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The secret to happiness is low expectations.
Think of this book as if Thinking Fast And Slow and Stumbling On Happiness had a child. Most books around randomness, decision making, or brain mechanics are a byproduct or are referencing Thinking Fast And Slow. Its relevance in the study of human behavior can't be overstated.
The Paradox Of Choice has been on my reading list for quite a while. Precisely, since the day I watched its corresponding — and now widely popular — TED talk. It seemed its time never came because I presumed it would become "yet another" take on the happiness-productivity dilemma.
And still, I don't think it is worth your time if you've recently read Thinking Fast And Slow or related titles. Stick with the TED talk instead. However, I found interesting and novel ideas in it; which helped me crystallize some behavioral experiments I already encountered elsewhere.
Here's an attempt to pin down some of the ideas that stuck.
The key idea, or the "paradox", can be boiled down into how today's amount of choices can lead to frustration and the inability to decide, making us less happy overall.
We claim we want freedom, but we might have gotten a little too much. That's because having so many choices makes it harder to choose at all and raises the chances we'll make a mistake.
On top of that, more opportunities increase the associated opportunity costs. Being aware we've missed out on other options, we'd probably feel stressed and less satisfied with our choice.
Next up, a summary of the key biases related to choices.
Tyranny of small decisions: a situation in which many decisions, individually small in size and time perspective, cumulatively result in a larger and significant outcome which is neither optimal nor desired.
The book references the Tragedy of the commons: a situation in a shared-resource system where individuals, acting independently according to their own self-interest, behave contrary to the common good of all users by depleting or spoiling the shared resource through their collective action.
Another one is the difference between expected, experience, and remembered utility. When it comes to remembering something we tend to recreate our own story — self-selecting its peaks and lasts moments. From here, the book starts revising some of Kahneman's theories through novel examples and their connection to decision making.
Availability bias: we see what there is. The experience of familiarity has a simple but powerful quality of "pastness" that seems to indicate that it is a direct reflection of prior experience.
The frequency in which we encounter certain ideas messes up with how we experience the true nature of reality. Curiously, it predicts the entire phenomena of fake news almost fifteen years before they took off.
Paraphrasing here: as the number of choices continues to escalate, the amount of information we need escalates with it. Hence we find ourselves relying on second-hand information, rather than personal experience. In parallel, telecommunications have become more global, and we end up relying on "the same" second-hand information. So, we end up in a situation where the media tells everyone the same story; hence everybody has the same biased information; which makes it less likely that individual biased understandings will be corrected by others. When you hear the same story wherever you look, you assume it must be true, and the more people believe it is true, the more likely they are to spread and repeat it.
Anchoring: it is fascinating how emotions can be primed by events of which you are not even aware. In this case, depending too heavily on the initial piece of information (considered to be the "anchor") to make subsequent judgments.
It also works with pricing theory. A hypothetically lowered-priced product can seem a bargain among an extremely expensive product line. It made me think of why the 2020 iPad Air or Apple Watch SE exist. I had a hard time figuring this out during the It's Almost Time special episode at Radio Lanza. But anchoring makes them seem reasonable options within the product line, while still remaining expensive devices.
Framing is also closely related to this idea: where people decide on options based on whether they are presented with positive or negative connotations — i.e. as a loss or gain.
I quite liked the example of gas stations, where two exact price schemes were presented as "discount for cash" or "surcharge for credit". The reference point becomes the anchor price (or reference) over which we cement our decisions.
These biases seem intimately related — because they are. They all fall (again) under Kahneman's prospect theory. Which describes how individuals assess their loss and gain perspectives asymmetrically.
The theory starts with the concept of loss aversion, from the observation that people react differently between potential losses and potential gains. For example, we prefer a small (but sure) gain, to a larger (but uncertain) one. So far so good. However, when it comes to losses, it is the contrary, we take the chance. In other words, we are risk-averse for potential gains, but risk-takers for potential losses.
This subtle idea is the cornerstone that supports a wide array of behavioral concepts concerning our misleading perception of reality. I believe Thinking Fast And Slow does a better job covering all of them. However, it is surprising how relevant they are when it comes to making decisions and how we go about our choosing policies.
Going down this bottomless rabbit hole, we can uncover plenty of common biases. For example, the fact that we are more sensitive to losses than wins (both being equal in size) makes us (illogically) value more what is ours. We place additional value and generate an irrational attachment to our things when faced with the situation of losing them.
These mental models go on and on. There are enough of them to cover entire books. Nonetheless, to bring the focus back to choices and wrap this summary up, let's go around the fundamental, unique ideas I found in the book.
The freedom to choose we so longed for years is one of the main roots of our unhappiness today.
The paradox of choice we've embedded in our society manifests itself as a tension between free choice (autonomy) and rising expectations (societal pressure). Too many choices produce an overall feeling of distress — usually magnified by a mixture of regret, comparison with others, hedonic adaptation, or status concerns.
The book proposes several strategies to go around this problem.
I usually don't review books that are closely related to other readings I've already posted. Yet I connected so deeply with some ideas in the book — like the difference between maximizers and satisficers and its link to anxiety and depression — that I thought it was worth sitting down and write a few lines about how that felt.
At the end of the day, we've all won the lottery of birth — just by not being born five hundred years ago. Still, nobody is happy. We remain mere, passive spectators in one of the most depressing societies humanity have ever seen.
I always have had a hard time understanding this disappointing paradox; and this book has again sparked some of these ideas around this problem.
Finally, if there is one takeaway maximizers like me should get from The Paradox Of Choice is to allow for serendipity. An idea that terrifies me, because it runs so counter to my own rational nature. However, deep down, I believe that serendipity holds a source of creativity and we should embrace it more often.