The Paradox of Choice: How the Abundance of Choice Robs Us of Satisfaction by Barry Schwartz talks about how we make everyday decisions: how will we invest our 401(k) (if we’re lucky enough to have one), how will we choose which car or house to buy, which jam will we buy from a display. Turns out these decisions are made a good deal more complex and less satisfying by the standard approach of assuming more choices are better.
As usual, I’m not going to write a regular book review. There are plenty of those out there. I was lucky enough to hear Mr. Schwartz give a talk way back when when he talked about the downsides of having too many choices: (1) you’re never sure you made the right decision so you keep looking, (2) if there are too many choices, you may never make a choice at all. I’ll be the first to admit his talk was more clear than this book, but all the elements are still there.
His view (viewed thru the filter of my experience) is that the best way to approach an important decision is to come up with a short list of what you’d like to have, no matter how unlikely you think it will be to find them. Then, the first item or place or choice that meets all those criteria? Jump on it. The key to happiness is then to Stop Looking.
My favorite example of this approach is when I thought of moving to NYC. By that time, I’d lived in a number of homes and knew what was important to me. So I made a list. Two bathrooms (one for my frequent guests who can sleep in my living room but who will please me by not messing about in my bathroom), southern or western exposure with lots of light, no steps, largish kitchen, near public transportation, overlooking a green area,, etc — ten items. Of course I also had a maximum budget. I found a real estate agent trusted by friends, gave them the list. and have been living in the second place I looked at for 17 years. Have never found a place I liked better.
His second point about choices — that too many choices paralyze — is proven by the data about what most people who aren’t educated about financial matters do with their investment money. For many years, the federal employee Thrift Savings Plan had only three options: a broad market index fund, a bond fund, and a money market. It was pretty easy for an employee to see that the only way they’d succeed in retiring was to put a big portion of their contributions in the stock fund. Good for them. Other plans offered sometimes dozens of options, many differing only in the sort of small details only an accountant or financial advisor could love. Those employees tended to stay in the money market and failed to participate in the long growth of the market. Too many choices.
This is an easy book to read and makes sense. It’s made a huge difference in my life and I recommend it to anyone who wants to be able to make good decisions. Isn’t that everyone?