TED Talk: Barry Schwartz on the paradox of choice
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0:00http://www.youtube.com/watch?v=Iy8R5TZNV1A
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MALE SPEAKER: We're very pleased to have you here for
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the marketing talk with Professor Barry Schwartz on
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the paradox of choice.
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And Professor Schwartz, we're also very
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honored to have you here.
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Thank you for coming.
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Barry Schwartz is the Dorwin Cartwright Professor of Social
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Theory and Social Action at Swarthmore College.
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He is the author of 10 books, among them The Battle for
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Human Nature, The Cost of Living, and The Paradox of
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Choice: Why Less is More.
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He is a fellow of both the American Psychological
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Association and the American Psychological Society.
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His research and teaching focus on the intersection of
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psychology and economics, and more specifically, how the
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abundance of choice in modern life both liberates and
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bedevils those who face it.
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So please join me in welcoming Professor Schwartz.
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BARRY SCHWARTZ: Hi, everybody.
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I'm really quite honored to be here.
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And just two preliminary remarks.
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One is that I'm shorter than I used to be.
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One is that I thought it was presumptuous for me to make
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myself an expert in what you do.
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So my talk is mostly not going to be about what you do.
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It's going to be about what I take to be a significant
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problem in people's lives more generally.
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And I trust that you're all smart enough A, to determine
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whether what I have to say is relevant to what you do, and
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then B, what to do about it.
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So I haven't tailored my remarks particularly except
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for a few things here and there to the particular
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concerns that I imagine folks who work here might have. I
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don't want to insult you by doing that.
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Second is I'm happy to have you interrupt with questions
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and comments as I talk.
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And if it looks like it's getting out of hand, since I'm
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a stern teacher, I can just tell you shut up and save it
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for the end.
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So don't hesitate if you want to raise something now.
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And as I say, if it looks like I'm never going to get past my
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first two slides, then I'll change the rules.
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OK?
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So first, I want to acknowledge the people I've
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collaborated with on a lot of what I'm going
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to talk to you about.
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Some of these are students of mine.
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Some are colleagues in various places.
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Anything you find worthwhile they had nothing to do with.
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There is in American society--
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not only in American society, but more here than anywhere
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else-- what I have come to call the official syllogism.
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And this is a set of assumptions that we have about
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well-being and about how society should be organized
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that runs so deep that I think we don't realize we make them.
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And the only time you start to notice that you make them is
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when you start to accumulate evidence that they're wrong.
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So what is this the official syllogism?
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First, we all think that the more freedom people have, the
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more welfare they have. How could you think otherwise?
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This is a no-brainer.
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What argument could you even make to suggest that there's
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anything wrong with this assumption?
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The second thing we think is that the more choice people
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have, the more freedom they have. What does freedom mean
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if not choice?
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In fact, for most Americans, particularly Americans of the
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educated classes, freedom and choice are two words for the
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same thing.
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To say that people have more freedom is to say that people
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have more choice.
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And so it follows from these two assumptions that the more
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choice people have, the more welfare the have. So as I say,
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we so deeply believe this to be true that probably most of
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us didn't realize that this was just a set of assumptions,
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that there are other assumptions one could make,
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and that they might even be empirically false.
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And I'm going to try to convince you today that they
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are empirically false.
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First, to what extent has modern life embodied these
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assumptions and improved people's lives
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by giving them choice?
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This is my supermarket, which is not an especially big one.
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The salad dressings, I should point out--
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that doesn't include the 10 extra virgin olive oils and 12
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balsamic vinegars that were also there in case none of the
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175 salad dressings suited you.
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So those of you know how to do combinatorial mathematics can
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compute how many different homemade salad dressings you
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can create out of all those balsamic vinegars.
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So there's a huge amount of choices, even choice about how
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we get our stuff packaged.
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And I want to give credit to the cartoon bank--
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you're going to see a bunch of cartoons from The New Yorker
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so you don't go to sleep.
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And so I want to acknowledge The Cartoon Bank, which has
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generously given me permission to show some, but not all, of
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the cartoons that I'm going to be showing you.
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So we've always had a choice in supermarkets.
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And now we have more choice.
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How much more?
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In the United States, there was a threefold increase in
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brands on grocery shelves in the 1990s.
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The average grocery has upwards of 30,000 SKUs.
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And these mega groceries, God only knows how much they have.
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So we've always had choice.
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Now we have more choice.
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And in the world of consumer goods, you can tell the same
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story pretty much everywhere.
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There was always choice, and now there's more choice.
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And one could argue that this is merely a
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quantitative change.
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No big deal.
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Well, two things about that.
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One, sometimes quantitative changes become qualitative if
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they're big enough.
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But second, in addition to having more options than we
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used to in areas where we always had options, there are
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whole new domains of life where there used to be no
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options, where now people have significant options.
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And I mention this because I want to give you a sense of
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what it is that is on everybody's shoulders as they
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get up out of bed every morning.
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Some of these choices are inconsequential, and some are
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extremely consequential.
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I give you just a few examples.
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There are many more.
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There's probably nobody in this room except me who's old
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enough to know that there was once a time when you could get
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any kind of phone service you wanted as long as it was
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provided by AT&T. There was a monopoly.
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There was the phone company.
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And not only was there the phone company, but the phone
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company owned the phone.
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You rented it.
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And you know what?
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It lasted 100 years.
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It never broke.
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These days, we get to choose long-distance service, local
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service, cell phone service, and God knows we get to choose
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a lot of products.
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These are the cell phones of the future.
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The one I like best is the middle one.
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It's a phone, an MP3 player, a nose hair trimmer, and a creme
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brulee torch.
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And if you haven't seen this phone yet, you can be sure
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that in a week or two, you will.
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And what that does is it leads people to go into their cell
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phone store and asked this question.
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And what's the answer to this question?
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Do you have a phone that doesn't do too much?
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The answer to this question is no.
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The only kind of cell phone I think you can no longer buy is
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a cell phone that's just a phone.
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I guess this is progress, but that means that there are a
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lot of choices we have that we didn't have before.
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In the world of health care, the notion that the doctor
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told the patient what to do and the patient did it is a
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distant memory.
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Nowadays, the ethic of medical care in the United States is
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the doctor and patient autonomy.
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And what that means is that docs give you the options,
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explain what the cost and benefits are of the various
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options, and you choose.
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Docs propose.
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Patients dispose.
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And if you say, but what do you recommend?
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A really principled doctor will say, well, I
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already told you.
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These are the pluses and minuses of surgery.
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These are the pluses and minuses of chemotherapy.
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You have to choose.
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And if you then say, but Doc, if you were me,
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what would you do?
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The doctor says, but I'm not you.
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So an enormous burden is now on all of our shoulders to
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make life and death decisions, typically on the basis of
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close to no information.
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And this burden is mostly borne by women, who take care
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of themselves, take care of the kids, and also take care
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of their husbands.
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The clearest evidence of how the world of health care has
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changed is in the direct marketing of prescription
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drugs to people like you and me.
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Hundreds of millions of dollars are spent every year
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by drug companies selling products to people
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who can't buy them.
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Why would you ever have an ad for prescription drugs on a
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network television show?
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The only explanation is that the model now is that patients
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will call the doctor's office the next morning and insist
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that they get switched from drug X to drug Y because they
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just saw a commercial.
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And it must also be the expectation that docs will
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honor the patients' requests.
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I don't think companies just burn money.
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Physical appearance is a matter of choice in a way that
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it didn't used to be.
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What do I mean by that?
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What I mean is that there's essentially no part of your
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body that can't be altered.
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And not only is that true, but it's no longer even something
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to be ashamed of.
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People used to have cosmetic surgery and
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pretend that they hadn't.
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And of course, everybody knew that they had because their
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faces looked weirdly constructed.
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But everyone politely didn't talk about it.
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Nowadays, people brag about their cosmetic surgeries, at
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least on the two coasts.
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If you have too much tissue in one part of your body and not
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enough in another, you can just suck it out of the place
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where you don't want it, injected it into the place
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where you do.
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What's the consequence of this?
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The consequence is that how you look is a matter of
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choice, which means that if you're an attractive, it's
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your fault.
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Nobody has to play the hand they were dealt any longer.
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In the world of work--
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I know that this doesn't apply to the people in this room,
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but modern technology has made it possible for each of us to
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work every minute of every day, no matter
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where on earth we are.
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And what that means is that whether or not to work is a
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matter of choice, every minute of every day.
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You take your kid to play soccer, and you're sitting
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there watching the game, and you've got your cell phone on
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one hip and your BlackBerry on your other hip, and your
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laptop on your lap.
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And they're all off.
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And as you watch this boring game, you ask yourself, maybe
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I can return that call, and answer that email, and draft
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that letter.
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And even if you say no to all of those things, you're
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thinking about saying yes.
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You're deliberating about it, which means that you have a
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decision to make.
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And it's a decision that you have to make basically every
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30 seconds.
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Because the game sure as hell isn't going to get less boring
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as you watch it.
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Just want to go home, crawl into bed, and
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do some more work.
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As I say, I know that this doesn't apply to
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anyone in this room.
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The company pension is a thing of the past,
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for a couple of reasons.
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One is that companies would much rather that their
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employees bear the risk than that they do.
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But the second is that instead of having a single financial
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instrument or a couple of financial instruments that
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your pension money goes into, employers in their benevolence
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have now offered people large numbers of
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options to choose from.
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You have in many workplaces a wide array of possible
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investment vehicles for your retirement pension.
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And I'll talk a little bit later about the
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consequences of that.
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Just to show you that everybody bears some
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responsibility for this, institutions like mine have
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completely abdicated responsibility for being
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educational institutions.
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We have this gigantic list of courses and basically tell
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kids, take whatever you want, often with disastrous
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consequences.
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Now, in the world of family, at least two generations ago,
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and maybe one and a half generations ago, nobody ever
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forced you to get married, and nobody
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forced you to have kids.
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But there was what you might call it a default assumption
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that was very powerful and governed
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almost everybody's behavior.
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And the default assumption was that you get married as soon
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as you can and you start having a family
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as soon as you can.
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And there was only one choice to be made.
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And that was who.
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The rest was sort of laid out for you.
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Those days are certainly gone.
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Whether or not to marry, whether to do it soon or do it
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late, whether or not to have kids, whether to do that soon
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or late, none of these things is taken for granted.
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There is no default.
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And what that means is that young people spend an enormous
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amount of their time thinking about things that were
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non-decisions when I was their age.
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There's a lot that's good about this, but one
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unfortunate consequence of it is that they spend a lot less
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time doing the work that I give them.
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And I can't say that I blame them.
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These are important things to figure out.
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And reading another journal article is not a life and
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death thing, whereas making the wrong decision about your
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romantic life might be.
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So they just were willing not to do all the
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work and get bad grades.
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So I just kept assigning less and less work.
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Unfortunately, it hasn't helped them make any wiser
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romantic decisions.
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Even your identity has become a matter of choice in a way
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that it wasn't years ago in the sense that, even though
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you probably inherit an identity from your family,
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your community, and so on, it's changeable.
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You can reinvent yourself on a regular basis.
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One is encouraged to do that.
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Who I want to be today?
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There's this company in Seattle that had a slogan
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about, Where do You Want to Go Today?
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Micro something.
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This is, who I want to be today?
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It's just as applicable.
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15:14
You've got to admit, these cartoons are good, right?
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So in every corner of our lives as Americans, the world
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we used to live in looked kind of like this.
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And the world we now live in looks like this.
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And the question is, is this good news or bad news?
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And the answer, as I'm sure you can tell, is yes.
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Now, I want to be absolutely clear about this.
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Though it never helps to say this, I will say it.
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Choice and freedom are good.
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Almost all of the things that I have just run down for you
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represent real improvements in the human possibilities, in
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the opportunity for people to be autonomous and in control
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of their lives.
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And all of that is good.
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OK, I said it.
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Remember that I said it.
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Everyone knows that.
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The thing that people have not been mindful of is that it is
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also bad, bad in various ways that I'm about to describe.
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That is to say, there is a dark side to all of this
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freedom of choice, which has been up until
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now completely ignored.
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And all the rest of this talk is going to be black, black,
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black, black, all the things that make everybody miserable.
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But remember that I know just as you do that choice is a
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wonderful thing.
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Just not as wonderful as we thought.
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So there was a survey done in Europe.
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And the stem of the sentence was, "There is currently more
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choice than I need," and then they asked people about
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various different aspects of consumer goods.
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And the results they got were this.
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With respect to clothing--
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this is the percentage of people who agreed that there
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is currently more choice than they need.
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Washing machines.
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Savings accounts.
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Utilities.
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Cars.
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Cleaning products.
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And cell phones.
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There were no items on the list where less than a
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majority of people agreed that there was more choice than
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they needed.
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So with respect to everything, people thought there was more
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choice than they needed.
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They just differed from one item to another on how much
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they agreed there was more choice than they needed.
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So there seems to be a coming together, a consensus, that
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people have more decisions to make than it's worth their
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time and trouble to be making.
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And I think there are three different effects that too
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much choice has.
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And I'm going to talk about each of them.
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One effect of having too much choice is
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that it produces paralysis.
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There are so many options to consider that you end up
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choosing none.
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The first demonstration of this was at this fancy food
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store in Palo Alto, the name of which I've forgotten.
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Whenever they get a new product, they'll put it on a
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table so that people can sample it.
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So the experimenters got them to cooperate in this store.
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And they put out 24 different flavors of an imported jam.
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and anyone who stopped by could sample as many different
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flavors as they wanted.
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And if they did, they got a coupon that would give them $1
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off on any jam they bought.
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A few days later, they set up the table with six different
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flavors of the same jam.
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And if you stop and tasted, you'd get a coupon that would
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get you $1 off.
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And what the experimenters found is that more people came
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to the table when there were 24 jams than
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when there were six.
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It was more inviting.
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It was more exciting.
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It was more interesting.
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One tenth as many people bought jam.
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One tenth as many people bought jam.
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OK, now, they found the same thing with writing extra
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credit essays.
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Because of the connection between this company and
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Stanford, I just thought I should mention this.
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In a social psych course, if you wrote an essay, you could
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get extra credit toward your grade.
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And what was nice about this is that the credit was
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independent of the quality of what you wrote, which could
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only happen at Stanford.
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So one class, the kids got 30 different essay topics to
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choose from.
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In another class, they got six.
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And the investigators looked to see how many people
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actually wrote essays.
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Fewer people wrote essays when they had 30 topics to choose
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from than when they had six topics to choose from.
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And I think it's the same as with the jam.
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Which flavor jam should I buy?
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They're all attractive.
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This is novel.
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This is distinctive.
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This I know I like.
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Ah, I'll buy peanut butter.
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Same thing happens with the essays.
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All these interesting topics.
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I don't know which one to choose.
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So I end up doing calculus homework instead.
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Speed dating.
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You know what speed dating is?
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Of course you do.
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20:03
If not here, where?
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So they set up two speed dating evenings.
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And in one evening, people had 12 dates.
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And in another one, they had six.
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And the question was, how many matches get made?
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And the answer is, more matches are made when you have
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six dates that when you have 12.
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See more people, have more choices, make fewer
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selections.
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And finally, to raise the stakes quite a lot, the
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researchers got access, thanks to the cooperation of Vanguard
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and about 1,500 employers, to the investment records of a
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million employees working, as I say, at
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1,500 different companies.
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And what they were interested in was this.
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How does the number of mutual funds that the employer makes
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available affect the rate at which employees participate?
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20:54
So one company offers three funds, one 10, one 30, one
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100, one 300.
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Does that matter?
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The answer is yes.
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How does it matter?
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For every 10 funds the employer makes available,
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participation goes down 2%.
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The more funds you offer, the lower the rate of
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participation.
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Understand that in most of these cases--
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not all, but most--
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not participating meant passing up a significant
21:22
amount of money from the employer, matching money.
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It was like you were taking a match and lighting it to a
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$5,000 bill because you didn't know which fund to put your
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retirement money into.
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Now, this is an extremely consequential finding, since
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Americans save nothing and everybody's going to be eating
21:37
dog food in 30 years, when they retire with no
21:41
money in the bank.
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And what makes it especially significant is that if you
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were a benevolent employer and you were concerned that your
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employees weren't putting enough money away for their
21:50
retirement, and you went to an investment adviser, any
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investment adviser, and said, listen, what can I do to get
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my employees to save more?
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Every single one of them would have told you the same thing.
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Give them more choice.
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Then everyone will find just the right fund with the right
22:08
amount of risk and safety and so on to satisfy their
22:12
particular needs and tastes.
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Give them more choice, the worst possible advice.
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So this is the first effect of too much choice.
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It produces paralysis.
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There's a little bit of research in real life on
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reducing assortment in groceries.
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For some reason, all the research that's been done in
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real life settings has been done with supermarkets.
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What happens when you reduce the amount of selection in a
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grocery is that the strong brands gain market share, the
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higher priced brands gain market share, store brands
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lose market share.
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And by and large shoppers are not influenced by how many
22:53
different kinds of things are on the shelves.
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They're just influenced by how much stuff is on the shelves.
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So as long as you keep the amount of stuff on the shelves
23:00
bountiful, there will be no perception on the part of
23:03
shoppers that you have reduced choice.
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However, they will buy more and they'll be more satisfied.
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They won't feel like you've take anything away from them.
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They will buy more, and they'll be happier with the
23:16
experience.
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Overall sales go up, though only marginally, when you
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reduce variety.
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AUDIENCE: But store brands lose [UNINTELLIGIBLE]?
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BARRY SCHWARTZ: Store brands lose--
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well, statistically reliable, yeah.
23:31
I suppose this is probably a compliment to
23:34
higher priced brands.
23:36
Higher priced brands gain.
23:38
AUDIENCE: But it seems to imply that this
23:40
isn't going to change.
23:41
It seems to imply this is not going to change because it's
23:44
not in the store's interest.
23:45
BARRY SCHWARTZ: It's not in the store's interest to
23:46
change, because it wants you to buy its brand, because it's
23:48
got a better markup.
23:50
That may be true.
23:51
But but also, there are only a handful of studies.
23:54
And we don't know whether this is inevitable.
23:56
This is what's been found, but if you engineered things, you
23:59
might be able to get the benefits of reduced selection
24:02
without paying that particular price.
24:05
For example, Trader Joe's is the fastest growing
24:07
supermarket chain the United States.
24:09
And everything there is store brand, pretty much.
24:11
So it's not inevitable.
24:14
There are two caveats to this choice paralysis thing that
24:16
are worth mentioning.
24:17
One is what's known as preference articulation.
24:22
If you know exactly what you're looking for, more
24:26
choice is better.
24:29
Because the more options there are, the more likely it is
24:33
that you'll be able to find exactly what you want.
24:37
So he calls this preference articulation.
24:39
And the model here is before you look at anything, you sit
24:42
down and you say, what do I want in a car?
24:44
And you list all the things you care about in a car.
24:47
And then you go out in the world to do a pattern match
24:50
and find and find it.
24:52
How often do people make choices like this?
24:55
My estimate is never.
24:57
At least for anything more
24:58
complicated than, say, raisins.
25:00
Instead, what happens is you kind of get a rough idea of
25:03
what you care about in a car.
25:04
It's got to be safe.
25:05
It's got to be fuel efficient.
25:06
And after that, you let the market help you figure out
25:09
what else you care about.
25:10
So you go shopping trying to answer two questions.
25:13
One, what do I care in a car?
25:16
Two, which one of these things has what I care about?
25:19
And under those conditions, choice
25:20
paralysis is a likely result.
25:23
However, it's useful advice to you personally to sit down and
25:28
figure out exactly why you're buying whatever it is you're
25:30
buying before you look at any of the alternatives.
25:33
I know that no one will do that.
25:34
It's way to hard.
25:36
Second, if the different options are alignable, meaning
25:41
that can all be scaled on the same dimension, then again,
25:45
more options are better than fewer.
25:48
So if you're going to Kentucky Fried Chicken--
25:51
I bet nobody eats that crap.
25:53
If you're going to buy Kentucky Fried Chicken or some
25:56
equivalent and it turns out that they now offer you a one
25:59
box, a two box, a three box, a four box, a five box, an eight
26:03
box, any size portion you want, the more different sized
26:07
portions they offer, the happier you are.
26:09
Everyone will be able to get exactly the number
26:11
of pieces they want.
26:13
And that's the only respect in which these different options
26:16
differ is the size of the box.
26:18
So if you're talking about choices that are like this,
26:22
more is better.
26:23
More options are better than fewer.
26:24
Again, how often are these the kind of
26:26
choices people are making?
26:27
I would say close to never.
26:29
It's almost always involves multiple dimensions.
26:31
It involves making tradeoffs.
26:33
And under those conditions, you can boggle the mind by
26:36
giving people too much choice.
26:37
Second, if you overcome paralysis and choose, the
26:42
second effect that too much choice has is it induces you
26:45
to make worse decisions.
26:47
In the dating case, the speed dating
26:49
case, here's what happens.
26:51
You ask people in advance, what do you care about in a
26:54
romantic partner?
26:55
And they tell you all of the right things.
26:57
I want somebody who's smart, interesting, makes me laugh,
27:02
kind, understanding, thoughtful, sensitive,
27:06
empathic, and really hot.
27:11
OK.
27:12
now comes the dating experience.
27:14
Now evaluating how smart, how kind, how empathic, how funny,
27:19
how all of those things 12 different people are is hard.
27:24
So what do people do?
27:25
They use a simplifying strategy.
27:27
And they end up choosing entirely on the
27:29
basis of how hot.
27:32
Then they wake up the next morning and they go, what was
27:34
I thinking?
27:36
So they adopt a strategy that makes the decision makeable, a
27:39
simplifying strategy.
27:41
But the problem is that the criteria that are simple
27:43
aren't the ones that really matter.
27:45
So they will consistently make bad decisions just because the
27:48
world has forced them to adopt a strategy that simplifies the
27:52
information assessment task.
27:56
In the case of the 401(k), people who knew that it was
27:59
stupid beyond words not to participate--
28:03
I have to participate.
28:04
My employer is giving me $5,000.
28:06
I have to do something.
28:08
What do they do?
28:09
For every 10 mutual funds you offer, the number of people
28:14
who put their money into a money market
28:16
account goes up 7%.
28:18
So they make the worst possible investment.
28:21
Because they know they have to do something, but they don't
28:23
know which thing.
28:24
So they say, ah, I'll just put it in the bank and tomorrow
28:27
I'll figure out what mutual fund to invest in.
28:30
They get 3/4 of a percent, 1/2 percent interest. You could
28:33
take a dart and throw it at the set of mutual fund
28:36
opportunities, and any of them would be better
28:38
than what they choose.
28:39
It's a nice simplifying strategy, but it's clearly not
28:42
the right decision.
28:44
OK.
28:46
But mostly I want to focus on the third effect that too much
28:49
choice has.
28:50
If you manage to overcome paralysis, and if you manage
28:56
to make a good decision, what happens to the satisfaction
29:00
you get out of making good decisions?
29:02
And I want to focus on this because this is I think in
29:05
some ways the most surprising aspect of the problem and
29:08
perhaps the most significant.
29:10
People may do better objectively when they have a
29:14
lot of options to choose from as opposed to a few.
29:17
However, they will feel worse.
29:20
Doing better and feeling worse is the song I'm going to be
29:23
singing to you for the next long time.
29:26
29:29
So--
29:32
they don't quite say this, but this is what they're thinking.
29:34
29:38
If you can't see the captions, "They never should have
29:39
allowed us to be
29:40
free range." OK.
29:44
Now, why does this happen?
29:46
I didn't know exactly where to fit this in,
29:48
so I put it in here.
29:50
It doesn't quite fit, but it ought to be relevant to you.
29:52
A study was recently done.
29:54
What it shows us is that people don't know their own
29:57
minds very well.
29:58
This will come as a shock to you, I'm sure.
30:01
This was a study where people got to
30:04
rate digital CD players.
30:07
So it was all software.
30:08
And people got--
30:10
one CD player had 7 features, one had 14, and one had 21.
30:14
And people got to-- first they were asked which of them they
30:18
would prefer.
30:20
And the majority of people said they would prefer the CD
30:23
player that had 21 features.
30:27
That is to say, they're interested in choosing
30:29
something that has enormous capability.
30:32
Now, you let them construct their own CD player by giving
30:37
them a list of the 21 different features that are
30:39
available, and you see how many of them they pick.
30:43
They pick only 19 of the 21.
30:45
I want my CD player to have these particular
30:47
19 customized features.
30:50
Now, in the third experiment, you actually let people use
30:53
the CD player with 21 features for a while.
30:56
Give them a manual.
30:57
Let them play with it.
30:58
And now you have them choose between that and a CD player
31:02
that has seven features.
31:03
And now they choose the simpler one.
31:07
So there's a tradeoff between capability and usability.
31:13
As far as I know, no one has figured out how to achieve
31:16
maximum capability and maximum usability in the same device.
31:21
There's a tradeoff.
31:23
In prospect, capability seems way more
31:26
important than usability.
31:28
In practice, the reverse is true.
31:31
What's weird about this, though, is that it's not like
31:34
the people in the study haven't already learned this.
31:38
They probably have closets full of devices that they
31:41
never use because they couldn't figure out how to get
31:44
it to do the simple things because it was able to do all
31:46
these complicated things.
31:47
They have taught themselves again, and again, and again
31:50
that usability is more important than capability.
31:53
Nonetheless, when the next device it appears, it seems
31:56
that they're driven by
31:57
capability rather than usability.
31:59
So people are not likely to get this right on their own.
32:02
And I mention this because it seems to me that you are in
32:05
perhaps a unique position in knowing this to help to
32:09
protect people from themselves, which is what I'm
32:12
going to recommend to you at the end.
32:14
So why is it that all this choice makes people miserable?
32:17
There are four different things,
32:18
four different reasons.
32:19
The first is regret.
32:23
You choose something, and it's good.
32:26
Is it perfect?
32:28
Nothing's perfect.
32:29
But it's good.
32:31
Yeah?
32:32
AUDIENCE: [INAUDIBLE]
32:34
slide, capability versus usability.
32:36
I was just thinking, isn't capability aspirational?
32:38
So you choose something that has many more features than
32:41
you're capable of using now because you think, I could get
32:45
to be that proficient.
32:45
Whereas usability is marked by what's available to me now.
32:49
But tomorrow is a new day.
32:51
BARRY SCHWARTZ: It's true.
32:52
You're absolutely right.
32:53
Capability is both a prediction about what you'll
32:56
want the device to do and a prediction about what you'll
32:59
be able to get the device to do.
33:01
But experience teaches most people-- not all people--
33:05
that they will never, either for reasons of talent, or
33:09
temperament, or time--
33:10
they will never be able to get the device to do all the
33:13
wonderful things it can do.
33:14
And that doesn't seem to stop them from choosing exactly
33:17
that kind of device the next time around.
33:19
And it's not like these choices are free.
33:23
Because when you choose a device that's got a lot of
33:25
capability, invariably the easy things are harder to do.
33:30
So, plug and play?
33:32
Right.
33:33
So the result is that you end up getting even less out of
33:37
the highly capable device than you would out of a less
33:40
capable device where it was transparent how to get to do
33:44
the things you cared about.
33:45
So, yes.
33:46
It may be aspirational.
33:47
But the question is, why don't people learn from their failed
33:50
aspirational efforts in the past to adopt a different set
33:53
of standards about what they should be looking for?
33:57
And people are endlessly optimistic.
33:59
Tomorrow is the first day of the rest of my life.
34:03
Could be that.
34:04
So regret.
34:05
Any choice it's not perfect, it's easy to imagine
34:08
alternative would have been better.
34:10
And the more alternatives there are, the easier it is to
34:14
imagine that an alternative would have been better.
34:16
If there are only two different kinds of cereal to
34:18
choose from, how much can you regret the one you chose?
34:21
If there are 200, well now, only an idiot could think that
34:25
you've actually stumbled onto the best cereal.
34:28
So what regret is going to do is it's going to reduce the
34:30
satisfaction you get out of good choices.
34:34
What anticipated regret does is it prevents you from making
34:37
choices at all.
34:39
You're so sure you're going to regret the decision that you
34:41
don't make it.
34:42
This I'm sure is a lot of why people don't put money into
34:45
their 401(k)s.
34:47
Some other fund will outperform the one they choose
34:49
and they'll spend the rest of their lives kicking
34:50
themselves.
34:52
The specter of regret, I think, makes even unimportant
34:56
decisions loom large.
34:57
And lastly, for all eternity, French, blue cheese, or ranch?
35:01
For one salad, it really doesn't matter what dressing
35:03
you have. But if I tell you you're going to pick the salad
35:05
dressing that you're going to have from now until the end of
35:07
time, you really want to get that right.
35:10
And I think that the specter that people will regret their
35:14
decisions is really what's driving the agony that people
35:18
have making even inconsequential choices.
35:21
Second, related to regret, what economists call
35:23
opportunity costs.
35:25
And that is, once again, you make a choice.
35:29
But the thing you choose is not the best in all respects.
35:32
You get great gas mileage and real safety and reliability,
35:38
but the ride isn't as smooth as you might like.
35:40
Or you get a really smooth ride, and everybody stops and
35:44
looks at your car as you drive by.
35:46
But the mileage sucks and the thing's in the shop every
35:49
three days.
35:49
So life is tradeoffs.
35:51
The more options you look at, the more options there are,
35:55
the more options you look at, the more you will identify
35:59
attractive features and options that you reject.
36:04
And so you might well choose the thing that is the best for
36:07
you but still be unhappy about all these attractive features
36:13
of other options that you had to pass up.
36:14
And all these opportunity costs add.
36:18
And what they do cumulatively is subtract from the
36:20
satisfaction you get out of the decision you made, even if
36:23
you make the right decision.
36:26
So there's a lot to say about opportunity costs.
36:30
Parents aren't told enough about this when they are
36:33
prospective parents.
36:34
We found we really missed going to the theater and
36:36
eating at nice restaurants, so we gave our kids away.
36:41
Then there's this one.
36:42
36:45
People don't need to have this explained, even though they
36:48
don't come from New York.
36:49
But the thing to think about-- here's are these people living
36:52
in a midtown apartment house.
36:53
And they have a place in the Hamptons.
36:55
And there they are sitting on the beach, have the beach
36:58
themselves, it's gorgeous, it's August.
37:01
What could be better?
37:02
Life is perfect.
37:03
And all this guy is thinking is that it's August. Everyone
37:06
in our neighborhood is away on vacation.
37:08
I could be parking right in front of my house.
37:11
And every day he sits on the beach, and instead of being
37:15
thankful for the beautiful weather and the beautiful
37:17
setting, all he is is pissed off about the parking spaces
37:20
he's blowing.
37:21
And that's going to make his vacation a lot less enjoyable
37:24
than it would have been if he hadn't had to pass up great
37:27
parking spaces.
37:28
One last example.
37:30
37:41
There is no caption on this one.
37:43
I think a caption is quite unnecessary.
37:47
Just to show that this is not just a fiction of New Yorker
37:50
cartoonists' imagination, here's a study.
37:52
People participate in an experiment.
37:54
And then when they're done, you offer them $2 as a token
37:58
of appreciation for their participating.
38:00
Or you say, we have these nice pens with the school logo that
38:05
are available the bookstore for about $2.50.
38:08
And if you'd rather, you can have a pen.
38:10
And under these conditions, 75% of people choose the pen
38:14
over the $2.
38:15
In another condition, you offer them $2, or that same
38:20
good pen, or two less expensive pens.
38:24
Now the question is what percentage of people in this
38:26
condition will choose either of the pen options.
38:30
And the answer, as should be obvious to you, has
38:32
to be at least 75%.
38:36
Right?
38:37
75% of people prefer the good pen to $2.
38:40
How can fewer than 75% of people prefer
38:43
either pen to $2?
38:45
But then you're saying to yourself, why would he be
38:48
talking to you about this trivial study?
38:51
And the answer is that 45% choose either pen.
38:55
And this really captures in a nutshell what
38:57
opportunity costs do.
38:59
You're looking at the good pen.
39:01
And it's a good pen.
39:02
It's nice to have a good pen.
39:03
But you're giving up the opportunity to have two pens.
39:06
And that makes a good pen feel less good.
39:08
So you look at the two pens.
39:10
And that'll take care of all the writing have to do for the
39:12
whole semester.
39:13
But once in your life, it would be nice to
39:15
write with a good pen.
39:17
And that makes the two pens less good.
39:19
So the thing you're passing up with the alternative subtracts
39:24
from the satisfaction you'd get from
39:25
whichever one you choose.
39:26
And suddenly, neither of the pens is as good as $2.
39:30
So you take the $2.
39:32
This in a nutshell is what life is like when people are
39:36
choosing from among a large set of attractive
39:39
alternatives.
39:40
The thing you end up choosing is never going to feel as good
39:43
as it would have if the choice set were smaller.
39:46
Another way of saying this is that everything suffers from
39:49
comparison.
39:50
There's a nice little study--
39:52
I don't have time to get-- there's a theoretical
39:54
rationale for this that derives from a theory that
39:57
Daniel Kahneman and Amos Tversky developed known as
39:59
prospect theory.
40:00
Some of you may have sort of encountered it in
40:03
one place or another.
40:05
Tversky was a psychologist at Stanford who sadly died about
40:09
a decade ago of a brain tumor.
40:12
And Kahneman just recently won the Nobel Prize for this work.
40:15
Anyway, there's a theoretical rationale for this.
40:18
But the result is simply this.
40:19
You ask one set of people in the San Francisco area, how
40:24
much would you pay for a plane ticket for a
40:28
weekend in Las Vegas?
40:29
How much would you be willing to pay to fly for a long
40:32
weekend in Las Vegas?
40:33
And people give you a number.
40:35
Other group of people, you say, you know, you're thinking
40:38
about going away to Seattle, to LA, and to Las Vegas.
40:43
How much would you pay for a plane ticket to Las Vegas?
40:47
So you're asking them the same question.
40:49
But in one case, you are forcing them explicitly to
40:52
think about the value of going to Las Vegas in comparison
40:55
with the alternatives.
40:57
And people are willing to pay significantly less money in
41:00
the latter case than in the former.
41:03
And this is true whether it's Las Vegas or LA or Seattle.
41:06
Doesn't matter which one you're asking about.
41:08
People will pay less for a ticket anyplace when they're
41:11
evaluating it in a larger set than when they're evaluating
41:14
it by itself.
41:15
41:17
OK.
41:18
One other thing about opportunity cost that might
41:20
surprise you.
41:23
Is there anyone in this room who's pressed for time?
41:25
41:28
No?
41:29
Oh, you are treated really, really well.
41:30
So why do you think people feel so much time pressure?
41:34
Mostly people assume--
41:35
I assume--
41:36
that it's the pressure to get the things done that you have
41:39
to get done.
41:40
We all have a very long to-do list. We never get to the
41:44
bottom of it.
41:45
And that's why we feel rushed for time.
41:47
So people did a study in which some people were asked to list
41:50
all the things they had to do.
41:52
And other people were asked to list all the things they'd
41:54
like to do.
41:55
And then they were asked a bunch of questions having to
41:57
do with time pressure.
41:59
And guess which group felt more time pressure?
42:01
Not the group with a list of chores.
42:03
The group with the list of desirable activities.
42:05
What really seems to create a sense that there's not enough
42:08
time is all of the things we want to do and like to do that
42:12
we don't have time to do and that we're going to have to
42:14
make choices among that create the sense that there's not
42:17
enough time in life for me to be the person I want to be and
42:20
do the things I want to do.
42:23
OK, third.
42:24
I don't want to talk about that.
42:27
The third reason why we do well and feel crappy is that
42:30
when there are a lot of options, it's inevitable that
42:33
our expectations about how good the chosen
42:35
option will be go up.
42:38
The story I use to make this point is when I went to
42:40
replace my jeans at The Gap.
42:42
And for years and years I'd buy jeans.
42:43
And they came in one style, and I bought them.
42:46
And they fit however they fit, which was
42:48
usually not very well.
42:49
And you'd sort of break them in and wear them forever
42:52
because it was so unpleasant to break them in.
42:55
So I go to replace my jeans.
42:56
And I give them the size.
42:57
And I get asked, you want slim fit, easy fit, relaxed buttons
43:02
fly, zipper fly, stone washed, acid wash, boot cut?
43:05
On and on it goes.
43:06
So I tried on every damn kind of jeans they had.
43:09
And I walked out with the best fitting jeans I had ever had,
43:12
honest, and I felt worse.
43:15
I did better, and I felt worse.
43:17
And the question was why.
43:18
And the answer was, when they only came in one style or two,
43:22
I had no expectations about how well they would fit.
43:25
When they came in 20 styles, I expected perfection.
43:28
And what I got was good, but it wasn't perfection.
43:31
We evaluate our experiences in large part by comparing them
43:35
to what we expect them to be.
43:36
And if our expectations are high, even good experiences
43:39
will end up feeling like we have failed.
43:42
And there's no way I can imagine that adding options in
43:45
people's lives will do anything other than raise
43:48
people's expectations.
43:50
Plus the world does this to us.
43:52
Travel agents.
43:55
Contractors.
43:56
Would be possible for you to totally exaggerate how much it
43:58
will cost and how long it will take so we'll be pleasantly
44:00
surprised in the end?
44:04
Everything was better back when everything was worse.
44:08
The truth in this is that when everything was worse, people's
44:12
expectations were lower so that it was possible
44:15
occasionally to have an experience that exceeded
44:18
expectations.
44:19
In modern American society, at least among the affluent, I
44:22
don't think it's possible for anything to happen that's
44:25
better than we expect it to be.
44:27
Because we expect everything to be perfect.
44:30
And that's a recipe for at least disappointment, if not
44:33
abject misery.
44:34
And all this choice is one reason why.
44:37
This is an exaggeration, but it's funny.
44:39
44:45
We tend to romanticize poverty.
44:48
Just to let you know, in case you care, that this is false.
44:51
People are not happy in stinking hell
44:53
holes of abject poverty.
44:54
What is true is that once you cross subsistence, whatever
44:58
subsistence is in your society, additional increases
45:02
in wealth have virtually no effect on well-being.
45:05
There's a huge, steep curve going from zero to
45:09
subsistence, but once you cross that line, the curve
45:11
flattens out.
45:13
It's worth knowing in case you have a choice between X and
45:16
making more money.
45:17
Almost certainly X is what you should choose.
45:22
Self-blame.
45:23
45:26
The last thing that does us in is that you make a choice.
45:29
And it's a good choice, but it's not as good as you think
45:31
it will be, or hope it will be, or expect it to be.
45:34
And the question is why.
45:35
What went wrong?
45:36
Whose fault is it?
45:38
And when you're choosing jeans from two different styles, the
45:41
answer to the question what went wrong is obvious.
45:44
It's the world's fault.
45:46
They only make them in a couple of varieties.
45:48
What could I do?
45:49
Did the best I could.
45:51
But if you're choosing from 200 styles, and the result is
45:55
unsatisfactory, and you ask the question,
45:57
whose fault is it?
45:59
It seems to me now the answer is again obvious.
46:01
It's just different.
46:02
Now the answer is it's my fault.
46:04
With 200 options, there's no excuse for anything less than
46:07
perfection.
46:08
So not only do people have ridiculously high expectations
46:14
which are almost never met, but then when they aren't met,
46:17
they attribute the responsibility for that
46:20
failure to themselves.
46:22
And self-blame I think is a critical component of why we
46:26
are experiencing an epidemic of clinical depression in the
46:29
United States.
46:31
At a time when we've never been richer or had more
46:34
freedom of choice, people seem to be
46:35
getting sadder and sadder.
46:38
There's one modifier I want to add, because
46:40
I think it's important.
46:42
And that is that the problem of having too much choice is
46:46
enormously exacerbated, made worse, if you're the kind of
46:50
person who thinks that the aim in a decision is to get the
46:53
best, what we call maximizing.
46:56
The best job, the best cell phone, the best car, the best
47:00
vacation, the best restaurant, the best dish in the
47:02
restaurant.
47:03
You're out to find the best.
47:05
The alternative is to be out to find
47:07
something that's good enough.
47:08
And good enough can be very good.
47:10
You can have high standards.
47:12
Why does this make a difference?
47:13
Well, in a world with unlimited choice, how do you
47:16
know you've got the best?
47:19
You have to examine all the possibilities.
47:22
Well, you can't examine all the possibilities.
47:24
There are too many of them.
47:25
So you examine a bunch, and then you choose.
47:27
And if it's in any way disappointing relative to
47:31
expectations, you'll just be convinced that looking a
47:34
little longer or in a little different place you'd have
47:36
done better.
47:37
If you're out to get a good enough alternative, satisfice,
47:41
then you don't need to examine all the possibilities.
47:44
You just examine them one at a time.
47:46
And when you find one that meets your standards, you
47:48
choose it, and you don't look back.
47:51
So the difference between these two decision-making
47:53
styles is probably significant in general.
47:56
But it becomes especially significant in a world where
47:59
there are essentially unlimited options.
48:01
This is an example of a maximizer.
48:03
48:06
And here is a satisficer.
48:07
48:10
And I studied, whether this matters, with a bunch of
48:14
college seniors who were looking for
48:16
jobs a few years ago.
48:18
We started tracking them in October of their senior year.
48:21
And we stayed with them until June.
48:23
And we were interested in how hard they found the decision,
48:26
how many options they wanted, how well they did, and how
48:29
they felt about how well they did.
48:31
And what we found in a nutshell is this.
48:35
If you are a maximizer, if you are out to get the best, you
48:39
get a job with a starting salary that is 25% higher than
48:43
if you are satisfied with good enough.
48:46
Maximizers get better jobs.
48:50
$7,500 difference, 25% difference.
48:53
That's a lot for a starting salary right out of college.
48:55
48:59
But they are also more pessimistic, anxious,
49:04
stressed, worried, tired, overwhelmed, depressed,
49:06
regretful, and disappointed.
49:07
And they are less content, optimistic, elated,
49:10
excited, and happy.
49:12
In other words, they do better and they feel worse.
49:15
Now, we don't know how they feel when they're actually on
49:18
the job, because the study stopped before they had
49:20
actually started working.
49:22
But I have no reason to think it would be true of their
49:24
experience on the job as it is of their experience of a
49:27
starting salary.
49:29
So how can it be that choice is good and bad?
49:33
Because remember, I said choice is good.
49:39
Here's how.
49:40
49:44
These people, Coombs and Avrunin wrote an article 30
49:47
years ago in which they argued not about choice, about
49:50
something else, that good feelings, good things satiate
49:54
and bad feelings escalate.
49:56
So you're eating a meal.
49:58
And you're starving when you start.
49:59
And the first few bites are spectacular.
50:01
You keep eating.
50:02
It's still delicious, but with each succeeding bite, it gets
50:05
a little bit less delicious and a little bit less
50:07
delicious, until you're no are getting much of a hedonic kick
50:10
out of your meal.
50:13
Meanwhile, something else is happening.
50:15
And that is you're starting to get full.
50:17
First it's just mild, hardly noticeable.
50:19
By the time you get to your third course, you're really
50:21
kind of sagging.
50:23
But your grandmother told you that people are starving in
50:25
Africa, so you have to finish everything on your plate.
50:28
So you just keep eating, and eating, and eating.
50:30
The pleasure is gone.
50:31
The discomfort is getting worse, and worse, and worse.
50:35
So this is exactly the way I envision choice.
50:38
When you go from having no choice, like being really
50:41
starving, to having some choice, it's all good.
50:46
And a curve going up is the way I imagine what the dynamic
50:55
is of the good characteristics of choices.
50:57
So along the X-axis is number of choices.
50:59
Along the Y-axis is subjective state.
51:01
The line in the middle is neutral.
51:03
So having no choice, you feel infinitely bad.
51:07
As I give you choice, there's a huge improvement in your
51:10
well-being.
51:11
But eventually that curve levels off and there are
51:14
diminishing marginal returns to additional options.
51:16
And eventually there are no returns to additional options.
51:19
It's flat.
51:20
Meanwhile, all the stuff that I've been describing to you--
51:24
opportunity cost, regret, raised expectations,
51:27
self-blame--
51:28
all of that gets bigger, and bigger, and bigger as the
51:31
number of choices increases.
51:33
And all of that is negative.
51:35
And that's what this curve is that starts out at
51:38
zero and goes down.
51:39
And so how do you feel about your life with any given
51:43
number of choices is simply the algebraic sum
51:47
of those two processes.
51:50
With me?
51:51
And that's what it looks.
51:52
Why does it look like this?
51:53
Because I drew it.
51:56
So I can make it look any damn way I want.
51:58
But this conceptually captures what I think is going on.
52:02
A point is reached where there are no longer benefits to
52:05
additional options and there are very significant costs,
52:08
very significant subjective psychological costs, and the
52:11
costs can more than outweigh the benefits.
52:14
So you end up feeling worse than neutral.
52:17
Not simply worse than you would if you had fewer
52:19
options, but actually worse than neutral.
52:22
And that's the state I think many, many people in American
52:25
society are in.
52:27
There's a deep point in that curve which all almost all of
52:31
social science ignores.
52:32
And that is what we call the monotonicity assumption.
52:38
So people do research assume that the function relating X
52:43
and Y goes in one direction.
52:45
Doesn't have to be a straight line, but it
52:47
doesn't change direction.
52:48
So you have one group that has no choice, and one group has a
52:52
choice between two options.
52:53
That group is happier than the group that has no choice.
52:56
You don't need to study three options.
52:58
Because we know what that's going to look like.
52:59
Just keep on extrapolating the curve out.
53:02
Now, I say this only because there were 50 years worth of
53:05
studies comparing no options to two options, and it never
53:09
occurred to anyone to look at five or ten options.
53:12
Because we knew what it would look like.
53:13
And we just knew the wrong thing.
53:16
Because the relation between choice and
53:17
satisfaction is not monotonic.
53:19
It changes direction at some point.
53:22
Second principle that's worth paying attention to is what I
53:27
call the leakage principle, a very elegant
53:29
name, you'll agree.
53:30
And that is the context in which you make the decision
53:36
will continue to exert its influence after the decision
53:41
is made and you're actually experiencing the
53:43
thing you've chosen.
53:44
So the anguish you go through in choosing a car, or a job,
53:48
or a spouse, or a restaurant doesn't stop when
53:51
the choice is over.
53:52
It's not like, OK, I've now got this car, and I'm just
53:55
going to evaluate it on its own terms. No.
53:59
The the comparisons that you were making while making the
54:02
decision will continue to influence you as you
54:05
experience the car.
54:06
And the result is that you will like it
54:08
less than you should.
54:09
You will underappreciate it if you have tortured yourself in
54:12
making the selection.
54:15
This raises an interesting point that I think is directly
54:18
relevant to the work you people do.
54:20
And this is what economists refer to as the
54:22
principal-agent distinction.
54:26
Principals are the people who are going to
54:28
experience the good.
54:29
Agents are the people who get it for them.
54:30
So we have financial advisers to tell us what stocks to buy,
54:34
insurance agents to tell us what insurance to get, real
54:37
estate agents to tells what house to buy, and so on.
54:40
We are hiring their expertise.
54:42
And that's why we think we're doing it.
54:46
We're also hiring something else.
54:49
And that is, if you have an agent choosing your house,
54:53
your car, and your insurance, you don't have to make the
54:56
comparisons.
54:58
And what that means is that you won't suffer all of the
55:01
effects of all of these choices.
55:04
Because you only get to see the result.
55:07
Your agent says, buy a Honda Civic, so
55:09
you buy a Honda Civic.
55:11
Your agent says, buy this $6.3 million house up on the hill.
55:15
It's a steal.
55:16
For all I know in this neighborhood,
55:18
that would be a steal.
55:20
So the agent is the one who suffering making all of these
55:23
comparisons, except it's not really suffering because the
55:26
agent isn't going to experience
55:27
whatever gets chosen.
55:28
You are separating the choice from the experience.
55:31
And as a result, you're making the person who was having the
55:34
experience more satisfied than he or she would otherwise be.
55:38
And the thing I want to emphasize is that this is true
55:41
even if your agent doesn't know one bit more about the
55:44
thing than you do.
55:47
The doesn't need to be an expert in order for you to
55:50
benefit from the advice that the agent gives you.
55:53
All the agent needs to do is not be a complete moron and
55:56
actually be interested in making you better off.
56:00
And you will be better off because you don't torture
56:02
yourself over the decision.
56:04
All that's done by somebody else.
56:06
One view of what search engines can do or might do for
56:13
people is that they act as agents, presenting results,
56:17
hiding all of the tortured comparisons that must be made
56:20
in order to prioritize results so you only
56:23
get to see the winner.
56:24
And the result is that you appreciate the winner much
56:27
more than you would if you had to do all
56:29
those comparisons yourself.
56:31
Almost done.
56:33
56:35
This is just to show you that there are
56:36
companies that know this.
56:37
They have limited selection, and they do very well.
56:40
Costco-- do they have Costcos out here?
56:42
It started in Seattle, right?
56:43
Costco is the store that people leave with the biggest
56:46
smiles on their faces.
56:48
That's the store people like to shop in most. Limited
56:51
selection, good prices.
56:53
And the little surprise things that they have for sale, these
56:57
little affordable luxuries that they
56:59
don't normally carry.
57:01
Greek diners in New York City.
57:03
So Greek diners--
57:05
it's not like they have Greek food.
57:06
They're just owned by Greek people.
57:08
And their menus are about 1,000 pages.
57:12
There is no dish that anyone has ever eaten that isn't in
57:14
somewhere on those menus.
57:16
And tucked in the front cover of the menu is a little piece
57:20
of paper clipped to the front of the menu with today's
57:24
specials, four or five items.
57:27
Two things to know about today's specials.
57:29
One, they are the highest margin items. Two, they're the
57:32
same every day.
57:35
Inadvertently, you create an insoluble problem by giving
57:39
people 10,000 things to choose from.
57:41
And then you solve it for them by giving
57:43
them today's specials.
57:44
And people are driven to choose, take your advice, take
57:47
your recommendation, and choose today's specials.
57:50
So they make a lot more money than they otherwise would.
57:53
And they solve your choice problem, which of course
57:55
they've created.
57:57
OK, last substantive slide.
58:02
And then I'll say just a word or two about how this might
58:04
relate to you guys.
58:06
The more choices are available for people, the more likely it
58:10
is that people will choose nothing, that
58:14
they will be paralyzed.
58:16
What do you do in the face of that paralysis?
58:19
Paralysis can be extremely costly.
58:21
Sometimes you really should act.
58:23
Richard Thaler, an economist, and Cass Sunstein, a professor
58:27
of law at the University of Chicago, have actually offered
58:30
a guide for public policy which they call libertarian
58:33
paternalism.
58:35
And the title of their paper is "Libertarian Paternalism is
58:38
Not an Oxymoron," although it would seem to be.
58:41
And here's their argument.
58:42
I'll give it to you with examples.
58:45
Let's choose this one.
58:46
In the United States, when you renew your driver's license,
58:49
you get asked, would you like to be an organ donor?
58:53
28% of American licensed drivers are organ donors.
58:57
85% five percent of Americans think organ
59:00
donation is a good thing.
59:01
28% of licensed drivers are organ donors.
59:05
Several different European countries,
59:06
they do the same thing.
59:07
When you renew your driver's license, you get the
59:10
opportunity to be an organ donor.
59:11
And in these countries, 90% of licensed
59:13
drivers are organ donors.
59:15
28% in the US, 90% in these European countries.
59:18
What's the difference?
59:20
Europeans are nicer than Americans?
59:22
I don't think so.
59:24
Opt-in versus opt-out.
59:25
In Europe, you're an organ donor unless you say no.
59:28
In the United States, you're not an organ donor
59:30
unless you say yes.
59:31
Now, understand that either way, all you have to do is
59:33
check a box and sign a form.
59:35
This is not exactly rocket science.
59:38
Nonetheless, with the high likelihood that people will do
59:42
nothing, Thaler and Sunstein argue, organize options so
59:47
that if people do nothing, they get what is almost
59:51
certainly in their interests.
59:53
That's the paternalistic part.
59:55
The libertarian part is you do give them the
59:58
opportunity to say no.
60:00
With respect to 401(k) participation, same story.
60:04
Almost every workplace the United States, you have to
60:07
sign a form that says, withhold 5% of my pay and put
60:10
it into something.
60:11
And if you don't, nothing is withheld.
60:13
Suppose you reverse that and the form says, don't
60:16
deduct 5% of my pay.
60:18
I want everybody bloody penny of it.
60:21
You dramatically increase the rate of
60:23
participation in 401(k)s.
60:25
And we have good reason to believe that this
60:27
paternalistic manipulation of what the default is is
60:31
actually doing what people want.
60:33
Because, as I say, 85% of Americans
60:35
support organ donation.
60:37
And virtually everybody ends up
60:38
participating in the 401(k).
60:40
So all you're doing is inducing them to do it a
60:42
little bit sooner.
60:44
So in a world in which people are more and more likely,
60:47
because of the overwhelming number of choices they face
60:49
and the complexity of life, to do nothing, the most useful
60:53
thing that policy can do is organize the space so that
60:58
when they do nothing, good things happen.
61:00
[INAUDIBLE]
61:02
It will have as big an effect on the character of a variety
61:05
of American social institutions, bigger effect
61:08
anything else I can think of.
61:09
And it's free.
61:11
Essentially free.
61:13
So it is worth thinking long and hard about what the
61:17
defaults should be so that people are mostly satisfied
61:22
with what happens to them if they don't do anything.
61:25
SPEAKER 1: Let's have you keep going and--
61:27
[INTERPOSING VOICES]
61:28
61:31
BARRY SCHWARTZ: I already said this.
61:33
I think the capability/usability problem
61:36
is relevant to you.
61:37
But you know better than I how you face it and how
61:40
you would solve it.
61:42
I must say I like a lot that you give people--
61:47
what do you call it?
61:48
Packets?
61:50
Pack?
61:50
AUDIENCE: Pack.
61:51
BARRY SCHWARTZ: Instead of letting people choose one from
61:53
column A and two from column B, you to say--
61:55
If I were you, I'd say it a lot harder--
61:56
I'd say, listen.
61:58
This is what we think you should have. Click
62:00
and you've got it.
62:00
Instead of just saying, you can have it
62:02
all if you want it.
62:04
Urge people to want it.
62:05
We know more than you do.
62:06
This is what you should have.
62:09
Structure our options hierarchically.
62:11
A way of reducing the choice paralysis is to give people a
62:15
choice among four or five options.
62:17
And then once they've--
62:18
create trees.
62:19
Great trees intelligently so that people never have to go
62:21
back up the tree, realizing that they've gone down the
62:23
wrong branch.
62:24
I know this isn't easy.
62:26
But this is going to be a lot more satisfying and usable for
62:29
people than presenting 125 options all at once.
62:33
And is worth paying a lot of attention to how people use
62:35
your products to know just how these trees should be
62:39
structured so that you never feel like you're choosing
62:42
among a very large set of options.
62:44
I get the feeling that there's nothing I can say that you
62:45
haven't really thought about in this connection.
62:48
But what the hell.
62:50
I'll say it anyway.
62:51
I believe that for the most part, you people are part of
62:54
the solution rather than part of the problem, to pull a
62:59
slogan from the '60s out of my back pocket.
63:01
And that's something that you should be very pleased about.
63:04
And I'm certainly thrilled to death that you exist. Because
63:07
you're certainly part of the solution and not part of the
63:09
problem in my world.
63:10
Although there is one thing I'd like you to fix that we
63:12
can talk about later.
63:15
But I don't think there's anything
63:17
inevitable about this.
63:18
I think that you remain part of the solution rather than
63:20
becoming part of the problem only if you are deliberately
63:23
and self-consciously trying to be part of the solution.
63:27
There's enormous pressure to move in other directions,
63:30
where you will confuse, muddle, and frustrate people
63:36
rather than serving them.
63:38
And with your eye clearly on the prize and on how much
63:41
people need to be guided by the kind of information you
63:45
offer, you can resist the pressure that you may
63:49
experience some day in the future to be something
63:52
different than what you set out to be.
63:54
So thank you very much.
63:56
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