How Too Much Choice Paralysis Actually Makes Things Harder for Your Customers
I recently watched a TED Talk I found particularly intriguing. It was about how technology inflicts us with something akin to Too Much Choice Paralysis. I’m sure you’re familiar with TED Talks. You may think, like I do, that they’re hit or miss in terms of quality and credibility. I’ve seen some that are unmitigated bullshit.
Then again, there are some great ones. One I recently saw that I really liked is this speech below by Barry Schwartz. It’s called The Paradox of Choice.
Obligatory shout out to Ryan Martin at UW-Green Bay for this Twitter thread about his favorite TED Talks. Thanks for making me aware of Mr. Schwartz’ speech.
What is He Getting at?
The speech is roughly twenty minutes, and definitely worth watching. For the sake of brevity I’m going to distill it down to the most important points. That is, the ones I think are applicable for entrepreneurs, in particular, how they can approach customers.
The crux of Mr. Schwartz’ speech is that, ironically, being presented with an abundance of choice actually gives us less choice. Seems like an impossible contradiction, but his argument makes a lot of sense.
I mentioned in this post that I read a book about two brilliant scientists named Daniel Kahneman and Amos Tversky. It’s about their groundbreaking research on how people make decisions. Among many other things they discovered was that people don’t take anticipation of regret into account when judging whether or not to take risks when faced with potential loss. They did confirm some long standing orthodoxy, that people do consider how to minimize regret when faced with risks associated with potential gains.
For instance, they found far more people are willing to take a guaranteed $500 rather than a 50/50 chance of making $1000 or nothing at all.
This is what Mr. Schwartz touches on. He uses as an example the copious amount of choices he is presented with at a local, regular sized supermarket. Schwartz points out that it’s easy to not feel bad about not liking a salad dressing you bought if you didn’t like it if it’s the only one the supermarket offers, or if they only offer very few. But when you have a choice from 175 salad dressings (literally, that’s what he says around the 1:50 mark), it’s easier to feel like you made a bad choice if you don’t enjoy your purchase.
Counterargument: There’s No Such Thing as Too Much Choice Paralysis
There’s a pretty simplistic yet widely accepted argument Schwartz breaks down early on in the speech about the moral righteousness of choice. The argument is predicated on the supposedly positive effects on personal welfare. While I don’t want to go into any logical or moral rabbit holes, I’ll say he does a good job of explaining why it needs some rethinking.
The argument states (I’m using some of my own verbiage and structure here) as its axiom that “Freedom is choice”. From there it follows that “freedom is maximized by maximizing choice”. Another premise is “with more freedom, people will act in their best interest” so the conclusion is “we need to maximize choice since it’s what’s best for people’s personal welfare.”
Why It’s Wrong
A big problem I have with the argument is it’s missing a vital premise, which is that free people don’t always act in their best interest, but putting that aside for a moment, what Schwartz takes issue with is the premise “freedom is maximized by maximizing choice”. He goes on to point out why it’s wrong, or at least isn’t as obviously right as it seems.
Schwartz demonstrates using more real life examples, this time using a scientific study in lieu of an anecdotes, that when we’re faced with all of these choices, we have a harder time settling on one. Beginning at the 8:25 mark, Schwartz cites a study done about voluntary retirement plan choices at Vanguard. His colleague conducting the study found that for every 10 mutual funds an employer offered, employee participation declined 2%. This fits well with the consensus opinion that people are risk averse when faced with potential gain, since it seems like when offered choices about how to best gain wealth to secure their retirement, employees fear the regret they’ll feel if they make the less than optimal choice. They then have a much more difficult time making any choice as a result.
This Has Pretty Startling Implications
Instead of making the sensible decision to better secure one’s retirement by selecting a mutual fund, the employees in this study chose to forego what could amount to many years of compounded capital gains and the free money from the employer match. By ostensibly being given more power to determine what’s in our best interest, they ended up doing something that certainly isn’t. The choices presented by the smorgasboard of investment options became, because of the fallibility and idiosyncrasies of the human mind, a choice between potential regret and doing nothing at all. FOMO is apparently realer than we think.
This Family Guy clip sums it up pretty neatly starting at the :28 second mark
Also, Schwartz Neatly Breaks Down the Problems in Everyday Life Caused by Too Much Choice Paralysis
Little Bit of a Tangent Incoming, but The Examples of Technology’s Impact on Too Much Choice Paralysis are Nearly Limitless
I recently watched Manhunt: Unabomber, and decided to write this article after seeing Schwartz’ speech because of how eerily timed my viewing of these two works, one of art and one of, well, not-art, was, and how they touch upon the same theme.
The brilliant but depraved madman know as the Unabomber was thoroughly convinced the pervasiveness of technology in the post-industrial world inhibited freedom. While Kaczynski’s crimes were absolutely abhorrent, he made some interesting points that many, including academics, concede he may have been onto something about. Perhaps most notably, UCLA professor James Q. Wilson, who was mentioned in Industrial Society and Its Future; said Kaczynski’s manifesto was “a carefully reasoned, artfully written paper”. “If it is the work of a madman, then the writings of many political philosophers … are scarcely more sane.”
The characters in the show find some of Kaczynski’s ideas agreeable. The leads are FBI agents, one of whom highlights a contradiction brought about by the “freedom” technology grants us. The example used is cars; they were made to set us free to go wherever we chose whenever we chose. Since this was something previous methods of transportation couldn’t do, cars became a part of everyday life for most people. Subsequently, cities across the country became more and more designed to accommodate car drivers. It got to the point where it’s often very difficult to live in most places without one.
There’s More Than Technology Itself and Too Much Choice Paralysis Playing a Role in Restricting Freedom
Overlapping rules of governance and expectations of and from technology play a role in restricting freedom as well.
In Manhunt, the main character goes on to talk about how he waited at a red light in the middle of the night. There was literally no one else around. He didn’t have to wait. He could have gone right through the light and gotten home sooner. But instead, he waited, as he was conditioned to do. Technology and the rules governing it overlap to constrain out freedom.
These are of course fictional examples, but art imitates life, so I don’t think the writers of Manhunt pulled these examples out of nowhere. Much of what they’re talking about is very relatable. I’m sure most people have sat at red lights they probably could have gone through without consequence. I know I have. Probably because I expected it to go something like this:
There are Definitely More Real Life Episodes of Human Reticence and Curtailment of Choice Brought on by Technology
I remember an anecdote from when I was young. My dad had been given a Blackberry by his law firm, and I thought it was so cool. He said “no it isn’t, now they can find me whenever they want.”
Schwartz talks about how the “freedom” granted us by our devices, and what it really meant, was not something my dad was unfortunate enough to suffer through alone. At 6:55 Schwartz gives an example of a kid’s soccer game. Parents have their BlackBerrys, laptops, whatever else on them reminding them of their work-related tasks. And even if there’s nothing that requires their immediate attention, those devices are present. They’re changing the experiences we’re trying to live in, and not for the better.
Going back even further in time, when I was playing little league soccer my father’s law firm could only harangue him with a flip phone. The parents weren’t checking their devices during the game. I’m certain they weren’t, they were busy yelling at the ref about the game like they had money on it. Maybe pervasive technology does have some upside after all.
Last, but Certainly Not Least, What Too Much Choice Paralysis Means for Entrepreneurs
I would say the most evident conclusion is somewhat counterintuitive. Businesses of all kinds, be they legacy companies or new entrepreneurial endeavors, strive to provide an abundance of choice for their customers. But perhaps they should try to limit that choice.
Schwartz concedes some choice is warranted. Schwartz demonstrates further honesty by pointing out he doesn’t know just how much choice should be limited to be in the best interest of the customers. Still, it follows that more choice isn’t always going to help your customers buy from you.
You definitely don’t want your customers fearing potential regret when considering your offerings, which too much variety can lead to. Entrepreneurs are going to have to pay very close attention to how their customers respond when their choices are expanded. Any data collection around this that can at least draw a correlation between how many choices are offered for different value propositions and customer responsiveness should be considered.
Call to Action
Please let me know if you have any thoughts about anything discussed. Would love to hear what I’m right about, wrong about, contrary or supporting facts, and any thoughtful counterarguments.