Mongolian Mischief

I remembered this last night and realised it relates back to the thinking of Barry Schwartz on how more choice can be bad for the consumer.
During the summer I went out for a dinner with the crowd from work, we headed down to an interesting restaurant in the city centre called the “Mongolian Barbeque”, this restaurant was unlike your average restaurant, the procedure was that when you went in you got your bowl and filled it with the various meats and vegetables you wanted, added some spices and seasonings, and then you gave it to the chef and he cooked it up right in front of you on a big giant hotplate like the pic above, pretty nifty eh?
There was a large selection of ingredients and with the spices included you could create an infinite variety of flavours, the problem was that a lot of the time the mixes created by the customer were well and truly foul, and the next day we discovered had caused many bowel related problems.
The problem is that your average person is not a chef, and therefore really doesn’t know anything about what goes well together and what is needed to make a nice tasting meal. The customer is not always right, because often the customer has no clue what they are talking about, and need to be saved from themselves. Or like my friends they will end up on the toilet all night

Why less is more - Choice Quality

I wrote before of the fascinating video I watched a while back on the subject of why “Less is more” delivered by the New York based psychologist Mr Barry Schwartz, and his first argument on how increasing the numbers of choices available to someone can cause a state of “choice paralysis” where they simply choose to make no choice at all.

The second thought provoking point that he puts forward is that increased choice leads to a decrease in the quality of the decision, and should someone mange to first overcome the choice paralysis and make a decision, often an abundance of choice will cause the chosen option to be inferior to that of a decision made with fewer options available.

The first example discussed by Mr Schwartz is that of a college survey undertaken in a New York college. Participants were asked to fill out a fairly lengthy survey and were rewarded with one of two gifts, they could choose either two dollars or a good pen from the college with the crest etc worth in the region of two dollars. 70% of the participants chose the pen, seemingly because two dollars was just cash, but the pen had a certain degree of novelty value to it and meant more to them than a mere $2. A week later the same survey was undertaken on campus, this time the participants were offered a choice of $2, the nice pen, or two cheaper pens. The results showed that with the increase in choices only 40% of people chose either pen option, with 60% going for the money instead. Although people had wanted the pen before, now they were faced with a problem they couldn’t resolve and decided to go for what had been deemed as the inferior option previously.

The second, and significantly more important example put forward by Mr Schwartz was that of company pension fund offerings. Mr Schwartz had previously explained that for every ten options added to the selection available to a workforce, it was observed that participation dropped by 2%, he now stated that the survey had also shown that for every 10 options you added, an extra 7% of participants chose to just put their money in a simple bank savings account, by far the poorest returning option, but given a long list of confusing options the easiest to understand. Therefore the quality of their decision got worse when they were given a greater choice.
He explained that the problem is only worsened due to that fact that most financial advisors if quizzed, would suggest that you give employees the largest choice possible, whereas in practice this actually has a negative effect on the quality of the choices made by the employee and puts their long term financial health at risk.

Makes you really think about our assumptions about what’s good and what’s bad when it comes to choice eh?

Why less is more - Choice Paralysis

“The Paradox of Choice: Why More is Less” raises what at first seems like a ridiculous concept, but proceeds to back up this seemingly absurd statement with simple examples from studies that seem to point that an increase in choice does indeed lead to a variety of undesirable conditions, the first and most debilitating of which is “Choice Paralysis”.

Barry Schwartz highlights the example of pension contribution schemes in most modern companies as an example of this paralysis and what ramifications that this can cause.

According to Mr Schwartz, no longer are your pension arrangements taken care of directly by your employer, nowadays you are faced with the choice of choosing where you pension contributions go yourself, and the choice in front of you can at times be truly huge, with countless different mutual funds based in different industries each with varying levels of risk and returns. Faced with such an array of choices it can often cause an individual to simply freeze in a state of confusion and make no choice at all. Schwartz goes on to say that in recent studies conducted across companies in many different industries that on average for every 10 further choices you put in front of your workforce, participation on the pension scheme drops by 2%, so by offering more choices you are leaving more people in worse financial situation for the rest of their lives.

My personal favourite example of more choice being bad for both customer and retailer is seen in the example of a California based jam shop.

The Jam shop decided to stage a promotion that involved sampling of its 24 imported jams, participants were then given a $1 off coupon for any jam in the shop. The next week they repeated the promotion with 6 varieties of the imported jam on display with the same $1 off coupon. The promotion with the 24 jams led to more buzz, excitement and more sampling around their shop front when compared to that of the day there were six, however sales of the jam were ONE TENTH of what they had been on the day when fewer samples were offered.
By offering too many choices the customer could not decide on what jam to buy… so just didn’t decide at all, and at the same time the retailer lost out on sales that the promotion could have provided them. The large amount of variety and choice therefore had a distinctly negative effect on both parties.

Two important facts I gather from this are
1. If there are too many choices the end result will be no choice
2. Do not judge the success of a promotion solely by numbers of people/ buzz

NB: Mr Schwartz does recognise that if you are knowledgeable about a certain area, and in this case are a financial expert or jam specialist, then an abundance of choices are ideal and exactly what you are looking for, however most people buying jam, wine or whatever it may be are not experts in that field.

Barry Schwartz - “The paradox of choice: Why more is less”

It seems somewhat logical to assume that the more choices we have in a life be it foodstuffs, work, medicine, basically anything, that this variety translates to a more advantageous situation for us.

I recently watched an eye opening lecture based on the book entitled “The paradox of choice: Why more is less” on Google video by professor of Social Theory Barry Schwartz who proposes that quite the opposite is true and that in fact we have so many choices available to us now in day to day life that it can lead to a situation where we are put in a much worse situation because of it. Of course Mr Schwartz does not say that choice is an entirely bad thing, he aggress that indeed some choice is better than no choice, but in many cases the sheer number of alternatives can create a sense of paralysis and given too many choices the chances are the individual will choose nothing.

One of the first presumptions we make is that the more choices we have available to us the better wellbeing we will have, because ultimately we can decide how we want to take care of ourselves.
It used to be that when you went to a doctor he would tell you what to do, and you would go get it done, the choice was simple, what ever the doctor said to you, you did.
Now the medical system in the United States has changed to one of “patient Autonomy” where although the Doctor proposes it is ultimately the patient who discloses, therefore the choice and the risk following is put in the hand of someone who does not know a great deal about medicine or the ramifications of these choices.

Another part of life where an increased level of choices has led to a drop in levels of wellbeing is that of our working lives. With the leaps and bounds technology has made in the last decade it is now possible with the wide array of mobile technology available to us to work every minute of every day and in virtually any place in the world. So now when we are at home, on holiday on the train, we have to make the choice not to work, and for many in a job where they feel like they need to compete or stay one step ahead of the competition this can lead people to a situation where they work to excessive levels and cause themselves and their family great deals of stress.

Over my next few posts I will highlight some of his great findings and ideas on the subject of why you can definitely have too much choice.
Also if you have some free time on your hands I suggest you watch it here at Google video