The Paradox of Choice: Why More Is Less

The availability heuristic is a bias that causes people to overestimate how likely something is to happen based on the availability of information about it. For instance, if people frequently read news about car accidents, they will overestimate their statistical likelihood. Schwartz connects this bias with consumer behavior, noting that people tend to lean heavily on what they have heard about most frequently, even if it is somewhat unreliable data, like personal anecdotes. This bias contributes to people making irrational buying decisions but feeling like they are well-researched.

Schwartz uses the term “choice overload” to refer to situations in which consumers face a vast amount of choices of a certain product. For instance, he reports counting 285 brands of cookies at a store. Schwartz presents choice overload as a detrimental burden to people’s mental health.

Schwartz uses the term “chooser” to describe people who think carefully about their choices without overanalyzing or wasting time or energy. Choosers make informed choices based on their actual needs.

Schwartz argues that by having an ideal in mind, people become less satisfied with their real-world options because of the “contrast effect,” which makes their realistic options look worse in comparison to an imagined perfection. This is yet another neuroscience phenomenon that impacts people’s decision-making and subjective experiences.

Counterfactual thinking is imagined or hypothetical thinking. People engage in this thinking to either reimagine situations that have already occurred, or to create an ideal situation in their mind. While counterfactual thinking can help people develop goals or identify regrets, if left unchecked it can spiral into rumination. Schwartz encourages the reader to limit their counterfactual thinking, especially when it comes to imaginary ideal situations that are not achievable anyway.

The endowment effect is a psychological phenomenon in which people attach more financial value to things that they own. Psychologists Daniel Kahneman and Amos Tversky observed that people tend to overvalue their own items and are hesitant to trade or sell them, since this might feel like a loss.

The hedonic treadmill refers to how people chase new sources of pleasure in order to satiate their desires. Since adaptation makes novelty and pleasure wear off over time, some people find themselves on a “hedonic treadmill,” always buying or doing something new to feel good. Schwartz feels that this is not sustainable and suggests another solution: Keeping pleasurable things rare and novel.

Inaction Inertia refers to a consumer’s lack of action due to their feelings of regret. People who miss out on a good opportunity may then be struck by “inaction inertia” and fail to make any choice at all, because choosing something would force them to confront their own regret and accept the loss.

Schwartz refers to consumers who are determined to get products of the best value and quality “maximizers.” According to Schwartz, maximizers tend to commit a lot of time and energy to making their purchases, yet are more likely to feel dissatisfied with their choice. These types of people are also more prone to dissatisfaction in other areas of their lives.

The nearness effect impacts how people feel about events depending on how near they were to success. Schwartz argues that people who come very close to success, but then lose, tend to have more regrets than people who fail by a wide margin. For instance, people who miss a flight by an hour are less upset than those who miss it by a minute. Schwartz uses this phenomenon as yet another example of how people are mentally affected by their decisions.

An objective experience is how a decision affected someone objectively, such as its financial or time cost, or if it resolved a certain problem or need. While objective experiences are important, Schwartz explains that a choice can be a positive objective experience while still being a negative subjective experience if the decider is unsatisfied with their decision.

Omission bias is the phenomenon in which people downplay their own failure to act on opportunities. Schwartz uses this bias to show that people are overly focused on actions and often fail to assess their own lack of action.

Similar to trade-offs, opportunity costs are the loss of opportunities that a different choice would have provided. For example, if someone chooses to move with their spouse to a new city, the opportunity cost may be time spent with their family and friends they have left behind. The author considers opportunity costs a significant downside to having a multitude of options, because people must weigh each “cost” and try to make the right decision. This process increases mental distress and uncertainty.

Schwartz uses the term “picker” to describe consumers who succumb to the overwhelming options and spontaneously make a selection, not knowing how it will really serve their needs. He encourages the reader to avoid acting like a Picker.

Positional goods are particularly valuable and tend to signify wealth or status more than other goods because of their finite nature. For instance, there is only so much beachfront property in the world, so this is a positional good.

Amos Tversky and Daniel Kahneman’s “prospect theory” explains how people evaluate their options and make choices. According to these psychologists, people are more risk-averse to potential gains than to potential losses. Schwartz uses this as one example of irrational thinking in decision-making.

Unlike maximizers, satisficers are shoppers who have certain requirements for what they are buying, and once these requirements are met they will make a prompt purchase. Satisficers might have high standards, but they spend much less time and energy evaluating alternatives than maximizers. Schwartz suggests that everyone should aim to be a satisficer, as they tend to feel happier with their decisions and are less likely to ruminate about them.

Schwartz borrows the notion of second-order decisions from psychologists Cass Sunstein and Edna Ullman-Margalit. These kinds of decisions are voluntary, self-imposed restraints on decision-making to save time and stress, and can range from hard rules to more flexible presumptions or standards. For instance, a second-order decision could be to never have more than two glasses of wine in one sitting. Schwartz highly recommends adopting this approach to eliminate the mental stress of constant decision-making and to protect oneself from poor decisions.

The subjective experience is how someone feels about their choices. For example, if someone agonizes over which dress to buy and spends a lot of time, emotional energy, and money on choosing the dress, only to regret their choice, they would have a very poor subjective experience. Schwartz emphasizes that the subjective experience is as important, if not more important, than the objective experience, since it affects people’s overall satisfaction and mental health.

The three utilities refer to “expected utility,” “experienced utility”, and “remembered utility.” Expected utility is how much we expect to enjoy something, while experienced utility is how we feel about it in the present moment. Remembered utility is how people recall their experience later on. Schwartz explains that these modes of thinking are not as aligned as one would think: It is common for people to record feeling a certain way while something is happening, and then recall their experience differently in hindsight. He attributes this to inherent human biases which cause people to more clearly recall the end of experiences.