The Paradox of Choice: Why More is Less
I studied a lot of economics in school. In fact, some people might say that I have two degrees in economics. And while I actually have used a few bits of this learning when on the job (a shock to some of my friends), there are many areas that all of my economics classes have not helped one bit. For example, when I spend hours trying to decipher the arcane tax code to input numbers into turbo tax every spring, the two degrees do not make IRS speak any more comprehensible. Another area that seemed to overlap surprisingly little with my economics studies was in understanding human behavior in decision making. Homo economicus seems to bear fairly little relevance to most people that I know, and most economic studies of the past seemed to focus on extensive mathematical models that did not capture behavioral anomalies.
Actually, this seems to have changed in the past few years. The field of economics (or at least a branch of the field) recognizes the realm of human behavior. I credit Daniel Kahneman, one of my favorite of the public intellectuals. who is the psychologist that was awarded the Economics Nobel for helping to integrate economic thinking and human behavior. Back in 1979, when most of today’s economists weren’t even little peeps, Kahneman, together with Amos Tversky published their seminal work on decision making and attitudes toward risk.
Recently, there’s been a spate of books published on economics and decision-making, highly readable and aimed for a broad audience. I may review several in future posts, but today, I wanted to feature a book whose title caught my eye, entitled The Paradox of Choice: Why More Is Less by Barry Schwarz. The book explores the phenomenon of choice overload and explains why having too many choices causes psychological stress. Rather than giving the someone greater satisfaction, too many choices are often the source of anxiety.
I found the book to be an enjoyable, relatively quick read. I also found that it helped me to think about a phenomenon that might explain why those of us who have chosen early retirement or alternative careers are relatively happy. As indicated in a recent interview, one of the surprising things about early retirement has been the lack of yearning for the old job. In choosing my form of retirement at a relatively young age, I’ve also removed a lot of anxiety about career path choices, stress over promotions, raises, etc.. While many people still busy climbing the business ladder might see that I have probably closed some future doors, I think closing some doors has been liberating.
On closing doors my aunt once told me: If they’re doors you’d never want to walk through, then don’t think twice about closing them. I struggled with that for a bit but there is a huge cost to trying to keep all options option.
I will have to look up this title. The simpler things are the more content generally I am.
Thanks for the great post
Julie, isn’t it interesting how counter-intuitive this seems. Most people (including sometimes me) think that more choices are better. Hope you enjoy the book.
E-
Elizabeth –
Don’t you stress over different things now though – like future money worries, health care costs, etc.? If you have enough retirement savings to last? Not trying to be a pain in the _ss, just wondering.
Hi Kevin, I certainly do worry about some of these things, especially rising health care and health insurance costs, and the stock market meltdown of last year certainly did impact my portfolio. I don’t want to gloss over that aspect of early retirement since it is part of the routine and I want to be open about the experience. I will say that after leaving corporate life, there are two things that I’ve found out (at least in my case). One is that I have an interest in finding avenues to save money and have cut out a lot of costs that I previously incurred (this was not like me before). Two is that I am not very concerned about owning what’s known as ‘positional goods’. Or goods that don’t really serve a purpose, but are purchased because your neighbor or your co-worker has it. More than just not spending the money, this sense of being less tethered to feeling obligated to spend money has been good for my state of mind.
Also, in the back of my mind, I think that if there is some need for money that I had not planned or some further substantial hit to the investment portfolio, I know that I can go back to work in that case. [I have in mind something like a medical emergency for a family member].
I plan on delving into more of this in future posts, particularly the social/psychological/emotional elements of early retirement, because I think this is not really covered and some of the surprises, both good and bad, are quite interesting.
Thanks for reading.
I found your blog through Jacobs interview. Enjoying reading your thoughts and perspectives. Agree with the complexity of choice, variation and stress linkage. As I have taken my journey to simplicity – no TV, Cable, Older Car, No Debt, Simple Things, Used Things – my choice has decreased and thus the stress around stuff is diminished. More ownership of things, square feet in the house and other drivers of choice does not result in a simple yet rewarding life and gives energy to the debt culture and the permutations of more and more. Also, like the comment on inflation and as a trained economist, I see the train coming as well as health care costs given health care is rather inelastic in times of great need.
Simplicity in Kansas, Great to hear your story. I find it interesting how many people have made the choice for simplicity and how the internet has given (a small) voice to share these experiences. I will be writing much more on both choice stress and inflation in upcoming posts.
Thanks for visiting and commenting.
Elizabeth – Thanks for the reply. I look forward to reading more about your experience. My wife and I are slowly trying to cut back our “stuff”, but with a toddler running around it tends to accumulate – toys & clothes he’s outgrown, for example. We don’t really spend any money frivolously – except satellite TV I guess, but I still see early retirement way in the futuer (34 now). Probably b/c we haven’t made a big dent in paying off our house yet.
Cheers