The Fallacy Of Choice – Niteen From IIM Calcutta
“You can have any car you want, as long as it is black” – Henry Ford
George Carlin, the famous comedian had once exclaimed that “You don’t really have choice in this country. We have 2 oil companies, 2 political parties, but if you want a bagel you will have 23 flavours”.
The best of Indian brains are busy innovating. After rigorous efforts, these top minds of the country who have been molded by the best institutions of the country – IIT+IIM – are involved in creating disruptions in our daily life. Not in sophisticated labs, but drawing rooms. Figuring out how to squeeze more out of the pockets of Indians. Busy selling soaps, creams, credit cards. Some might say they are selling dreams and aspirations. While detractors label them with derogatory labels.
My take is that like morality, the answer isn’t black and white – but rather differing shades of grey. The value of a choice is in our ability to perceive differences between the choices. The bright minds of our country are basically exercising their intellect to make this harder for the common folk who are falling for the trap of choice in the name of consumerism. But in the era of individualism and choice, it isn’t wrong to say that corporates and brands are just doing value addition in accordance to society’s demands. After all, life is all about choices. For instance, Fair and Lovely gets berated by the urban educated elite for being racist. But they are far from reality and don’t realise that Fair and Lovely is basically selling the dream of women from humble backgrounds. There is a whole class angle associated to it that has crept into the societal structure since ages. In the villages, being fair is indeed critical to having the confidence to getting married, or taking up risky ventures, since fairness has been associated with that of the upper castes.
There have been numerous experiments where stripping the labels of competing products reveal that there is no actual difference between them. As our society turns more consumerism, we as a whole are better off. But off late, the marginal cost of externalities seems substantial enough not to be overlooked. The same has been the theme of many a latest TV series – especially Dark satire genre.
Let us take the case of toothpaste : First we had the Calcium Carbonate, Sorbate ‘white paste’. Later, we were offered gels. Then the paste colour changed. Next was the turn of mixture of paste-gel. And then came the turn of crystals in the gel. What do you expect next – multi coloured crystals. Next adders like – Salt, Charcoal, neem the list goes on. The best minds of the country are spending sleepless nights basically doing this ‘innovation’. But you ask any dentist – an unsold one. You will know that toothpaste is mainly composed of abrasive, an active agent and a binding agent. The combination remains same in most of the toothpastes. What we are being sold is the perceived value additions by letting our minds be susceptible to corporate pendulum. Don’t get me wrong this ain’t easy. That’s why we are hired. Very few venture into the desert-land of doing something substantially meaningful.
Adding options is what economists call a “Pareto improvement,” making some people better off while making nobody worse off. Because of the “obvious” truth of the proposition that more choice makes us better off, it was big news when Sheena Iyengar published a series of studies more than a decade ago showing the opposite. Iyengar found that there are circumstances in which adding options reduces the likelihood that people will select any.
In one of the iconic studies, researchers presented an array of jams and asked shoppers to buy. On one side were 6 varieties of jam. On the other side there were 24. The second side got a lot of attention and traffic. But the smaller array led to 10 times more purchases.
An average American supermarket has around 50000 items, according to the Food Marketing Institute. Five times more than in 1975. We find hundreds of varieties of FMCG products.
What we don’t seem to be realizing is that choices above certain limit makes us confused and unhappy, due to regret. It might also paralyse us from choosing anything as seen from the results of a research conducted on employees using insurance schemes. Employees were more likely to push decision making further time periods when presented with multitude of choices. This goes in contradiction to many of the marketing ‘fundas’ that we deduce as part of our education at B-Schools.
Early decision making research by Daniel Kahneman and Amos Tversky showed that people respond much more strongly to losses than gains. Daniel McFadden, an economist at the University of California, Berkeley says that consumers find too many options troubling because of the risk of mispresentation, misunderstanding, miscalculation and misreading. The expectation of indecision prompts panic and failure to choose at all.
For instance, in one survey when people who had cancer were asked how many would prefer having patient autonomy, very few respondents affirmed so. On the other hand, people without cancer when asked if they had cancer, how many would prefer patient autonomy on key decision along with doctor’s input, majority voted for autonomy.
Don’t get me wrong. I’m a staunch supporter of free markets and consumer choice. It benefits the society as a whole. But one can’t overlook the social aspect. Social innovations are really tough to implement, especially in a country like India. No wonder the best minds shy away from these issues. It is we as a society who are to be blamed. There isn’t much scope and incentives to pursue real meaningful challenges in this country. India hasn’t gone overboard with the bug of consumerism, unlike many other countries. Moreover, things seem to be taking positive turn off late due to the advent of social entrepreneurship and digital revolution. Corporates and brand managers need to recognise this and exploit the opportunity. But we still have miles to go. It is just the beginning.