In western societies there is a central tenet, which claims the freedom of choice for consumers. Nowadays the goods shelf of for example a simple drugstore enables its customers to make a decision between lots of different deodorants, shampoos etc. By following this way of thinking companies should maximize the number of similar products offering to their customers and the customers themselves are happy about the amount of different offerings they can choose from. However, in 2004 the American psychologist Barry Schwartz challenges this thought with his book “The Paradox of Choice – Why More is Less”. From his point of view a large number of possible choices like you can find it in today’s marketplace of western societies does not satisfy the customers at all. He is going even further with his thesis stating that too much choice has a negative impact on decision makers. At first someone who can decide between many offerings gets paralysed. Choice Paralysis means that consumers effectively shut down and do nothing when faced with the number of possible choices. When a customer should overcome Choice Paralysis and choosing one of the alternatives, the lost choices will mostly make him or her unhappy afterwards. On the other hand there are also some critical voices against Barry Schwartz’s way of thinking.
Opponents of Barry Schwartz claim that reducing the number of choices would make consumers feel unable to make the optimal choice, because for example some features of all the products they can choose from are not like they want them to be. In this scenario the customer does not get what he want, the companies decide the specifications of the product and in this way, they decide what the customer can buy. The customer can only chose of this small product range. In comparison with a wide range of products, the customer has more options to get the optimal choice to make him happy. A very important point to be happy is to reach self realization. In the Maslow’s hierarchy of needs which describes the humans needs and motivations. Self realization is at the top of his pyramid, this level refer to what is the full potential of a person and how can you reach that potential. One big step to get self realization is able to make the optimal choice, to reach self determination. Consequently, customer has to get the chance to make the optimal choice.
According to this choice and freedom are directly connected with each other. The more choice the more costumers feel free and in addition the welfare increases. But the most decisions are linked with conditions. To make a decision for a product even a service money act an important part. If liquid resources are defined the choice is bounded too. Many people try to save much money as they can to become a buffer for bad times. Therefor they started looking for inexpensive goods with a high quality. Hence the industry adapt their production style and offered also for the low budget a wide range of products. In the end it is possible to choose between many products for a high or a lower price, so that the part of the money decrease step by step.
Another restriction may be the fast technical development of electronic goods. Specially the older population become trouble to keep up with the progress. For them the choice is also limited. It is not easy to find an electronically gadget which does not do too much. One example is the mobile phone. Nowadays it is quite difficult to buy a simple mobile phone without touchscreen and internet access. The offer is limited because the provider often just offer products for the average population. Marginal groups like old people and young children do not number to this amount. If they do not keep up with the current technology progress they have to accept the limitation of some groups of products. Thus overchoice is not a problem for everyone. Just the average population and special groups receive the chance to choose in a wide range. If there is a provider of a niche also this marginal group is capable to deal with this topic.
These example have already shown, that an overchoice can have an influence on the behaviour of the customers and the market. Furthermore, products which do not have options will be kicked out of the market, because the customer has then the feeling not to decide free their products. Customers got already used to have a lot of options and do not want to miss it. Even if it is hard or not possible to take a decision immediately. Although there might be something true about Barry Schwartz's thesis that some customers will experience regret after their decision, this does not go for every decision maker, because they had the chance to choose a product according to their individual wishes. All in all it can be said, that a reduction of product choice will not increase the customer happiness. The statement that customers will not be regret because of less choice can not be proofed in this way. Customers want to have the opportunity to choose from a large number of alternatives, for example when they create their salad variation. It makes them happy to decide freely which combination of ingredients they eat. This is also called self-determination.
The idea that a maximum of freedom can be reached by maximizing choice which in turn will maximize welfare is not appropriate for everyone but for the big majority of customers. On the other hand, this kind of choice freedom can also reach border groups such as the elderly. It will not solve the problem of the paralysis, but group specific products are reducing the paralysis. It makes it easier to choose the right product. It can also be said, that manufacturer wants to paralyse the customer, to force them to buy more expensive products.
Finally the thesis from Barry Schwartz that reduces production choice increase the customer happiness is in this way not correct. The most people like to choose from a wide range of products so they feel free to make the optimal choice. But it cannot be said that a maximum choice is proportional to welfare because to much choice can have negative aspects too. So it is difficult to say: what is an adequate range of products to make the customer happy. When a customer knows what he wants and is able to describe perfectly his favourite features, he wants a huge range of products to find his optimal choice. In contrast a customer which has no idea what he really wants, is paralyse from huge range of products.