Can reducing our choices increase our happiness?
by Edward F. Fischer on
Does more choice make us happier? The instinctive American response would certainly be yes, but a comparison of German and US shoppers suggests otherwise.
Germany supermarkets differ from their U.S. counterparts. The carts are smaller, like an overgrown children's wagon, the aisles are narrower, and the selection is smaller. You would be lucky to find a dozen types of breakfast cereal, when the aisles of my Nashville grocer looks like Andreas Gursky's photograph "99 cent II Diptychon."
The choices of German shoppers have been further restricted with the introduction of new regulations. Starting January 1st 2010, German farmers are forbidden from selling conventional, coop-raised eggs.
To many Americans, this would seem an unwarranted government intrusion, analogous to EU regulations on banana shapes and sizes. Given that just 30% of egg sales were of free-range eggs, this new regulation meant that the majority of Germans were forced to change their buying practices and pay far more money — up to three times more than they had previously paid for coop-raised eggs.
How can we understand this restriction of consumer choice? Has it put undue financial pressure upon German consumers and led to greater unhappiness?
This question is not as easy to answer as it may seem, because there is a gaping difference between what German consumers do and what they say they to do. In surveys assistants and I conducted in 2008 in Hannover, Germany, over 60% of our sample reported buying either organic or free-range eggs, and this pattern holds true across socio-economic groups.
However, in national sales data, we find that just more than 30% of eggs sold are organic or free-range. Taking our sample as broadly representative, twice as many people say they buy organic and/or free-range than actually do. Despite their moral preferences, at the moment of the financial decision, where the rubber hits the road and the money changes hands, the 200+% premium is too much to bear.
So, what is their preference? Their revealed preference presumably values price over moral provenance and quality (more coop-raised and coop-free eggs are bought), and yet their stated preferences are just the opposite (preferring more organic and free-range eggs). Both tell us something important about consumer values.
Conventional wisdom in U.S. marketing holds that price, quality, and convenience are the most important factors in consumer decisions (and, roughly, in that order). In our Hannover sample, quality clearly trumps price; and price only just barely edged out environmental-friendliness as the second most important factor. (Convenience was not a major factor for our Hannover sample.
Indeed, we had difficulty translating "convenience" (as, for example, Komfort or Bequemheit); there is simply not a salient term in German that adequately glosses American-style "convenience." This is not to say that Germans do not take into account factors we would label under "convenience," just that its significance does not seem to merit a precise term.)
Many consumers in the Hannover sample explicitly invoked arguments that privileged quality over price, invoking a long time horizon and explicit moral projects in their explanations of preferences. Joachim, a married man in his mid-40s, stated that, "we have to change this idea that everything has to be cheap. We are wealthy enough that we can afford to buy more expensive foods. We need for folks to be better informed."
This raises an intriguing question: might reducing consumer choice increase overall well-being by enforcing long-range preferences? Barry Schwartz (in The Paradox of Choice) reviews a wide range of studies showing that too many choices actually decreases satisfaction. He suggests that this is due to "regret aversion," as choosing forecloses the unknown bounties of those paths not taken, and to informational overload, there simply being too many variables to consider when choosing a product even as simple as jam or chocolate.
Perhaps, then, Germans want to have some alternatives prohibited to avoid temptations to act against a perceived greater good. Perhaps this is a case in which regulation can best help individuals effectively pursue their long-term meta-preferences. Perhaps the invisible hand works best not flailing about and gesticulating by itself, but firmly ensconced in the grip of the social.
It is true that Germans have a higher tolerance for regulation. There is a greater trust in the government to look out for the common good, and, as a result, a different sort of social contract. But we should not be too quick to dismiss lessons to be learned from Old Europe on balancing regulation and free trade.
Indeed, as the case of German eggs suggest, we might do well to promote economic structures that help us realize our stated preferences and not just cater to the quick buck made inducing hedonistic revealed preferences. "Yes, I buy the organic eggs," one woman said. "Most of the time, at least. I want to, but it is more money. I try to remember that it is worth a couple of euros to do some good." And, she added as an afterthought, "they taste pretty good too."
Perhaps, then, Germans want to have some alternatives prohibited to avoid temptations to act against a perceived greater good.