Big Data and the Paradox of Choice

Industry   |   
Published July 2, 2013   |   

“Autonomy and freedom of choice are critical to our well-being, and choice is critical to freedom and autonomy. Nonetheless, though modern Americans have more choice than any group of people ever has before, and thus, presumably, more freedom and autonomy, we don’t seem to be benefiting from it psychologically.” — Psychologist Barry Schwartz (The Paradox of Choice – Why More Is Less)

The official dogma of all industrial societies across the world is that when people have more choices, they have more freedom; and the more freedom they have, the more welfare they have. This ideology is deeply embedded in our lives. But does the abundance of choices actually make our lives happy? In Schwartz’s estimation, choice has made us not freer but more paralyzed, not happier but more dissatisfied. He says, instead of increasing our happiness, too many choices have tended to increase our anxiety. He calls it: “The Paradox of Choice.”

Let’s go to a grocery store or pharmacy, take a moment and marvel at all the choices we have. You will see dozens of shampoo formulas, pain relievers, snacks, soft drinks, clothing… For many people, that’s an amazing thing, but for others it’s intimidating. A few weeks ago, I met a lady in the supermarket, trying to decide which one to get. After a while, I went to the other side of the store to get something and discovered that I had forgot to get something. When I went back, that same lady was still there trying to decide what to get. It must have been a good 10 or 15 minutes and yet there she was still trying to figure out what to get. We waste lot of time in our daily lives by comparing the choices we have to the variety of products we want to buy.

Psychologists like Schwartz believe that having a large array of choices and alternatives leads a person to a “decision paralysis” (indecisiveness), as his attention is divided between the numbers of choices he has. It also forces an increase in the effort that goes into making a decision. So, decision-making becomes tough and many individuals decide not to decide and don’t buy a product. Recent research suggests that in reality, when presented with “too many” choices, we feel so uncertain and fearful about how to proceed and avoid making a “poor” choice that we’d rather make no choice than risk regret. Which product should I focus on…? Whether or not should I act on that choice…? Am I getting the best deal/product? Should I go to one more store? Should I get some advice/recommendations from my friends or read more reviews of the product, before I buy it? Should I choose right now or put the decision on hold? This is in fact an Orwellian situation: “Freedom is Slavery?” Is having too many choices making life more complicated? Is choice demotivating? Yes, it is.

“When people have no choice, life is almost unbearable …. But as the number of choices keeps growing, negative aspects of having a multitude of options begin to appear. As the number of choices grows further, the negatives escalate until we become overloaded. At this point, choice no longer liberates, but debilitates. It might even be said to tyrannize.” — Barry Schwartz

Once father of a 10-year-old said: “Take my younger son to an ice cream parlour or restaurant if you really want to torture him. He has to make a choice, and that’s one thing he hates. Would chocolate chip or coffee chunk ice cream be better? The cheeseburger or the turkey wrap? His fear is that whatever he selects, the other option would have been better.” So, having too many choices has two drawbacks, besides decision paralysis and accompanying stress: 1. When customers have more choices, they buy less. 2. More choices lead to greater dissatisfaction because expectations are high.

Nevertheless, some people are really clever in handling the paradox of choices. Let’s meet Barack Obama, who has a better solution in simplifying his choices… While researching a behind-the-scenes article of Obama’s daily life, noted author-journalist Michael Lewis once asked Obama about his practice of wearing only grey or blue suits. The reply was fascinating…. “I eat essentially the same thing for breakfast each morning: a bowl of cold cereal and a banana. For lunch, I eat a chicken salad sandwich with a diet soda. Each morning, I dress in one of a small number of suits, each of which goes with particular shirts and ties. I’m trying to pare down decisions. I don’t want to make decisions about what I’m eating or wearing. Because making too many decisions about mundane details is a waste of your mental energy, a limited resource. I have too many other decisions to make.”

Obama’s practice is echoed by Steve Jobs who decided to wear the same outfit every day, so that he didn’t have to think about it. Facebook CEO Mark Zuckerberg is also well-known for wearing the same outfit every day. He owns about 20 of the grey, scoop neck shirts, he’s become famous for. It seems that Albert Einstein owned 6 or 7 of the exact same brown suits for the same reason – so he wouldn’t waste any mental energy with such useless minutiae such as what to wear that day. (There is an interesting episode in ‘The Big Bang Theory’ where Sheldon Cooper started using dice rolls to make mundane decisions, thereby freeing up his mind to work on more complex problems.)

So, the point is reducing choices (or making the choices simpler) has become vital in today’s abundance of consumer options. If the decision-making is so complicated for individuals like you and me, imagine how complicated it would be for large companies with an exponential amount of amassed data (both structured and unstructured), which is so complex that it is difficult to find the most valuable pieces of information to make strategic decisions. And sometimes, those decisions have to be taken quickly, like packing your luggage on the night before you catch a morning flight for a two weeks’ vacation. Many big companies face the decision paralysis, because of the volume of data they have to process in a very limited time. Here is where Big Data looks promising. It narrows down and simplifies choices, or at least provide helpful indicators/insights about how to make a selection from amongst a wide array of complex options. Big Data represents a fundamentally new way of doing business – one that is driven by data-based decision-making.