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Sunday, March 09, 2008

Oh... the choices



Barry Schwartz, a professor of Social Theory talks about the perils of too many choices in affluent western societies in this TED talk. His focal points are that when people are presented with too many choices, they either
  • get confused and procrastinate decision-making
  • make a hasty choice and repent for not making the perfect choice
  • feel dissatisfied with even the best of choices for not meeting their expectations
I disagree with him on all counts. Barry cites a statistic where the number of people opting for retirement benefits go down with the increasing number of fund options available. Well, if someone is such a dud as to be baffled by the options and decides not to make a decision or keep procrastinating, it speaks of the preparedness, foresightedness and responsibility towards life of the person. The point that these guys would have made a decision had there been only a few choices is not only a bad argument, but means that a self-contained market without progressions of any sort is how we get people to buy. This is not only illogical, but also insane.

Barry is of the opinion that when the buyers don't get their choice right, they repent and brood. This scenario doesn't occur when there are only a few, or even better just one choice (in which case, there's no choice at all). It's true that people are unhappy if their selection turns out to be less than what they had in mind. But isn't that how one sharpens their decision making abilities? If there were only one cellphone available in the market, you wouldn't bother to look into its configurations. Just because there are so many brands with varying degrees of features, the user takes the pain of educating himself about all the features, assesses if he needs them and then makes an informed decision. There's still a chance that he may brood, but at least he learns from the experience, owns up responsibility for his decision and in the process becomes a shrewd decision-maker.

The third point doesn't have much to do with the number of options available rather than the personality we're talking about. If one is not satisfied with, say the top of the line Bose stereo system, may be he should just wait for the field of acoustics to get better or sponsor a sound research institute. A negligible chunk of the demographics will always be unhappy because of their ridiculous expectations. They're only a minuscule and the market hadn't cared for them.

Update: Barry is correct when he says that multiple options lead to a little bit of confusion and/or hesitation. But he clearly blames the market and exaggerates the multitude of choices instead of researching how people can and should decide from the pool of options.

5 comments:

Dhan said...

I kind of disagree with you and agree with Barry.
While it is good to have choices a huge number of choices leaves the normal human completely baffled. It is important to have different categorization (a means of easily definable and identifiable goal associated with a product) to subcategorieze these options and within these categories, the choices should not be too many.
These categories can be explcitly named - like watches, food, bank FD etc. or implicit - like cost bands, exclusivity, wifi connected camera mobile etc.
Unless these categories are present (and annuities are just an extreme case of not having them), we are going to remain confused.

Prasad Venkataramana said...

Dhan,
You bring in terms like 'definable', 'identifiable' & 'categorizable' and you suggest that since most of the products don't fit into those terms the average customer is baffled. Which means that the market is growing in a direction that leaves the common man confused.

I think a mature market would have consolidated options. I believe that the manufacturers would proceed in putting out easily identifiable, definable & categorizable products from a common man's perspective. If that is not in place, either the market is not mature yet or the average customer is below average.

Srikanth Dakshinamoorthy said...

the choices become a burden on the planet, if it turns out that an average man who left alone, would lead a low impact, simple life is presented with this array of choices (where, to make a decision, one has to go out of the way to educate oneself and do that continuously) and does not have the wherewithall to make the right decision.

US does not label its genetically modified food ingredients. So, one has to go and specifically look for "organic" labels, or milk cans that say this milk is "not" from cows treated with rBST (watch out for that small r..) and such products take undue advantage on the educated consumers by charging a premium.

You were buying organic cheese and were feeling good about it.. well go on for a while until you learn about something called rennet; then you go shopping for another speciality: "organic cheese with vegetable rennet"

not to say that the choices are bad - but a good government has to do more. It needs to ensure that the choices are available to those who "want" and are able to make the choices. for those that are not, a choice needs to be made for them (this may not be the best choice, but a good enough one for individuals and a good one for the planet, they can graduate to the higher realm and make their own choice if needed)

what this essentially does is: give choices to people who are not willing/ready/able to make those choices and then blame them for the decisions they have made or not made.

what about gun control? all the shootings in universities.. kids buy guns legally - exercising their choice?

there has to be a balance between choice and restrain.

Prasad Venkataramana said...

Srikanth,
You bring in the government factor into the equation and I believe that market freedom and government intrusion should overlap to the bare minimum extent thereby ensuring market freedom.

I agree that in delicate pathways like classifying organic foods, the user needs to educate him/herself. But in a reasonably educated country like the U.S, people are quite aware of the GM label, which is why there are separate stores that sell only 'clean' foods. Yes, government intervention can help clarify such shady deals, like in India where absolutely vegetarian packed foods come with green dot. If the number of people who complain about the non-labelling part reaches a critical mass, may be the food department in the U.S will take the required action.

Dhan said...

Those additional terms (definable ...) are the essence of why you and Barry differ. Let me emphasize my point better by calling into attention the difference between a starbucks menu and a hotel menu. Though both serve food / drinks, it is easy to deal with a hotel menu - since each item on it is further categorized and we order what we feel like that moment (say north indian, mexican, continental etc). Whereas a starbucks menu is bound to be confusing for a first timer - mocha, cappuccino etc. That explains why a starbucks coffee menu is more manageable in size than a hotel menu - thus enabling people to try out a small set and develop preferences.
Annuities on the other hand are a different matter. I believe that companies thrive in the confusion they create - since we have reached a point where it is impossible to differentiate my product over others in anyway other than past performance (which will remain inconsistent given the amount of job switching that happens, and inherent market fluctuations).