your life have you seen this paradigm play out? Or is it false? Is more choice always better? I’ve decided to limit my choices in a few areas of life to free up some mental energy that allows me to be more focused on the areas that are actually important. I think choice is great. I also enjoy having fewer options on occasions to live a more relaxed, ironically efficient life.