The Long Tail of Choice

Now it’s my turn to disagree. Not to the idea that there are too many school districts — I have no way to measure the optimum balance between the value of competition and the efficiency of consolidation — but to the notion that "too many choices" can ultimately make us worse-off.

David Stokes links to a New Yorker review of Barry Schwartz’s book The Paradox of Choice: Why More Is Less, noting that when faced with an ever-growing variety of products from which to choose, "at some point, the variety of choices leads to diminishing returns." I don’t dispute that this can be the case — for a majority of people, most of the time, even — but that this is no argument for artificial elimination of any of those choices.

Sometimes eliminating choices is a business strategy that makes sense. Some restaurants are getting rid of menus, some supermarkets are paring down the number of items on their shelves, and the Internet is filled with advice on how to make decisions effectively — suggesting that there’s a wide range of people out there that needs help coping with the bewildering array of choices life has to offer them.

So, yes, I grant all of this. And yet … it’s easy to forget that the long tail has become the basis for the most valuable new business plans of the Internet age. The idea here is that people have such widely varied tastes that the many items people buy very little of, with low market share, add up to a mass of options that rivals the popular items that nearly everybody buys.

Schwartz coined a couple of terms for different types of deision-makers: "maximizers" and "satisficers."

Maximizers are the people who try to find the best of whatever they’re choosing — the best new car, the best brand of toothpaste, the best hamburger, etc. These people may enjoy their optimal choices more than other people enjoy their subpar choices, but there’s a large opportunity cost in pursuing knowledge of the "best" choice.

Satisficers, on the other hand, choose things that are "good enough." They don’t second-guess whether there’s a better brand of peanut butter if the brand they’ve already purchased results in satisfactory sandwiches.

Schwartz essentially argues that satisficers are happier than maximizers because they don’t expend an inefficient amount of time and energy looking for goods that are only marginally better than things they would be satisfied with. And his argument might make sense if people fit exclusively into one or the other of his categories.

But the fact is that everybody is both a maximizer and a satisficer, just for different sets of choices. As Virginia Postrel argued in Reason:

Since different people care intensely about different things, only a society where choice is abundant everywhere can truly accommodate the variety of human beings. Abundant choice doesn’t force us to look for the absolute best of everything. It allows us to find the extremes in those things we really care about, whether that means great coffee, jeans cut wide across the hips, or a spouse who shares your zeal for mountaineering, Zen meditation, and science fiction.

A world in which there’s an ever-expanding array of choices means I get to maximize my music preferences by listening to Zorn and Zappa while others can satisfice theirs with Lavigne and Timberlake. It also means that some people can maximize their preference for vehicles with luxury BMWs or SUVs, while I can satisfice with my trusty Hyundai Elantra. And it means that while David Stokes can satisfice his baby bottle needs with whatever’s on sale, somebody else who’s looking for certain characteristics in a bottle that David might not care about, or have even considered, can find what they’re looking for as well.

Patri Friedman (son of David and grandson of Milton) argued that despite the declining marginal utility of additional choice past the point of satisfaction, the ability to choose maximization in favored areas is necessary to achieve Flow — a state that some psychologists describe as optimal for creativity and success.

But without the array of choices the market makes available, we’d all be settling for less than what we really want — every time.

There are some people who’ve even used this as a pretext to propose bad policy:

As Fred Hirsch argued in his 1977 book, “The Social Limits to Growth”, many good things in life are “positional”. You can enjoy them only if others don’t. Sometimes, a quick car, fine suit or attractive house is not enough. One must have the fastest car, finest suit or priciest house.

Think of the scramble for schools, Mr Frank says. Only 10% of kids can go to the top 10% of schools. In many countries, wherever the schools are good, the houses will be expensive. Thus parents who want the best education for their child must overwork to afford a house in a good school district. In doing so, however, they raise the bar for everyone else.

Is mutual disarmament possible? Not without government help, Mr Frank and [Richard Layard, an economist at the London School of Economics,] argue. The exchequer should tax earned income heavily enough to deter one-upmanship, they say.

Despite appearances, this is not a naked example of punitive redistribution—the fiscal politics of envy. Mr Frank and Lord Layard do not want to level the social order. Their aim is much more conservative than that. Their taxes would leave the pecking order intact and envy undiminished. But people would be deterred from acting on the green-eyed monster. The problem these economists want to tackle is not inequality per se. It is that people don’t know their place and scramble vainly to improve it.

There are few things more onerous than the idea that everybody should "know their place" rather than pursuing their own vision of excellence. It’s bad enough when this takes the form of the mores of class stasis or social conservatism — all the worse when people try to enshrine it as government policy.

Economist Russell Roberts wrote at Cafe Hayek:

Yes, there are times when all of us have trouble making decision. [sic] And yes, there are times when all of us ask for help, either from experts or friends to help narrow our choices. But what are the policy implications of this anxiety? Boy, there sure are a lot of news sites on the web. I can narrow them down by bookmarking the ones I like. I can narrow them down by using Google news. Is there anyone out there who wants the government to pick my bookmarks? Or limit my access to all those web sites? There are a lot of stocks out there and right now, I actually invest in some of them. I use something called mutual funds to simplify the range of choices and reduce my risk. It’s not perfect. There’s risk. I might be in the wrong funds. But would I want there to be fewer choices so I woudn’t have to worry as much?

My answer has to be no. We’re better off having the choices available, so we can pursue the best choice when it comes to things we care about, and settle for the satisfactory — or the random, even — when it comes to the rest.