The “paradox of choice” is not robust

by on November 24, 2009 at 10:15 am in Economics, Education | Permalink

I missed this one while traveling, so I am grateful to the loyal MR reader who pointed it out to me:

… the psychological effect may not actually exist at all. It is hard to find much evidence that retailers are ferociously simplifying their offerings in an effort to boost sales. Starbucks boasts about its “87,000 drink combinations”; supermarkets are packed with options. This suggests that “choice demotivates” is not a universal human truth, but an effect that emerges under special circumstances.

Benjamin Scheibehenne, a psychologist at the University of Basel, was thinking along these lines when he decided (with Peter Todd and, later, Rainer Greifeneder) to design a range of experiments to figure out when choice demotivates, and when it does not.

But a curious thing happened almost immediately. They began by trying to replicate some classic experiments – such as the jam study, and a similar one with luxury chocolates. They couldn’t find any sign of the “choice is bad” effect. Neither the original Lepper-Iyengar experiments nor the new study appears to be at fault: the results are just different and we don’t know why.

After designing 10 different experiments in which participants were asked to make a choice, and finding very little evidence that variety caused any problems, Scheibehenne and his colleagues tried to assemble all the studies, published and unpublished, of the effect.

The average of all these studies suggests that offering lots of extra choices seems to make no important difference either way. There seem to be circumstances where choice is counterproductive but, despite looking hard for them, we don’t yet know much about what they are. Overall, says Scheibehenne: “If you did one of these studies tomorrow, the most probable result would be no effect.”

That's by Tim Harford.  In my view, the so-called paradox of choice is one of the most overrated and incorrectly cited results in the social sciences.  The full account is here.

1 Nancy Lebovitz November 24, 2009 at 10:32 am

It’s possible that people have gotten used to more choice in the past decade.

2 David Heigham November 24, 2009 at 10:55 am

This is the comment I made to Tim Harford. I like John Meredith’s more sophisticated take above.

“This may be new in the literature, but it is ancient in practice. The key is that in almost all purchase situations, the time and attention which the buyer wants to devote to her, his or their decision is limited. Therefore most routine purchases are repeat purchases; and non-routine purchasing follows a standard pattern. In non-repeat purchases buyers usually want to first quickly scan a large range of choices. A wide range of choice therefore attracts more prospects (one reason for the success of hyper-markets). Buyers then zero in on a narrow range which they think worth the investment of time in serious consideration. Most of the time the narrow range is three to six options wide. This allows the buyer a manageable number of detailed comparisons of different aspects. (The number of comparisons rises sharply,of course, with each extra option added.) For a familiar example, think of how you buy a car.

If they cannot zero in to a narrow range, most buyers will put off the non-routine purchase if they can. The cost in scarce time of making the purchase decision becomes prohibitive.

I recall, when employed as an economist in market research, explaining this, lamely, to consumer marketing people 50 years ago. It also applies, with emphasis, when the buyers’ time has an explicit price tag; as in corporate piurchasing (including hiring).

When this model does not apply is when the buyer considers her or his time spent on wondering what to buy costs very little (e.g., for the world’s poorest, it is often worth spending a lot of time working out how to spend their little money), or indeed has a positive value (think of how many women and some men enjoy shopping for clothes). I am not familiar with a wide range of the experimental frameworks for the experiments quoted, but at least some experiments in this field ask that people set aside time for the experiment. If they do so, the buyers concerned will not regard time within this little segment of their lives as scarce. Therefore they will dally over the purchase, and look at a wide range of possibilities.”

3 tom November 24, 2009 at 11:11 am

Isn’t ‘too much choice’ a big deal for the left-ish book writers like Robert Frank and others? And maybe even for the libertarian paternalists?

If I remember right, a big part of their critiques of today’s weak capitalism is based on the that people can’t process well when they have many choices, and that it is better for choices to be limited.

More generally, it would be great to have a list of the top 50 consumer-oriented economics books and a list of their priors so that we could watch as they gain strength or are undermined.

4 Ben Ho November 24, 2009 at 11:23 am

the paradox of choice is not alone. Keith Chen has a forthcoming paper that finds that most papers on cognitive dissonance all share a statistical flaw. List and Levitt reanalyze the data from the Hawthorne effect, and find that the Hawthorne effect doesn’t exist in the Hawthorne data. They also have some data that finds little evidence for Claude Steele’s stereotype threat. I’m wondering how many of these old oft cited studies are indeed robust, especially when even cognitive dissonance seems not to hold up.

5 Anon November 24, 2009 at 11:27 am

If the extra choices allow me to find exactly what I want, without too much compromise, then the effect of choice will be to motivate me to buy.

If none of the extra choices give me exactly what I want, but instead force me to spend lots of time trying to decide between nearly-equal unpleasant trade-offs, with the end-result that I am making the same compromises that I would have had to make anyway if there were fewer choices, then choice demotivates me.

6 Craig November 24, 2009 at 12:06 pm

I think it matters how the choice is presented. Is there a simple-to-navigate menu with the options listed? Or, are certain choices bundled together so that we can’t easily get exactly what we want or we can’t find it because navigating the menu is so difficult?

7 Andrew November 24, 2009 at 12:30 pm

Let’s say you are sailing and you come to a harbor. You are faced with a choice between Dock A and Dock B. They are identical in appearance. How do you choose? It’s a paradox.

8 Andrew November 24, 2009 at 1:00 pm

You are on to something Wagster. But what if you were denied the choice to buy the Mac? That’s the paradox!

9 Yancey Ward November 24, 2009 at 1:01 pm

It has always appeared to me that the believers in “more options are bad” have been exactly those who want to limit the options available to others.

10 Dustin November 24, 2009 at 1:26 pm

I’m irritated when my choices are limited. But then again, that’s just me. I know others who would rather just have someone else limit their choices in some arbitrary manner.

11 Steve Sailer November 24, 2009 at 2:48 pm

Costco has done very well for itself offering its members/customers limited choices.

12 Greg Ransom November 24, 2009 at 3:11 pm

Next you’ll tell me the human caused global warming data isn’t to be trusted …. oh wait ..

13 john personna November 24, 2009 at 3:42 pm

Trader Joe’s is another store that has done well by simplifying choice.

14 MadAnthony November 24, 2009 at 4:35 pm

I think it comes down to a couple things things. First of all, there are some things that we want a lot of choices in, things we are passionate about, and some things we don’t really care about, where we might be annoyed or confused by all the choices. I like coffee and soda, so I like having a lot of varieties to choose from. I don’t really care much about toothpaste or paper towels, so I grab whatever is cheapest or on sale. But somewhere, there is probably someone thrilled that they can buy Colgate Plus Ultra Peppermint Gel with flavor crystals, no whip, and chances are the benefit they get from it outweighs my annoyance in the toothpaste isle.

The other thing is that we have ways of filtering large choices, like the Starbucks one. If I know I want a hot beverage, that knocks out half the options. If I know I want a Venti, that kills another 66%. If I know I want coffee and not tea or chai or hot chocolate, and that I want skim milk and not whole or soy or 2%, that takes a bunch more out, and in the end I’m really only choosing between a handful of options.

15 Joe November 24, 2009 at 5:04 pm

I’m shocked. Someone called up Barry Schwartz and tell him his TED talk is full of it.

Barry Schwartz’s TED talk on the Paradox of Choice:

16 Eric H November 24, 2009 at 6:52 pm

The thing that struck me especially about the jam choice was that the experiment was not set up the way I (and I presume, others?) shop. I usually have a clear idea about what I want to buy (a specific brand of cherry preserves), search for that, buy it if I can find it, and widen the search choice from there if I cannot. I may search for other brands, and then other flavors, but I walk out of the store with something approximating what I came in for in some way. The only way I might leave empty handed would be if the only choice was grape jelly. Since that seems to be the most popular choice, I am as grateful for the wide range of choices as others are. The experiment, as I recall, waylaid people with no strong prior commitment and asked them to choose from a limited or wide range of choices with some kind of enticement to buy. Unless my shopping is terribly unique, I don’t see any reason to believe that the experiment reflects the way humans look for things to meet their needs. Rather, it tests the way that they take advantage of unforeseen opportunities.

I can think of at least one real-world problem and solution to unforeseen opportunity: I am occasionally but not frequently attracted to art I see at street or Renasissance fairs. I used to get contact information and thought I would look at their website and buy the one I liked best. I never bought anything that way, possibly for the reasons explained by Schwartz (fear of not optimizing?). Now, if I see something I like, I buy it at once if I can afford it. I buy more art now than before, and am happier for it.

Now if I could just get around to hanging some of it.

17 Mark November 24, 2009 at 7:21 pm

Interesting thread and thanks to the many commentators.

For me, “paradox of choice” definitely exists for “big” purchases or commitment purchases (i.e. gym membership). When I have to make a choice that is difficult to reverse and each option has pluses/minuses, I really don’t enjoy having a lot of options. I notice this in myself in a very direct manner: I get irritated and immediately think “I need to figure this out later, I probably should ask some people, I should look at X and Y.” Honestly, in many of these cases, if there was only one reasonable choice, I would happily choose it.

Interesting, this also exists for items that feel very personal to me (my laptop, cell phone). But then again, these choices often have “difficult to reverse” as a quality too.

18 astonerii November 24, 2009 at 10:26 pm

The only time in which large number of options to chose from are bad is when you have no idea about what the choices are and have a limited time or ability to review them.

For instance, if your an American and go to an Asian country and go to a restaurant with 500 dish choices and not a single one of them has a name similar to what you have had in the USA and no pictures, you would have a very hard time picking something you are likely to enjoy.

19 Casey Pahl November 25, 2009 at 12:41 am

To factor in exchange must change the dynamic. A person may spend more time choosing a jam if that jam also costs her a dollar of her own.

20 Lord November 25, 2009 at 3:18 pm

It isn’t a matter of choice, but a matter of decision, their number and difficulty.

21 Andrew November 25, 2009 at 7:42 pm

I concur with the PC/Mac story. If you try to buy a PC, even from a big brand like Dell, you are faced with millions of possible combinations. I work in IT so I should know what’s best; yet even I was paralyzed.

In the end I bought an iMac. Just four to choose from. Simples.

Cars are a similar story. The number of possible combinations of options (air-con, CD changer, leather seats, etc.) runs into the tens of thousands. To avoid this problem, manufacturers group the options into class levels, e.g. Ford Focus S / SE / SEL / SES. This is a long-established trend in the motor industry, and it certainly suggests that real-world companies acknowledge the paradox of choice.

22 John December 10, 2009 at 9:05 pm

From Stefano DellaVigna’s “Psychology and Economics: Evidence from the Field,” JEL June 2009, page 355:

Marianne Bertrand et al. (forthcoming) examine the impact of a small or large menu set in the context of a field experiment on the mailing of 50,000 loan offers in South Africa. The authors randomize, among other things, the format of the table illustrating the use of the loan. The small-table format lists only one loan size as an example, while the big-table format presents four different loan sizes. The finding is consistent with the choice avoidance results. The take-up in the small-table format is .6 percentage points larger compared to a baseline of 8 percentage points, an effect size equivalent to a reduction of the (monthly) interest rate by 2.3 percentage points.

Choi, Laibson, and Madrian (2006) also provide evidence from a field experiment that a smaller number of investment options increases participation in a 401(k) plan. Participation increases by 10 percentage points when nonparticipating employees receive a card that allows them, if mailed back, to enroll in a default plan (3 percent contribution in a balanced fund).

23 Eric H July 29, 2010 at 9:30 pm

“Costco has done very well for itself offering its members/customers limited choices.”

Unfortunately, I do not have the choice of shopping there. Sams seems to be okay, though. And Wallyworld. And Albertson’s. Some things I prefer to get at the farmer’s market or the co-op, like local eggs and produce. And then there’s the local Trader Joe’s knock-off. And there’s the poor folks store that always stocks lots of club soda (we don’t drink sweetened drinks, and we prefer our water to be bubbly but not expensive).

Each one of them offers a limited supply of stuff. I agree, it’s great to have limited choices.

24 Katarina January 20, 2011 at 4:30 pm

Will and grace is a Decision to Spell Hypnosis!

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