47 pages • 1 hour read
The Paradox of Choice: Why More Is Less
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BetaPart 2Chapter Summaries & Analyses
Part 2: “How We Choose”
Part 2, Chapter 3 Summary: “Deciding and Choosing”
People often consider many relevant factors before making a decision, and when their options increase, decision making can become more psychologically burdensome. People base their decisions around fulfilling their goals, which they usually generate through their internal dialogue. However, Schwartz maintains that this internal dialogue is often informed by biased thinking.
Decision making is informed by three modes of thought: “Expected Utility,” or what we believe an experience will be like, “Experienced Utility,” or the actual lived experience, and “Remembered Utility,” or the way we recall the experience later. Schwartz explains that people tend to recall events inaccurately, since the human brain is biased towards remembering the end of an experience rather than the whole thing. Therefore, even if an experience is mediocre, if it ends very positively people are likely to repeat it. Another study demonstrated that people anticipated wanting a variety of grocery items over the long term, when in reality they preferred to go back to their old favorite foods.
In order to make decisions, people first need to gather relevant information. During this part of decision-making, too, people are prone to irrational behavior. People place the same importance on biased sources of information—such as ads, individuals on the internet, and anecdotal evidence—as they do on more neutral sources of information, such as consumer reports. Another influential bias is the “availability heuristic,” in which people assume that certain things are more likely if they can think of many examples of it. For instance, people grossly overestimate the number of fatalities by homicides in comparison to strokes because homicides are more publicized.
People’s comparison processes are also deeply biased. For example, if people see a very expensive appliance with a cheaper one, they are more likely to believe that the lower-priced one is a good deal, and purchase it. How prices are “framed” also influences consumer behavior. For instance, framing two prices as a “regular” price and a “discounted” price is more appealing than framing the same prices as “regular” and “surcharged.”
Amos Tversky and Daniel Kahneman’s “prospect theory” contends that people tend to be risk-averse in terms of possible gains, but are more risk-seeking when it comes to losses. Schwartz attributes this to people’s aversion to losing, arguing that since losing $100 is so painful, losing $200 doesn’t make much of a difference emotionally. Moreover, losing is always more impactful and memorable than winning, since humans have inherent loss aversion. Kahneman and Tverksy have also observed the “endowment theory” at work in consumer decision making: When people feel a sense of ownership over something, they tend to inflate its value, and are averse to losing it.
The author concludes the chapter by reiterating that humans are already highly susceptible to decision-making errors, and that as options increase it only becomes more taxing to try to make accurate decisions. Rather than being “choosers” who thoughtfully weigh options, people may become overwhelmed and act like “pickers” who spontaneously grab choices.
Part 2, Chapter 4 Summary: “When Only the Best Will Do”
Some consumers only make purchases when they believe they are getting the absolute best product. Schwartz calls these buyers “maximizers.” In order to know that they are making the absolute best purchase, maximizers must attempt to find and evaluate all the alternatives. Other shoppers are “satisficers,” who have a certain checklist and stop shopping once they’ve settled on something that meets it.
Schwartz argues that being a maximizer often makes people very dissatisfied, as it is impossible to know for sure that you have chosen the best product, especially with many choices available. He argues that people should aim to be satisficers instead. According to Schwartz’s study comparing the two groups, maximizers are less able to enjoy positive events and are less resilient to negative experiences. Overall, maximizers were less content in life in general, and extreme maximizers were more likely to be depressed. Schwartz reflects on this correlation, positing that he believes maximizing behaviors play a causal role in people’s dissatisfaction.
When considering the value of one’s decisions, a person can consider the objective results or the subjective experience. For instance, a maximizer might have found an amazing sweater at a great price, an objectively better deal than a satisficer’s sweater, but if he or she laments the time they spent buying it, or regrets not finding a different deal, they have a worse subjective experience. The author distinguishes between perfectionists and maximizers, noting that perfectionists tend to push themselves to improve, but understand that real perfection isn’t possible. In contrast, maximizers tend to operate under the delusion that there is a perfect choice somewhere. Satisficers are not so affected by an influx of choices, as they’ll find one that suits their purpose and stop worrying about it. Maximizers, however, can find an array of options highly distressing.
The author reflects on why people become maximizers. He argues that maximizers may be unaware of the drawbacks of their habits, buy purchases based on status anxiety, or attach great importance to more scarce goods. Schwartz speculates that if people have a choice overload, they are more likely to change their consumer behavior and become maximizers.
Part 2 Analysis
In Part 2, Schwartz cites numerous studies to support his arguments regarding Human Behavior and Decision-Making, arguing that human decision making is often highly biased and irrational. He clearly explains these phenomena with scientific examples, attempting to illustrate how these intrinsic human biases function. By referring to specific academic evidence, the author presents his arguments as substantiated by a body of research and not just anecdotal observation.
For instance, he cites a study to show that people remember the end of experiences more clearly than the beginning or middle, and that this informs their future attitudes towards it and their likelihood of repeating the experience. He explains that this phenomenon has been clearly demonstrated in studies, such as when lab participants opted to hear a more unpleasant sound again because of its mild ending. Schwartz writes, “Clearly the second noise is worse—the unpleasantness lasted twice as long. Nonetheless, the overwhelming majority of people chose the second to be repeated. Why? Because whereas both noises were unpleasant and had the same aversive peak, the second had a less unpleasant end, and so was remembered as less annoying than the first” (49).
In another scientific study, participants were asked to predict which snacks they would want each week. Schwartz reveals that people predicted their own desires poorly, expecting to want variety but really being creatures of habit. These contradictions show how people fail to rationally assess both their past and future experiences. By connecting these biases to his broader argument, he shows how such biases can shape real-life decision-making in a potentially problematic way. Schwartz writes, “In a world of expanding, confusing, and conflicting options, we can see that this difficulty in targeting our goals accurately—step one on the path to a wise decision—sets us up for disappointment with the choices we actually make” (52).
Schwartz connects the evidence on irrational consumer behavior to his argument that more variety of choice is not necessarily better. For example, he points to a study on grocery shoppers who were asked to prepare for three days’ worth of meals. The variety available to them did not make their task easier—indeed, it actually played into a false expectation that they should buy more varied products. He explains, “People within this latter group made more varied selections within each category than people in the former group, predicting, inaccurately, that they would want something different on day two from what they had eaten on day one” (52).
Moreover, Schwartz argues that the enormous variety of products today does not increase people’s chances of success. First, the variety raises the possibility that people will bypass their decision-making process altogether. By contrasting “choosers” who carefully weigh their options with “pickers” who spontaneously make a selection, Schwartz emphasizes the limitations of the human mind and its ability to weigh information. Furthermore, according to Schwartz, the increase in choice is psychologically taxing for consumers. He writes, “[T]he growth of options and opportunities for choice has three, related, unfortunate effects. It means that decisions require more effort. It makes mistakes more likely. It makes the psychological consequences of mistakes more severe” (74).
The author’s detailed discussion on the reality of decision-making adds to the theme of The Relationship Between Choice, Freedom, and Happiness. By contrasting the consumers’ objective and subjective experiences, Schwartz suggests that “maximizers” make better objective purchases but have worse subjective experiences than their more realistic counterparts, the “satisficers.” He posits, “What matters to us most of the time, I think, is how we feel about the decisions we make…So while objective experience clearly matters, subjective experience has a great deal to do with the quality of that objective experience” (88). Schwartz thus continues to suggest that more choice does not necessarily lead to more happiness or freedom.
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