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Donald Marron

The Paradox of Choice: A theory loses favor

A famous experiment, published in 2000, points to something called the Paradox of Choice: more choices lead to lower overall sales. That makes no sense in the narrow rationality often used in economic models, and some evidence suggests it might not actually be true.

By Guest blogger / July 19, 2012

A woman places a milk carton on the shelf in a Fivimart supermarket in Hanoi in this June 2012 file photo. A famous study conducted in 2000 with jam varieties identified something called the Paradox of Choice, which says that the more choices a person has, the lower the chance of a consumer actually buying something.

Kham/Reuters

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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)?

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Donald B. Marron is director of economic policy initiatives at the Urban Institute. He previously served as a member of the President's Council of Economic Advisers and as acting director of the Congressional Budget Office.

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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.

The Christian Science Monitor has assembled a diverse group of the best economy-related bloggers out there. Our guest bloggers are not employed or directed by the Monitor and the views expressed are the bloggers' own, as is responsibility for the content of their blogs. To contact us about a blogger, click here. To add or view a comment on a guest blog, please go to the blogger's own site by clicking on dmarron.com.

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