The tyranny of choice?

July 26, 2010

As the number of choices keeps growing, negative aspects of having a multitude of options begin to appear. As the number of choices grows further, the negatives escalate until we become overloaded. At this point, choice no longer liberates, but debilitates. It might even be said to tyrannize. Psychologist Barry Schwartz in The Paradox of Choice.

Economics is all about how people make choices. Sociology is all about why they don’t have any choices to make.  James S. Duesenberry, U.S. economist

Choose Life. Choose a job. Choose a career. Choose a family. Choose a fucking big television, choose washing machines, cars, compact disc players and electrical tin openers. Choose good health, low cholesterol, and dental insurance. Choose fixed interest mortgage repayments. Choose a starter home. Choose your friends. Choose leisurewear and matching luggage. Choose a three-piece suit on hire purchase in a range of fucking fabrics. Choose DIY and wondering who the fuck you are on Sunday morning. Choose sitting on that couch watching mind-numbing, spirit-crushing game shows, stuffing fucking junk food into your mouth. Choose rotting away at the end of it all, pissing your last in a miserable home, nothing more than an embarrassment to the selfish, fucked up brats you spawned to replace yourselves. Choose your future. Choose life… But why would I want to do a thing like that? I chose not to choose life. I chose somethin’ else. And the reasons? There are no reasons. Who needs reasons when you’ve got heroin? From Trainspotting

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In our lives we are constantly making choices- these choices go from the banal to the life-changing. The word choice has become ubiquitous in the modern world. If you go a modern American supermarket you can choose between 50,000 different products. Amazon gives every town a bookshop with over 2 million titles. Starbucks claims that they offer 87,000 drink combinations. But choice goes much further than these examples; in this postmodern world some claim that we can now construct our very identities, including  our sexuality, gender and class.

 It is in economics where the idea of choice really comes into its own. Robert Mundell, a Nobel-prize winning economist, defined modern economics as ‘the science of choice.” Indeed, for economists choice is the quintessential anthropological act. They tend to believe that it is good and the more you have the better. Giving buyers more choice means more competition, which lowers prices, raises quality and promotes innovation. In the end, workers’ productivity increases, consumers are better off and the economy grows and becomes more efficient. The dominant behavioural theory in modern economic analysis is rational choice. Homo Economicus is seen as a reasoning actor who evaluates means and ends, costs and benefits in order to make a rational choice.

While for many this choice is a positive thing, it has also attracted criticisms. The idea that capitalism offers too many choices probably goes back to Karl Marx. And in the last ten years there have been a plethora of books which have set out to criticise “the tyranny of choice.” I am going to look at two representative examples of this phenomenon: Barry Schwartz’s The Paradox of Choice and Renata Salecl’s Choice. What criticisms do these authors make? They believe that all this choice provokes anxiety in people. One study that is often cited is When Choice is Demotivating: Can One Desire Too Much of a Good Thing? This is a study of gourmet jams carried out by Sheena S. Iyengar and Mark R. Lepper from Columbia and Stanford universities respectively. The experiments were carried out both in the lab and at luxury food store in Menlo Park. The researchers set out tables offering either six or 24 samples of jam. More shoppers would go to the table with 24 flavours but only 3% actually bought jam. On the other hand 30% of those who visited the stall which offered less variety bought some jam. They were just intimidated by too much choice. This is known as consumer vertigo. In the opening chapter of The Paradox of Choice Schwartz describes the traumatic  experience buying jeans at The Gap. In the past buying jeans had been a five-minute task. All you needed to know was waist size and length. Now Schwartz was confronted with five fit choices in every size: slim, easy, relaxed, baggy, and extra-baggy. All this was too much for the hapless Schwartz:

“… it was a complex decision in which I was forced to invest time, energy, and no small amount of self-doubt, anxiety, and dread.”  Life is just so hard sometimes.

Salecl, who was married to fellow Slovenian philosopher Slavoj Zizek, argues that individual choices are rarely rational, being mediated by our unconscious and ultimately insatiable desires.  Like Schwarz she sees choice as an anxiety-creator. In particular she focuses on how we can be ridiculed if we make the “wrong” choice. She notes the parallels between our search for a mate and how we look for a telephone company: constant switching, followed by the feeling that we may have missed a better deal once we’ve made our choice. Ultimately we are powerless to make the really fundamental choices – the choice to reject the consumerist, individualist model altogether.

As a libertarian I am sceptical about these arguments. Firstly I think that we are capable of negotiating these options. If people are so overwhelmed by choice, how come superstores are so popular with the public? Maybe we have just been fooled by the marketers but I think we do enjoy variety. We may be irrational sometimes but that doesn’t mean we should have the government tell us what we should do. Are there too many newspapers? Too many books? Too many websites? The problem is who decides which choices should be eliminated. It all seems so wasteful but of course as we saw in my post last week the Soviet Union was also probably more wasteful of resources. Salecl talks about questioning the system but it depends on the alternative she is proposing. Will it be better than the current one?

Of course there are difficulties in making decisions but we are capable of habituating ourselves to this environment. We can get help from newspapers, magazines, online or from family and friends. I have never enjoyed buying clothes but I’m sure our current teenagers have no problems buying a pair of jeans. Anyway, we can always decide to maintain the status quo. Options are valuable, even when not exercised. I am still with Telefónica although there are now many other providers. I benefit from the competition, which keeps the former monopoly on its toes.

I love the new distribution models described by Chris Anderson in his book The Long Tail. Instead of being able to buy a limited number of items, we now have a huge number sold in relatively small quantities, which allows for incredible personalisation. Bruce Springsteen talked about 57 channels and nothing on but the Boss was wrong. American television is now living a golden age. Does the choice on the Internet really create anxiety? I prefer to focus on the positive aspects.

Whenever you make a choice, there exists the possibility that you will get it wrong. And those mistakes can prove very costly. There are opportunity costs in making choices because we dispose of scarce resources. That is the nature of human life. But would we better off if our marriages were arranged or the only car you could buy was a Trabant? Of course having loads of choices doesn’t guarantee our happiness. But it’s not the state’s job to make us happy. That is up to us. Just pursuing material well-being is unlikely to bring us contentment. We need to know who we are and what we want from life. I will finish with this quote from Virginia Postrel:

Ultimately, the debate about choice is not about markets but about character. Liberty and responsibility really do go together; it’s not just a platitude. The more freedom we have to control our lives, the more responsibility we have for how they turn out. In a world of constraints, learning to be happy with what you’re given is a virtue. In a world of choices, virtue comes from learning to make commitments without regrets. And commitment, in turn, requires self-confidence and self-knowledge.

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Weird words

July 26, 2010

The Sun featured a piece about British author Adam Jacot de Boinod, who fell in love with odd words after discovering that Albanians have 27 different terms for the eyebrow. They have an extract from his new book I Never Knew There Was A Word For That. Here we have a list of words connected to the body and its functions:

POGONION: The bit in the middle of your chin that most sticks out.

PHILTRUM: The groove below your nose and above your mouth.

GLABELLA: The gap between your eyebrows.

CANTHUS: Corner of the eye where the upper and lower lids meet.

FIPPLE: The lower lip.

JOBLOCKS: Fleshy hanging cheeks (on your face!) SIMOUS: A flat or turned up nose.

WIKINS: The corners of the mouth.

MIMPING: To speak in a prissy manner.

BORBORYGMUS: The rumbling sounds made by the tummy.

CALLIPYGIAN: Ancient Greek word for a shapely bum.

COKE-BOTTLE SHOULDERS: The shoulders of someone who takes no responsibility.

QUOBLED: Hands that are shrivelled and wrinkled from doing too much washing-up.

BANANA FOLD: The fat line below the buttocks.

LIK-POT: The forefinger of the right hand.

PROGNATHOUS: To have a big jaw that juts forward.

BUFFALO HUMP: Lump of fat between the shoulder blades at the base of the neck.

COCKTHROPPLED: Having an unusually large Adam’s apple.

WORKING MAN’S SMILE: Builder’s bum.

PRAYERBONES: Knees.

CANKLES: Thick ankles.

Here are some other weird words from the book:

ARCTOPHILE: A person who collects teddy bears.

BOONDOGGLING: The act of pretending to be busy.

CREPITATION: The crackling of a wood fire.

HYPNOPOMPIC: The fuzzy state between being asleep and awake.

DESIDERIUM: Yearning for a thing you have lost.

PROSOPAGNOSIA: The inability to recognise familiar faces.

THANATOPSIS: To think about death.

DUNDUCKYTIMUR: A dull but indescribable colour.

QUOMODOCUNQUIZE: Making money by any means possible.

CLOOP: The sound of drawing a cork from a bottle.

SWABBLE: Water being sloshed around.

WHIFFLE: A soft sound of gently moving air.

JARG: The creaking of a gate.

WHEEP: Sound of a steel weapon being drawn from its sheath.

AMPHORIC: The hollow sound when you blow across the top of a bottle.

FOG DOG: Lower part of a rainbow.

MONKEY’S WEDDING: Simultaneous rain and sunshine.

YAFFLE: To eat or drink greedily.

PINGLE: To move food around your plate without eating it.

HODGER: Someone who eats all the host’s food and drinks all their drink.

DOOADGE: To handle food in a messy way.

WAFF: The slightest touch of illness.

FLUFF: Breaking wind silently.

VURP: Something that’s between vomit and a burp.

BLEPHAROSPASM: Uncontrollable winking.

TRICHOTILLOMANIA: The compulsive desire to pull out your own hair.

GERVE: The breast pocket in a jacket.

BRITCH: The inside jacket pocket.

GRAVITY-BAGS: The seat of the trousers.

APPLE-CATCHERS: Oversized knickers


My media week 26/07/10

July 26, 2010

 

In the online magazine Guernica, Susie Linfield argues that in Rwanda reconciliation after genocide is just another form of torture: Living with the Enemy.

In my post about planning I mentioned the Austrian economist F.A. Hayek. On this website you can find video-taped interviews of Hayek talking about such topics as the failures of Marxism democracy, creating laws, and public choice theory. They come with a transcript, which can also be downloaded in e-book format.

Vimeo has this video about a high tech dystopia: Mob (a near-future science fiction story) by Tom Scott

Finally The Onion has this spoof video.: Jennifer Aniston Adopts 33-Year-Old Boyfriend From Africa.


The best-laid plans…

July 19, 2010

The curious task of economics is to demonstrate to men how little they really know about what they imagine they can design. F.A. Hayek, The Fatal Conceit

 The man of system, on the contrary, is apt to be very wise in his own conceit; and is often so enamoured with the supposed beauty of his own ideal plan of government, that he cannot suffer the smallest deviation from any part of it. He goes on to establish it completely and in all its parts, without any regard either to the great interests, or to the strong prejudices which may oppose it. He seems to imagine that he can arrange the different members of a great society with as much ease as the hand arranges the different pieces upon a chess-board. He does not consider that the pieces upon the chess-board have no other principle of motion besides that which the hand impresses upon them; but that, in the great chess-board of human society, every single piece has a principle of motion of its own, altogether different from that which the legislature might choose to impress upon it. If those two principles coincide and act in the same direction, the game of human society will go on easily and harmoniously, and is very likely to be happy and successful. If they are opposite or different, the game will go on miserably, and the society must be at all times in the highest degree of disorder. Adam Smith, The Theory of Moral Sentiments

 What is called planning in political rhetoric is the government’s suppression of other people’s plans. Thomas Sowell 

In economics when we think of planning we have in mind decisions made by bureaucrats. But planning is not limited to governments. It takes place in capitalism as well. The difference lies in who is planning for whom. In capitalism those decisions are decentralised taken by countless individuals and companies. We are all planners who use our intimate knowledge of local conditions in order to do so. But its critics thought that this system could be improved and this chaos could be substituted for something more “rational.” It proved very seductive, especially to intellectuals. The case for central planning appeared both credible and attractive. But how it would fare in the real world?

These questions came to mind the other day when I was watching The Engineer’s Plot, the first episode from a 1992 documentary series by Adam Curtis, Pandora’s Box. Curtis, my favourite documentary-maker, unearthed some really interesting footage where the Soviet planners themselves speak. They had an ambitious plan to reengineer society and turn the people into scientific beings. Experts would decide what goods would be produced and what economic resources would be used to make them. To achieve these goals they needed to create an all-powerful bureaucratic apparatus. The most famous of the organisations they created was Gosplan, the state planning commission in overall charge of coordination and development of the economy.

The most intractable problem was deciding prices. The documentary introduces us to the head of the delightfully named USSR State Committee for Organization and Methodology of Price Creation. It’s a long name and they had an immense task deciding the price of 25 million separate items. To perform this gargantuan task they employed 400 highly qualified experts. The head of this committee is shown sitting next to a tower of price logbooks: “This shows quite clearly that the system is rational”. He also enthuses about how this will all fit onto a couple of floppy disks. The Soviets pinned a lot of hopes on information technology. But not even the world’s most advanced supercomputer would be up to task of such daunting complexity – it may simply be impossible to make long-term predictions for a highly complex system such as an economy.

We then meet the All Union Scientific Research Institute for the Study of the Population’s Demand for Consumer Goods and the Conjuncture of the Market. They had two correspondents in every city, whose job was to report on what consumers wanted. Unfortunately the response time by the factories was very slow. One of the economists who worked for the Institute was very candid in her explanations: “The problem is industry responds very slowly to our scientific forecasts. For instance, we decided people wanted platform shoes. By the time the industry got around to increasing production they were out of fashion. Nowadays the Soviet consumer knows that if there is enough of a particular item in the shops it’s a sure sign it’s out of fashion.”

In the end this experiment was an abject failure. It sounded perfectly plausible but it just couldn’t cope as the Soviet economy grew more and more complex. Warehouses overflowed with unwanted and unsold goods, while people queued up for other things that they wanted and hoped to get before supplies ran out. Trains travelled thousands of miles only in order to meet the targets of a plan. Sofas and chandeliers were made larger and larger because the plan measured the material used. The ultimate “success” was to use more valuable inputs to produce less valuable outputs, Under capitalism you do not need the All Union Scientific Research Institute for the Study of the Population’s Demand for Consumer Goods and the Conjuncture of the Market. You have the price mechanism instead. Companies do make mistakes about demand but they are usually forced to pay the price for those mistakes. (Although, I have to admit this has not happened recently as we have seen with the bank bailouts.) Tthe main reason that this central planning failed was that knowledge is dispersed in society and to believe that 400 highly-qualified people are capable of carrying out this task was indeed a fatal conceit.

I am not saying all planning is bad. Countries such as France, Japan and South Korea have enjoyed important successes in their industrial policies. No country is either 100% free market or 100% state-controlled. Governments now play an unavoidable role but I prefer to be nearer the free market end of this continuum.


Key concepts in Hayek’s thought

July 19, 2010

The article about central planning is influenced by the economist F.A. Hayek. Here is an excellent summary of his key ideas I found on the website of the Adam Smith Institute:

Markets versus planning Market exchange works because people value thing differently. The planned economy rests on the unlikely assumption that everyone can agree what to produce, and how.

Importance of prices The price system reflects the imbalance of demand and supply, and automatically steers resources to where they are most needed – without the need for planners to discover, understand, and correct the imbalance.

We’re all planners We all plan, and we do so on the basis of our own knowledge of local conditions. There is far more useful and current information in this dispersed knowledge base than could ever be collected in a central planning agency.

Competition is dynamic Competition is not a textbook ‘given’ but a dynamic process, in which people constantly search to discover the cheapest mix of resources to produce the most desired outputs.

Human action but not human design The social order is like language. It is a product of human action, but not something that we have deliberately designed. It evolves and changes, but endures because it is useful to us.

Limits to our understanding Just as language is built on complex rules of grammar that we follow with ease but cannot necessarily articulate, the social order is built on complex regularities in our behaviour – common law, ethics, customs, manners – whose importance we only faintly understand.

The fatal conceit The totalitarian disasters that have occurred when utopians attempt to redesign society according to their rational plan shows just how little we know about the workings of the complex system of rules on which the social order is based.


My media week 19/07/10

July 19, 2010

First we had the slow food movement. Now in the Guardian Patrick Kingsley argues in favour of the art of slow reading.

 

NPR’s Fresh Air enters The Secret World Of Wikileaks.

In the Telegraph Nesrine Malik argues that the French vote to ban Muslim women from covering their faces in public is just as oppressive as the Islamic law forcing them to do it in the first place: Burka ban: Why must I cast off the veil?

 


Cost-benefit analysis and the value of a human life

July 12, 2010

It is the French engineer and economist, Jules Dupuit, who is usually credited with the development of cost-benefit analysis. It began in the evaluation of public works projects but it has since been used to analyse polices in criminal justice, defence, public health and the environment. It can be said to have its origins in Jeremy Bentham and his theory of utilitarianism. The English philosopher argued that the aim of policies should be to provide the greatest happiness for the greatest number.

When governments use of cost-benefit analysis to decide whether to build a new road or offer a new drug through the public health system they are often putting a value on the environment or human life, which can be extremely controversial, especially in the latter case. We are horrified by the idea of putting a price tag on life because we believe every one is “priceless”. I know that this is very off-putting but it is necessary. If you spend money on some solutions, that money will not be available for other alternatives. The idea that if it saves just one life it is worth whatever it costs has a strong emotional appeal but it does not stand up to rigorous scrutiny. In a previous post I mentioned my favourite definition of economics comes from the economist Lionel Robbins:

Economics is the study of the use of scarce resources which have alternative uses.” In this case the alternative uses are other ways of saving live”

Of course a human life has a very different value in the third world. The Indians of Bhopal have been rightly been furious about the compensation being asked of BP compared to the disaster caused by Union Carbide, which resulted in the deaths of 25,000 people and horrific injuries for many more. The final settlement was just $470million. BP has already committed $20 billion and it will be a lot more once the criminal investigation has finished. Although the environmental toll has been huge, the cost in human lives, compared to Bhopal, has been minimal.

With a limited supply of resources, it is impossible to save every life, so some trade-offs must be made. While it may well be necessary cost-benefit analysis has undoubtedly had some contentious applications. In the British comedy Yes Prime Minister when Jim Hacker confronts Sir Humphrey about the tremendous costs of smoking the civil servant has an immediate response:

Jim Hacker: Humphrey, we are talking about 100,000 deaths a year.

Sir Humphrey: Yes, but cigarette taxes pay for a third of the cost of the National Health Service. We are saving many more lives than we otherwise could because of those smokers who voluntarily lay down their lives for their friends. Smokers are national benefactors.

That may seem very morbid but Philip Morris commissioned one such report about the Czech Republic, which proved that the country saved about $147m in 1997 through the deaths of smokers who would not live to use healthcare or housing for the elderly.

In the 1970s The Ford Pinto became a focus of a major scandal when it was alleged that the car’s design allowed its fuel tank to be easily damaged in a rear-end collision, which sometimes resulted in deadly fires. Ford allegedly knew about this design flaw but refused to pay for a redesign because it would it would be cheaper to settle potential lawsuits for resulting deaths. Here is an extract from the infamous Ford Pinto memo, in which the Detroit manufacturer used cost-benefit analysis to compare the cost of an $11 repair against the monetary value of a human life:

Fatalities Associated with Crash-Induced Fuel Leakage and Fires

Expected Costs of producing the Pinto with fuel tank modifications:

Expected unit sales: 11 million vehicles (includes utility vehicles built on same chassis)

Modification costs per unit: $11.00

Total Cost: $121 million

[= 11,000,000 vehicles x $11.00 per unit]

Expected Costs of producing the Pinto without fuel tank modifications:

Expected accident results (assuming 2100 accidents):

180 burn deaths

180 serious burn injuries

2100 burned out vehicles

Unit costs of accident results (assuming out of court settlements):

$200,000 per burn death

$67,000 per serious injury

$700 per burned out vehicle

Total Costs: $49.53 million

[= (180 deaths x $200k) + (180 injuries x $67k) + (2100 vehicles x $700 per vehicle)]

The cost for fixing the Pinto was $121 million, while settling cases where injuries occur was only $50 million. Ford decided to manufacture and market the Pinto without modifying the fuel tank. Ford was acquitted of criminal charges, but it lost several million dollars and gained a reputation for manufacturing a car that was described as “the barbecue that seats four.”

The final example I Have is NICE and health care. The National Institute for Health and Clinical Excellence, which was established in the late 1990s in the UK, was the body created to ensure that the NHS used “best practices” in medicine. The bottom line is that NICE is a rationing body. It is a thankless task and there is bound to be controversy. You can try to get rid of waste but in the end you have to make real cutbacks. One particularly sensitive area is the last six months of life. How much should you spend? There have been a number of rulings against medicines that would have prolonged the lives of patients but at a very high cost.

It would be lovely to live in a world with unlimited resources but we do not have that luxury. In the end we will have to place a value on human life. There are no simple formulas available. I have given a lot of examples which show the controversial side of cost-benefit analysis. But we cannot avoid having to make choices. As economist Thomas Sowell has stated: There are no solutions only trade-offs.