[lbo-talk] The Paradox of Choice: Why More Is Less (the gains from variety)

Yoshie Furuhashi furuhashi.1 at osu.edu
Thu Mar 11 11:08:30 PST 2004



>[lbo-talk] the gains from variety
>Doug Henwood dhenwood at panix.com, Thu Mar 11 08:32:57 PST 2004
<snip>
>"Globalization and the Gains from Variety," by Christian Broda and
>David Weinstein (Staff Report no. 180, March 2004)
>
>Since the seminal work of Krugman, product variety has played a
>central role in models of trade and growth. In spite of the general
>use of love-of-variety models, there has been no systematic study of
>how the import of new varieties has contributed to national welfare
>gains in the United States. In this paper, we show that the
>unmeasured growth in product variety from U.S. imports has been an
>important source of gains from trade over the last three decades
>(1972-2001).

So, Doug wants to recommend product variety in consumption but not in presidential elections. :->


>[lbo-talk] the gains from variety
>Michael Dawson -PSU mdawson at pdx.edu
>Thu Mar 11 09:43:43 PST 2004
<snip>
>Choice is massively important. It's the essence of both democracy
>and humanity. This whole new literature about "the tyranny of
>choice" is bad science. The problem is not too many choices, but
>the hidden consequences of the proferred range of choices, and the
>extreme lack of democratic control over macro-level choices.

There should be more electoral choices than the pro-empire & anti-working-class duopoly, but, even in elections, there can be such a thing as the tyranny of too many choices, the best example of which is the Total Recall election in California last year: "October 7, 2003 Statewide Special Election Certified List of Candidates ," <http://www.ss.ca.gov/elections/2003_cert_cand.htm>.

Moreover, asking voters to make too many electoral choices by making too many offices elected ones _and_ focusing electoral choices on individual candidates rather than political parties tends to diminish working-class electoral participation:

***** CENTER FOR THE STUDY OF DEMOCRACY, UC IRVINE RESEARCH PAPERS

Turnout Decline in the U.S. and other Advanced Industrial Democracies Martin P. Wattenberg University of California, Irvine Copyright 1998, Martin Wattenberg

. . . [T]he information costs that Americans typically encounter as they decide whether or not to vote are often overwhelming. As I look at what I am being asked to vote on in California this year, I find that even as a Political Science professor my level of political information is inadequate to deal with the many questions at stake. For example, I have voted for state Controller in four elections but I have yet to learn what the holder of this office actually does. When I ask my university students, the answer I always get back is, "He (or she) controls." Usually, I can prod someone into saying that the Controller deals with money. But students are stumped when I ask how this position differs from state Treasurer, which is also an elected office. I then pose further rhetorical questions, such as what are the issues in the campaigns for state Insurance Commissioner, Superintendent of Schools, or Secretary of State, and whether they know anything about the judges we have to decide whether to retain. Finally, I read off a few obscure California propositions, such as a 1994 vote on whether to abolish justice courts. By the time I am done, I think I have made my point: All these demands on citizens probably discourages many people from voting in the first place. . . .

Of course, just simplifying the electoral process itself would be one way to increase turnout in America. In 1930, Harold Gosnell wrote in _Why Europe Votes_ that one of the reasons for America's low turnout is because they are 'given an impossible task to perform on election day' (quoted in Lijphart, 1997: 8). As Dalton (1996: 46-47) has recently written, residents of Cambridge, England were asked to make 4 choices at the polls between 1985 and 1990 whereas the citizens of Irvine, California were called upon to cast 44 votes in 1992 alone. . . .

<http://hypatia.ss.uci.edu/democ//papers/marty.html> ******

Then, there is a question of psychology -- too many choices can lead to increasing paralysis and decreasing satisfaction for "maximizers," and added options may be simply ignored by "satisficers" who feel they have already found what works for them:

***** Maximizing Versus Satisficing: Happiness Is a Matter of Choice Barry Schwartz and Andrew Ward, Swarthmore College John Monterosso, University of Pennsylvania Sonja Lyubomirsky, University of California, Riverside Katherine White and Darrin R. Lehman, University of British Columbia _Journal of Personality and Social Psychology_ 83.5, 2002: 1178-1197

Can people feel worse off as the options they face increase? The present studies suggest that some people -- maximizers -- can. Study 1 reported a Maximization Scale, which measures individual differences in desire to maximize. Seven samples revealed negative correlations between maximization and happiness, optimism, self-esteem, and life satisfaction, and positive correlations between maximization and depression, perfectionism, and regret. Study 2 found maximizers less satisfied than nonmaximizers (satisficers) with consumer decisions, and more likely to engage in social comparison. Study 3 found maximizers more adversely affected by upward social comparison. Study 4 found maximizers more sensitive to regret and less satisfied in an ultimatum bargaining game. The interaction between maximizing and choice is discussed in terms of regret, adaptation, and self-blame.

. . . . . . . . . . . . . . . . . . . .

Can There Be Too Much Choice?

There is no question that greater choice can provide benefits for the chooser. Indeed it is axiomatic in rational choice theory that people cannot have too many options. If, for example, one is trying to decide between two models of a CD player, and then discovers that a third model also is available, the third model may be just the thing one is after. If not, one can simply go back to deliberating between the first two. And one can always ignore the new, third option altogether. So it seems irrational to perceive oneself as worse off as a result of added possibilities for choice. Nonetheless, there is now a small body of evidence suggesting that added options are a mixed blessing (e.g., Simenson & Tversky, 1992; Tversky & Shafir, 1992). Results have begun to appear in the decision-making literature indicating that adding options can make a choice situation less rather than more attractive for people -- that indeed, sometimes people prefer it if others make the choices for them (Beattie, Baron, Hershey, & Spranca, 1994).

In one series of studies (Iyengar & Lepper, 2000; see also Iyengar & Lepper, 1999), participants were more likely to purchase exotic jams or gourmet chocolates when they had 6 options from which to choose than when they had 24 or 30, respectively. And perhaps more importantly, those with fewer options expressed greater satisfaction with the choices they made. Similarly, university students were more likely to write an extracredit essay, and wrote better essays, when they had 6 topics to choose from than when they had 30. Iyengar and Lepper suggested several possible factors that may underlie this effect. One is the avoidance of potential regret. The more options there are, the more likely one will make a nonoptimal choice, and this prospect may undermine whatever pleasure one gets from one's actual choice. There is ample evidence that regret aversion is a potent force in decision making -- perhaps even more potent than the loss aversion that has been a significant feature of Kahneman and Tversky's (1979) prospect theory of decision making (Beattie et al., 1994; Bell, 1982, 1985; Larrick & Boles, 1995; Loomes & Sugden, 1982; Ritov, 1996; Simenson, 1992; Zeelenberg, 1999; Zeelenberg & Beattie, 1997; Zeelenberg, Beattie, van der Pligt, & de Vries, 1996; Zeelenberg et al., 1998).

A second factor that may make increased choice unattractive is that it creates a seemingly intractable information problem. It is hard enough to gather information and go through the deliberations needed to make the best choice among 6 options. To choose the best among 30 options is truly daunting. So rather than even try, people may disengage, choosing almost arbitrarily to complete the process. As a result of this disengagement, many of the psychological processes that normally are recruited to enhance the attractiveness of the choices one makes may not be operative (see Gilovich & Medvec, 1995, for an account of some of these processes, in the context of their theory of regret).

Maximizing, Satisficing, and Choice

Schwartz (2000) recently argued that the proliferation of options can have a variety of negative effects on well-being. He suggested that as options are added within a domain of choice, three problems materialize. First, there is the problem of gaining adequate information about the options to make a choice. Second, there is the problem that as options expand, people's standards for what is an acceptable outcome rise. And third, there is the problem that as options expand, people may come to believe that any unacceptable result is their fault, because with so many options, they should be able to find a satisfactory one. Similar problems arise as choice becomes available in domains in which previously there was no choice. No matter how dissatisfied one is with one's telephone service, if phone service is provided by a regulated monopoly, one cannot do better, and inadequate service is not one's fault. However, when choice of phone service becomes available, there is no longer any reason to tolerate inadequate service, and failure to obtain adequate service is one's responsibility. Schwartz (2000) suggested that people might in general be better off with constrained and limited choice than with unconstrained choice.

However, expanded opportunities for choice need not have these negative psychological effects. Consider the different effects that an expanding array of options might have on two people, one of whom aims to maximize his or her outcomes in that domain and one of whom aims to satisfice. For the maximizer, added options pose problems. One cannot be sure that one is making the maximizing choice without examining all the alternatives. And if it is impossible or impractical to examine all the alternatives, then when the maximizer gives up the search and chooses, there will be a lingering doubt that he or she could have done better by searching a bit more. Thus, as options proliferate, the likelihood of achieving the goal of maximization goes down. Further, the potential for regret is ever present, because the question the maximizer is asking him- or herself is not "is this a good outcome?" but "is this the best outcome?".

Expanded opportunities for choice may have different effects on the satisficer. The satisficer is looking for something that crosses the threshold of acceptability -- something that is good enough. Adding options in a domain in which the satisficer has already encountered something good enough need have no effect; the new options may simply be ignored. With "good enough" rather than the "best" as a criterion, the satisficer will be less inclined to experience regret if it turns out that an option better than the chosen one was available. And if no satisfactory option has been encountered in a domain, added options will provide new possibilities for finding something that crosses the "good enough" threshold. Thus, the risk of being made worse off by added options may be minimal for satisficers. . . .

<http://www.swarthmore.edu/SocSci/bschwar1/maximizing.pdf> *****

Cf. Barry Schwartz: <http://www.swarthmore.edu/SocSci/bschwar1/>.

Barry Schwartz, "The Tyranny of Choice," _The Chronicle of Higher Education_, January 23, 2004: <http://chronicle.com/cgi2-bin/printable.cgi?article=http://chronicle.com/prm/weekly/v50/i20/20b00601.htm>. -- Yoshie

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