6.1.04

OVERWHELMED BY CHOICES? Does that include being overwhelmed by analysis, and not sure where to start? Why not start with a USA Today column by Barry Schwartz, author of The Paradox of Choice (details or compare prices), reviewed here. In the column, Professor Schwartz identifies four problems with expanded choices: people are more likely to regret their decisions, they may avoid acting for fear of regretting their choice, their expectations may outstrip reality, and they blame themselves for making the wrong choice. He's not the only person fretting over choices. Gregg Easterbrook has written The Progress Paradox (details or compare prices), which appears to be of a piece, and there's a review here. The subtext running through both books, at least as perceived by the reviewers, is that an abundance of choices is not good if it leaves the choosers worse off, and perhaps some choices, such as retirement plans or health insurance (or number of teams in a baseball league, or number of condiments on a hamburger?) ought to be left to experts. (Virginia Postrel smells nostalgia for the best and the brightest, or perhaps for Herbert Croly.) Perhaps the books are as good a reason as any to enter the conversation about the S factor, as a call for experts might be an assertion that nonexperts are, well, too stupid to choose properly. (That's a working hypothesis; the Schwartz column focuses more on hysteresis and buyer's remorse although it suggests people take advantage of the expertise of others. Hmmm ... don't you have to choose the experts?)

So, on to the serious economics. Econ Log's "Case for Paternalism?" post provides some useful research, based on Daniel Kahneman's Nobel lecture. The lecture comes down in defense of experts, citing some George Loewenstein research that introduces the concept of "paternalistically protected idiots." On the other hand, Edward Glaeser has looked at the problem of choices and suggested (to the satisfaction of Newmark's Door) that markets (entrepreneurs as competing experts?) might beat paternalism.

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