| I 'm going to talk to you about some stuff that 's in this book of mine that I hope will resonate with other things you 've already heard , and I 'll try to make some connections myself , in case you miss them . I want to start with what I call the " official dogma . " The official dogma of what ? The official dogma of all western industrial societies . And the official dogma runs like this : if we are interested in maximizing the welfare of our citizens , the way to do that is to maximize individual freedom . The reason for this is both that freedom is in and of itself good , valuable , worthwhile , essential to being human . And because if people have freedom , then each of us can act on our own to do the things that will maximize our welfare , and no one has to decide on our behalf . The way to maximize freedom is to maximize choice . The more choice people have , the more freedom they have , and the more freedom they have , the more welfare they have . This , I think , is so deeply embedded in the water supply that it would n't occur to anyone to question it . And it 's also deeply embedded in our lives . I 'll give you some examples of what modern progress has made possible for us . This is my supermarket . Not such a big one . I want to say just a word about salad dressing . 175 salad dressings in my supermarket , if you do n't count the 10 different extra-virgin olive oils and 12 balsamic vinegars you could buy to make a very large number of your own salad dressings , in the off chance that none of the 175 the store has on offer suit you . So this is what the supermarket is like . And then you go to the consumer electronics store to set up a stereo system -- speakers , CD player , tape player , tuner , amplifier . And in this one single consumer electronics store , there are that many stereo systems . We can construct six and a half million different stereo systems out of the components that are on offer in one store . You 've got to admit that 's a lot of choice . In other domains -- the world of communications . There was a time , when I was a boy , when you could get any kind of telephone service you wanted , as long as it came from Ma Bell . You rented your phone . You did n't buy it . One consequence of that , by the way , is that the phone never broke . And those days are gone . We now have an almost unlimited variety of phones , especially in the world of cell phones . These are cell phones of the future . My favorite is the middle one -- the MP3 player , nose hair trimmer , and creme brulee torch . And if by some chance you have n't seen that in your store yet , you can rest assured that one day soon you will . And what this does is it leads people to walk into their stores asking this question . And do you know what the answer to this question now is ? The answer is " No. " It is not possible to buy a cell phone that does n't do too much . So , in other aspects of life that are much more significant than buying things , The same explosion of choice is true . Health care -- it is no longer the case in the United States that you go to the doctor , and the doctor tells you what to do . Instead , you go to the doctor , and the doctor tells you , well , we could do A , or we could do B. A has these benefits , and these risks . B has these benefits , and these risks . What do you want to do ? And you say , " Doc , what should I do ? " And the doc says , A has these benefits and risks , and B has these benefits and risks . What do you want to do ? And you say , " If you were me , Doc , what would you do ? " And the doc says , " But I 'm not you . " And the result is -- we call it " patient autonomy , " which makes it sound like a good thing . But what it really is is a shifting of the burden and the responsibility for decision-making from somebody who knows something -- namely the doctor -- to somebody who knows nothing and is almost certainly sick and thus not in the best shape to be making decisions -- namely the patient . There 's enormous marketing of prescription drugs to people like you and me , which , if you think about it , makes no sense at all , since we ca n't buy them . Why do they market to us if we ca n't buy them ? The answer is that they expect us to call our doctors the next morning and ask prescriptions to be changed . Something as dramatic as our identity has now become a matter of choice , as this slide is meant to indicate . We do n't inherit an identity , we get to invent it . And we get to re-invent ourselves as often as we like . And that means that every day when you wake up in the morning , you have to decide what kind of person you want to be . With respect to marriage and family , there was a time when the default assumption that almost everyone had is that you got married as soon as you could , and then you started having kids as soon as you could . The only real choice was who , not when , and not what you did after . Nowadays , everything is very much up for grabs . I teach wonderfully intelligent students , and I assign 20 percent less work than I used to . And it 's not because they 're less smart , and it 's not because they 're less diligent . It 's because they are preoccupied , asking themselves , " Should I get married or not ? Should I get married now ? Should I get married later ? Should I have kids first , or a career first ? " All of these are consuming questions . And they 're going to answer these questions , whether or not it means not doing all the work I assign and not getting a good grade in my courses . And indeed they should . These are important questions to answer . Work -- we are blessed , as Carl was pointing out , with the technology that enables us to work every minute of every day from any place on the planet -- except the Randolph Hotel . ( Laughter ) There is one corner , by the way , that I 'm not going to tell anybody about , where the WiFi works . I 'm not telling you about it because I want to use it . So what this means , this incredible freedom of choice we have with respect to work , is that we have to make a decision , again and again and again , about whether we should or should n't be working . We can go to watch our kid play soccer , and we have our cell phone on one hip , and our Blackberry on our other hip , and our laptop , presumably , on our laps . And even if they 're all shut off , every minute that we 're watching our kid mutilate a soccer game , we are also asking ourselves , " Should I answer this cell phone call ? Should I respond to this email ? Should I draft this letter ? " And even if the answer to the question is " no , " it 's certainly going to make the experience of your kid 's soccer game very different than it would 've been . So everywhere we look , big things and small things , material things and lifestyle things , life is a matter of choice . And the world we used to live in looked like this . That is to say , there were some choices , but not everything was a matter of choice . And the world we now live in looks like this . And the question is , is this good news , or bad news ? And the answer is yes . ( Laughter ) We all know what 's good about it , so I 'm going to talk about what 's bad about it . All of this choice has two effects , two negative effects on people . One effect , paradoxically , is that it produces paralysis , rather than liberation . With so many options to choose from , people find it very difficult to choose at all . I 'll give you one very dramatic example of this , a study that was done of investments in voluntary retirement plans . A colleague of mine got access to investment records from Vanguard , the gigantic mutual fund company of about a million employees and about 2,000 different workplaces . And what she found is that for every 10 mutual funds the employer offered , rate of participation went down two percent . You offer 50 funds -- 10 percent fewer employees participate than if you only offer five . Why ? Because with 50 funds to choose from , it 's so damn hard to decide which fund to choose that you 'll just put it off until tomorrow . And then tomorrow , and then tomorrow , and tomorrow , and tomorrow , and of course tomorrow never comes . Understand that not only does this mean that people are going to have to eat dog food when they retire because they do n't have enough money to put away , it also means that making the decision is so hard that they pass up significant matching money from the employer . By not participating , they are passing up as much as 5,000 dollars a year from the employer , who would happily match their contribution . So paralysis is a consequence of having too many choices . And I think it makes the world look like this . ( Laughter ) You really want to get the decision right if it 's for all eternity , right ? You do n't want to pick the wrong mutual fund , or even the wrong salad dressing . So that 's one effect . The second effect is that even if we manage to overcome the paralysis and make a choice , we end up less satisfied with the result of the choice than we would be if we had fewer options to choose from . And there are several reasons for this . One of them is that with a lot of different salad dressings to choose from , if you buy one , and it 's not perfect -- and , you know , what salad dressing is ? It 's easy to imagine that you could have made a different choice that would have been better . And what happens is this imagined alternative induces you to regret the decision you made , and this regret subtracts from the satisfaction you get out of the decision you made , even if it was a good decision . The more options there are , the easier it is to regret anything at all that is disappointing about the option that you chose . Second , what economists call opportunity costs . Dan Gilbert made a big point this morning of talking about how much the way in which we value things depends on what we compare them to . Well , when there are lots of alternatives to consider , it is easy to imagine the attractive features of alternatives that you reject , that make you less satisfied with the alternative that you 've chosen . Here 's an example . For those of you who are n't New Yorkers , I apologize . ( Laughter ) But here 's what you 're supposed to be thinking . Here 's this couple on the Hamptons . Very expensive real estate . Gorgeous beach . Beautiful day . They have it all to themselves . What could be better ? " Well , damn it , " this guy is thinking , " It 's August . Everybody in my Manhattan neighborhood is away . I could be parking right in front of my building . " And he spends two weeks nagged by the idea that he is missing the opportunity , day after day , to have a great parking space . Opportunity costs subtract from the satisfaction we get out of what we choose , even when what we choose is terrific . And the more options there are to consider , the more attractive features of these options are going to be reflected by us as opportunity costs . Here 's another example . Now this cartoon makes a lot of points . It makes points about living in the moment as well , and probably about doing things slowly . But one point it makes is that whenever you 're choosing one thing , you 're choosing not to do other things . And those other things may have lots of attractive features , and it 's going to make what you 're doing less attractive . Third : escalation of expectations . This hit me when I went to replace my jeans . I wear jeans almost all the time . And there was a time when jeans came in one flavor , and you bought them , and they fit like crap , and they were incredibly uncomfortable , and if you wore them long enough and washed them enough times , they started to feel OK . So I went to replace my jeans after years and years of wearing these old ones , and I said , " You know , I want a pair of jeans , here 's my size . " And the shopkeeper said , " Do you want slim fit , easy fit , relaxed fit ? You want button fly or zipper fly ? You want stonewashed or acid washed ? Do you want them distressed ? You want boot cut , you want tapered , blah blah blah ... " On and on he went . My jaw dropped , and after I recovered , I said , " I want the kind that used to be the only kind . " ( Laughter ) He had no idea what that was , so I spent an hour trying on all these damn jeans , and I walked out of the store -- truth be told -- with the best fitting jeans I had ever had . I did better . All this choice made it possible for me to do better . But I felt worse . Why ? I wrote a whole book to try and explain this to myself . The reason I felt worse is that , with all of these options available , my expectations about how good a pair of jeans should be went up . I had very low expectations . I had no particular expectations when they only came in one flavor . When they came in 100 flavors , damn it , one of them should 've been perfect . And what I got was good , but it was n't perfect . And so I compared what I got to what I expected , and what I got was disappointing in comparison to what I expected . Adding options to people 's lives ca n't help but increase the expectations people have about how good those options will be . And what that 's going to produce is less satisfaction with results , even when they 're good results . Nobody in the world of marketing knows this . Because if they did , you would n't all know what this was about . The truth is more like this . ( Laughter ) The reason that everything was better back when everything was worse is that when everything was worse , it was actually possible for people to have experiences that were a pleasant surprise . Nowadays , the world we live in -- we affluent , industrialized citizens , with perfection the expectation -- the best you can ever hope for is that stuff is as good as you expect it to be . You will never be pleasantly surprised because your expectations , my expectations , have gone through the roof . The secret to happiness -- this is what you all came for -- the secret to happiness is low expectations . ( Laughter ) ( Applause ) I want to say -- just a little autobiographical moment -- that I actually am married to a wife , and she 's really quite wonderful . I could n't have done better . I did n't settle . But settling is n't always such a bad thing . Finally , one consequence of buying a bad-fitting pair of jeans when there is only one kind to buy is that when you are dissatisfied , and you ask why , who 's responsible , the answer is clear . The world is responsible . What could you do ? When there are hundreds of different styles of jeans available , and you buy one that is disappointing , and you ask why , who 's responsible ? It is equally clear that the answer to the question is you . You could have done better . With a hundred different kinds of jeans on display , there is no excuse for failure . And so when people make decisions , and even though the results of the decisions are good , they feel disappointed about them , they blame themselves . Clinical depression has exploded in the industrial world in the last generation . I believe a significant -- not the only , but a significant contributor to this explosion of depression , and also suicide , is that people have experiences that are disappointing because their standards are so high . And then when they have to explain these experiences to themselves , they think they 're at fault . And so the net result is that we do better in general , objectively , and we feel worse . So let me remind you . This is the official dogma , the one that we all take to be true , and it 's all false . It is not true . There 's no question that some choice is better than none , but it does n't follow from that that more choice is better than some choice . There 's some magical amount . I do n't know what it is . I 'm pretty confident that we have long since passed the point where options improve our welfare . Now , as a policy matter -- I 'm almost done -- as a policy matter , the thing to think about is this . What enables all of this choice in industrial societies is material affluence . There are lots of places in the world , and we have heard about several of them , where their problem is not that they have too much choice . Their problem is that they have too little . So the stuff I 'm talking about is the peculiar problem of modern , affluent , Western societies . And what is so frustrating and infuriating is this : Steve Levitt talked to you yesterday about how these expensive and difficult to install child seats do n't help . It 's a waste of money . What I 'm telling you is that these expensive , complicated choices -- it 's not simply that they do n't help . They actually hurt . They actually make us worse off . If some of what enables people in our societies to make all of the choices we make were shifted to societies in which people have too few options , not only would those people 's lives be improved , but ours would be improved also . This is what economists call a Pareto-improving move . Income redistribution will make everyone better off -- not just poor people -- because of how all this excess choice plagues us . So to conclude . You 're supposed to read this cartoon , and , being a sophisticated person , say , " Ah ! What does this fish know ? You know nothing is possible in this fishbowl . " Impoverished imagination , a myopic view of the world -- and that 's the way I read it at first . The more I thought about it , however , the more I came to the view that this fish knows something . Because the truth of the matter is that if you shatter the fishbowl so that everything is possible , you do n't have freedom . You have paralysis . If you shatter this fishbowl so that everything is possible , you decrease satisfaction . You increase paralysis , and you decrease satisfaction . Everybody needs a fishbowl . This one is almost certainly too limited -- perhaps even for the fish , certainly for us . But the absence of some metaphorical fishbowl is a recipe for misery , and , I suspect , disaster . Thank you very much . ( Applause ) |