Written by Noah Rich
The University of Michigan offers more than 280 undergraduate degree programs (“Academics and Majors”). On the surface, that sounds amazing. If you want to do something, you can most likely do it at the University of Michigan. Let’s say you are interested in economics, like I am. Well, you could take the traditional path and be an Economics major. Or, if you want to add an interdisciplinary element to it, you could be a Philosophy, Politics, and Economics major. Or if you want a more applied degree, you could be a Public Policy or Business Major. However, this abundance of closely overlapping programs might also be overwhelming.
Using normal economics analysis, you might miss this problem. Economics is generally built on the idea of preference utilitarianism: a framework that emphasizes “the satisfaction of preferences” in understanding utility (Singer). This means that economics sees the net good, utility, in our lives as constrained by the choices we make, and thus, by the options we have available to make those choices. In this framework, there is never a downside to having too many options. The more options you have, the more you can align your choices to your preferences. However, as I’ve shown above, this framework seems to fail when you face more options. There are rarely times when you face 280 options, as a Michigan student faces when choosing a major. However, rare is not never.
One idea that has been developed to explain this gap is the paradox of choice. The paradox of choice, as defined by Barry Schwartz, is the idea that “having an abundance of options actually requires more effort to make a decision…leaving us feeling unsatisfied” (The “The Paradox of Choice”). While having more options increases the chances we can find what best matches our preferences, it also makes the process of finding that best option harder. Not only can you make a choice that leaves you unhappy, you can have processes of choice-making that do the same thing.
Besides intuition, there is experimental evidence of this phenomenon. Foundational evidence comes from a study by Iyengar and Lepper, published in 2000. In their study, Iyengar and Lepper completed several experiments that challenged the idea that “having more choices is necessarily more intrinsically motivating.” In one experiment, Iyengar and Lepper set up a jam stand at a grocery store. They then compared how many people bought jam from displays with 24 and 6 options of jam respectively. They found that more jam was bought when only 6 options were displayed. In another experiment, they gave college students the opportunity to complete an extra credit essay. However, some students were given 6 possible essay prompts while others were given 30. In this experiment, they found more students wrote the essay when they only saw 6 possible prompts.
Iyengar and Lepper did not directly measure preference utility. However, they did show the pitfalls of having too many options, which relates to the paradox of choice. I previously said that simply having this idea of the paradox of choice is enough to fill in economics’s logic gap here, leaving the rest of its preference utility-based self intact. However, some economists have gone even further than this, arguing that a total revision of economic logic is needed. Maybe, life is more than the sum of a series of decisions, and economics needs a different framework than preference utilitarianism for understanding peoples’ experiences of good and bad.
One proposed alternate framework has been hedonistic utility. As a whole, hedonistic utility focuses more on overall experienced pleasure and pain (Springer). The key difference between this and preference utility is that in preference utility, your relative benefit is based on the relative value of the options you face, while in hedonistic utility, your benefit is based on what you are feeling overall. In preference utility, only the outcome of your choice would impact your utility, while in hedonistic utility, how you feel while making a choice would also be taken into account.
Some economists have already tried to think about how economics might look when based around hedonistic utility. Kahneman and Sugden explored this in a 2005 paper, coming to the conclusion that hedonistic measurements might better capture the people’s good and bad experiences. However, they also pointed out that it would be hard to directly and credibly measure these experiences.
All this being said, it is important to remember that preference utility in economics can still be useful. Most choices don’t involve 280 options, and your choices do impact you. And indeed, the idea of the paradox of choice has its own detractors. Critics point to businesses like Starbucks, where consumers have hundreds of options, and yet keep coming back (“The Paradox of Choice”). However, it is still important to think about the costs and benefits of both approaches. Each approach gives a method of understanding the world, and that is what gives both, at least, some utility.
Bibliography:
“Academics & Majors.” Academics & Majors | University of Michigan Office of Undergraduate Admissions, https://admissions.umich.edu/academics-majors.
Dubner, Stephen J. “Is the Paradox of Choice Not so Paradoxical after All?” Freakonomics, 2 Dec. 2009, https://freakonomics.com/2009/12/is-the-paradox-of-choice-not-so-paradoxical-after-all/.
Iyengar, Sheena S., and Mark R. Lepper. “When Choice Is Demotivating: Can One Desire Too Much of a Good Thing?” Journal of Personality and Social Psychology, vol. 79, no. 6, 2000, pp. 995–1006., https://doi.org/10.1037/0022-3514.79.6.995.
Kahneman, Daniel, and Robert Sugden. “Experienced Utility as a Standard of Policy Evaluation.” Environmental and Resource Economics, vol. 32, no. 1, 2005, pp. 161–181., https://doi.org/10.1007/s10640-005-6032-4.
“The Paradox of Choice.” The Decision Lab, https://thedecisionlab.com/reference-guide/economics/the-paradox-of-choice.Springer, Peter. “Normative Ethics.” Encyclopædia Britannica, Encyclopædia Britannica, Inc., https://www.britannica.com/topic/ethics-philosophy/Normative-ethics#ref885732.