THE BURDEN AND FREEDOM OF CHOICE
We live in a world where some people have no freedom of choice, while others have a too broad range of choice. Economic theories that view humans as Homo oeconomicus – someone who always makes rational decisions and maximises profit – cannot deal with the problem of too many choices, and will always say that the more options we have the better. In fact, even in the worst case scenario, by broadening the range of choices, we do not remove that possibility we would have chosen from the original set, however, it opens up further options to make a better choice from the new one. Yet, when we face endless options, we feel uneasy instead of welcoming this exceptional economic situation.
Never before in history could we make decisions so freely than we can today. We can freely decide what we want to work, where we want to live, and what we want to do in our free time. There is no question, these are wonderful things. However, how many people are suffering from the crippling burden of the responsibility that comes with making a decision?
THINGS USED TO BE SO SIMPLE
Surely, everyone has positive opinion on the reign of King Mathias. Even the peasant too, who lived under his rule, even though nobody else taxed them more than Mathias. Life was easy. The king governed his subjects, and religion guided the believers. People did not try to find their places in the world, sons usually had the same mastery as their fathers, the priest clearly stated what was right and wrong. Certainly, people could make their own decisions, but not on everything.
Nobody had to go to career advisors, psychologists, or take anti-depressants in order to be able to make so many decisions – and even fail sometimes. In the home of opportunities, the United States, every sixth person takes psychiatric medication, mainly anti-depressants. In today’s materialistic world, where religion does not have such a firm hold of us, it is up to us to decide what is right or wrong. Is it a good or bad thing? Since we are living in the 21st century, I let the readers decide.
LESS IS MORE!
Indeed, when we have too many options, we often struggle to make a decision. An experiment showed that if an investment firm offered 50 investment opportunities to its customers, it brought fewer investments than if it had offered only five. The explanation is that we are able to manage to choose from five options, however, from 50, we are hesitant to make a decision right away. We postpone it to another day or another, which usually never even comes.
If we do manage to make a decision, we will be less satisfied than if we had had fewer options to choose from. For example, if our investment fund puts out an average performance, then one might think that another might have been better, and it makes us question our decision. This regret decreases the satisfaction that our average-yield investment brings us. The situation happens to be the same if we make a great decision and choose an above the average investment option because, among the other offered options, there might have been one that could have been even better. The more possibilities there are the higher our expectations rise. And, with higher expectations, we end up less satisfied, even if we made a better choice than if we had not made any at all. There is no doubt, a few options are better than none, but it does not mean that more is better than a few. There is a certain perfect amount.
WHEN THE BROKER DECIDES
At a financial consultancy or for a broker this is a key factor. A broker makes a living from investors conducting transactions. Of course, in the long-term, whether his or her client wins or loses is not irrelevant because he or she could lose the client. In the short-term, however, the broker has interest in convincing the client to make more frequent sales and purchases. As clients of an investment management that offers contingency fee constructions, we can be assured that the manager will not make unnecessary deals. The contingency fee construction ensures that both the portfolio manager and the client are in the same boat, and neither of them is interested in making the brokerage commission high because that would decrease both the client’s profit and the manager’s contingency fee.
NOT MAKING A DECISION IS A DECISION
Before a serious operation, doctors ask which treatment we would like. They inform us about their advantages and risks but they give the power of choice to us and the responsibility along with it. So the burden and the responsibility of choice are taken from someone with experience and given to a person who knows far less about the topic, however, since this decision revolves around patient’s life, the right to decide is offered to the patient. In this case, probably, it would be better if we gave up our right to decide and entrusted the doctors with it; after all, it is their profession and they have been doing this for their whole lives, maybe they can better evaluate which treatment is the best for us. If we are willing to give up our right to decide, then there is only one thing left to do. Think about whether the goals of our doctors/counsellors are the align! One of the options should not be easier or financially more profitable for them.
IT DOES NOT DEPEND ON THE TEA
To research the topic, a test was conducted. Two groups had to solve a series of relatively difficult puzzles within a tight time limit. Before beginning the test, the groups enjoyed a cup of tea. There were two options – caffeinated or chamomile tea.
Therefore, there were two ‘mental states’ while solving the puzzles. If we opt for the caffeinated tea, we choose to be alert, and if we go with the chamomile tea, we choose to be calm. One group could freely decide which tea they would like to drink, while for the other group, the researchers gave the tea – randomly.
The freedom of choice, theoretically, guarantees that we chose the tea which is the best for us, maximising our chances. Yet, the group from which the right of choice was taken was victorious. The latter group solved puzzles within less time on average and proved to be more persistent, managing their time better, while the other group was more likely to give up sooner.
In the case of puzzle solving, we get an immediate feedback – whether we can solve the problem or not. Since it is a quite difficult series of problems, the feedback is usually negative. Just like at the share markets.
WHAT IS HAPPENING?
The person realises that he or she is responsible for the decision, and starts to ponder about the missed opportunities. I should have chosen the other tea. Instead of thinking about the solution, the person becomes worried, insecure, unsatisfied, and demotivated. This obviously affects the quality of problem-solving. Questioning an earlier decision starts a chain-reaction. If I made a bad decision recently, then am I able to solve these challenging tasks at all? In the end, they put less energy into solving the problem, they finish fewer puzzles and earn fewer points than those who were stripped of the right of choice.
Still, I would not go back to the middle-ages and I am glad that the waiter asks what I would like to eat before bringing it out. However, there are situations where the less is more, or giving up control is the right choice.
Original date of Hungarian publication: 28 November 2017.