Analysis paralysis: do consumers want more choice or less?

  • Opinion
  • September 19, 2016
  • Emily Franklin-Smith
Analysis paralysis: do consumers want more choice or less?

You come home, have dinner and make a cup of tea. You consider going to the gym, but instead you plonk yourself down in front of the television. You flick through Netflix trying to find something to watch. If you’re with others, you diplomatically ask if they have any preferences, and get the response you’d expect from people who have spent the majority of the day making decisions: “I don’t mind.”

The pressure then falls on you to make the right choice, one that you and everyone else will enjoy so that you can optimise the time you have to relax and recover from a day of work. Which theme? Is three stars good enough? Is it okay to just watch your favourite TV series for the third time? What it boils down to is choice, even about seemingly mundane things, is exhausting.

The freedom of choice is something we hold so dear that it’s not something we usually pause to question. Some very smart people have questioned it though, most notably—psychologist Barry Schwartz. Schwartz posits that our welfare might be better if we didn’t have abundant choice in all areas of our lives. He notes two distinct ways in which choice is actually a disservice to us­—through analysis paralysis and opportunity cost.

Analysis paralysis is the phenomenon in which a decision has so many variables to consider that no choice is made. For example, the famous Jam Study conducted by Iyengar & Lepper found that when 24 options of jam were on offer, three percent of consumers made a purchase compared to the 30 percent who purchased when the number of options was reduced to six.

This same principle was applied by UK shopping giant, Tesco, who in 2015 cut their range by 30 percent in order to make shopping easier for their customers. As someone who works in marketing services, this initially seemed unintuitive to me, as surely more choice would mean that we are more capable of catering to different needs? Ultimately though, are our needs granular and differentiated enough that we need 28 different types of tomato ketchup and 13 types of aluminium foil?

If someone is able to overcome analysis paralysis and make a decision, the next issue is one of opportunity cost. My 'Economics 101' days taught me that an opportunity cost is the benefit we forego when we make a choice: if I choose the cake for dessert then (unless I’m really hungry) I won’t be having the brownie. By choosing to spend my night watching Sex and the City, the movie, I forego the time I could have spent doing anything else. We also evaluate our choices, and if we feel we could’ve made a better one, we blame ourselves when our expectations aren’t met.

The complexity of choice is something that will increasingly rear its ugly head in an ever-expanding marketplace. Smart companies will find ways to help people with decision-making, simplify choices, make us feel good about our selections and do away with the pain of indecision. They won’t assume I want to spend my limited leisure time working through an endless menu of options.

Choice is a paradox—something we protect and treasure, aware that many do not have the same benefits afforded to them, but it is also a burden, one that begs for our attention all day, every day. Happy Netflixing.

  • Emily Franklin-Smith is a consultant at TRA

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