2016-04 From the President: Paradox of Plenty
When is enough, enough? When is enough too much? With seemingly infinite line extensions of products, especially in the drug store and grocery store, we struggle to decide on the right product for us. Marketing strategists claim to be giving us what we demand, that is, more choices in the toothpaste aisle: tooth paste or tooth gel, with or without whitener, striped or blue, mint flavored or no flavor? You get the idea.
As an economist, I have taught the theory of consumer behavior that stipulates that consumers select goods and services that maximize their utility (roughly translated as satisfaction) given the amount of money they have to spend. With this theory comes the idea that more is always better than less. Thus, it is concluded, that the more informed choices we have, the greater the likelihood that we are satisfied. This sounds straightforward but I have decided that for all its elegance and widespread applicability, this theory must have been created in an era of scarcity, when it was inconceivable that less might be better than more.
The concept of the paradox of plenty has been under discussion for decades, but it seems to have poignant relevance for those of us who are retired. Does living with plenty (of everything) cripple our ability to make decisions about what to eat, what to give away, what religion to ascribe to or what to put on the bucket list? We are bombarded with seminars and books about how to downsize, how to de-clutter our homes and our lives. A quick count on amazon.com revealed at least 43 books printed in the past 15 months that have the word de-clutter in the title. A similar search for books titled Paradox of Plenty uncovered two books with the lone title (1932 and 1968) and five other books with subtitles referring to obesity/hunger in America, spiritual hunger, oil and gas booms, and labor in the Middle East. Sometimes the supply of goods and services outstrips the demand. On an individual level, it is possible that we simply have too many choices.
There is a large body of literature in the academic world that sheds some light on this phenomenon. Consumer researchers have found that as the number of choices rise, the more difficult it is to make a decision. It simply takes too much time to evaluate a large variety of options. It is emotionally exhausting. Shopping is costly. In some cases, consumers walk away selecting nothing. In some cases they reject a whole category of products such as cell phones or social-media connections.
In a typical academic study of this phenomenon titled “When Choice is Demotivating: Can One Desire Too Much of a Good Thing?” * It was found that an extensive array of options reduces the likelihood that a purchase will be made. Specifically, in one of the experimental studies, a limited assortment of six jams in a grocery store setting resulted in 30 percent of consumers making a purchase while an assortment of 24 to 30 jams resulted in only three percent of consumers making a purchase. Although many preferred looking at a large variety, it did not lead to a decision to purchase. Another study** of menu choices found that the larger the number of items on the menu the more likely people were to choose a “virtuous/healthy/practical” food (salad) rather than an indulgence (pizza). It was concluded that a virtuous choice is easier to justify.
With or without the results of research experiments, one often observes that it becomes too difficult to learn and translate all the information one needs to select the best product so one just moves on or resorts to habitual/safe choice. And if a selection is made, there is a lingering question about whether it was really the best choice.
We do indeed live with the “paradox of plenty” in many parts of our lives. No wonder we use our own personal, time-tested criteria for selecting a store, a food, a radio station, or a TV show.
— Jean Kinsey, UMRA President
*Iyengar and Lepper in the Journal of Personality and Social Psychology (2000,79) 995-1006.
** Sela, Berber, and Liu in Journal of Consumer Research, (2009,35:6) 941-951