The Paradox of Choice Meets the Decline Effect

Does your brain freeze when offered too many options? Do you put off repainting your bathroom because you can’t bear to select among fifty shades of white (or, for the more adventurous, grey)?

If so, take heart. A famous experiment by psychologists Mark Lepper and Sheena Iyengar, published in 2000, suggests that you are not alone. In supermarket tests, they documented what’s known as the Paradox of Choice. Customers offered an array of six new jam varieties were much more likely to buy one than those offered a choice of 24.

That makes no sense in the narrow sense of rationality often used in simple economic models. More choice should always lead to more sales, since the odds are greater that a shopper will find something they want. But it didn’t. On those days, in those supermarkets, with those jams, more choice meant less buying.

This result resonates with many people. I certainly behave that way occasionally. With limited time and cognitive energy, I sometimes avoid or defer choices that I don’t absolutely need to make … like buying a new jam. Making decisions is hard. Just as consumers have financial budget constraints, so too do we have decision-making budget constraints.

Today’s TED Blog provides links and, naturally, videos for a series of studies documenting similar challenges of choice, from retirement planning to health care to spaghetti sauce. All well worth a view.

But how general are these results? Perhaps not as much as we’d think from the TED talks. A few years ago, Tim Harford, the Financial Times’ Undercover Economist, noted that some subsequent studies in the jam tradition failed to find this effect:

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.”

In short, the Paradox of Choice is experiencing the infamous Decline Effect. As Jonah Lehrer noted in the New Yorker in late 2010, sometimes what seems to be scientific truth “wears off” over time. And not just in “soft” sciences like the intersection of psychology and economics, but in biology and medicine as well.

Some of that decline reflects selection pressures in research and publishing … and invitations to give TED talks. It’s easy to get a paper published if it documents a new a paradox or anomaly. Only after that claim has gained some mindshare does the marketplace then open to research showing null results of no paradox.

About Donald Marron 294 Articles

Donald Marron is an economist in the Washington, DC area. He currently speaks, writes, and consults about economic, budget, and financial issues.

From 2002 to early 2009, he served in various senior positions in the White House and Congress including: * Member of the President’s Council of Economic Advisers (CEA) * Acting Director of the Congressional Budget Office (CBO) * Executive Director of Congress’s Joint Economic Committee (JEC)

Before his government service, Donald had a varied career as a professor, consultant, and entrepreneur. In the mid-1990s, he taught economics and finance at the University of Chicago Graduate School of Business. He then spent about a year-and-a-half managing large antitrust cases (e.g., Pepsi vs. Coke) at Charles River Associates in Washington, DC. After that, he took the plunge into the world of new ventures, serving as Chief Financial Officer of a health care software start-up in Austin, TX. After that fascinating experience, he started his career in public service.

Donald received his Ph.D. in Economics from the Massachusetts Institute of Technology and his B.A. in Mathematics a couple miles down the road at Harvard.

Visit: Donald Marron

Be the first to comment

Leave a Reply

Your email address will not be published.