Can Government Solve the Paradox of Choice?

Mark Pennington,

Release Date
January 10, 2012


Basic Economics

Are the choices provided by a market economy stressful? According to Prof. Mark Pennington, it can definitely be stressful to choose among several different options. In fact, Pennington himself is often overwhelmed by the choices provided to him in a modern supermarket.

This phenomena, called the paradox of choice, has often been used to make arguments in favor of government action on behalf of its citizens. However, these arguments overlook the flaws associated with government action.
For instance, if individual choices are stressful, it must be even more stressful for regulators and bureaucrats to make choices on behalf of millions of people. Moreover, even if it were assumed that bureaucrats and regulators were not stressed out by their decisions, they would lack the relevant knowledge of people’s personalities and preferences.
In a world with many choices, we must either shoulder the burden of making our own choices or shoulder the burden of knowing that other people are making decisions for us under a great deal of stress and insufficient knowledge.

Can Government Solve the Paradox of Choice?
Does having choice, whether over breakfast cereal or pension plans, make us happy? It’s become fashionable to say that we can have too much choice. That if we face many different options, we’ll get stressed about making the wrong choice, or that we’ll be comparing our choices unfavorably to the choices that other people have made. This is what many behavioral economists and social psychologists describe as the paradox of choice. We say that we want to have choice, but it turns out actually that choice isn’t really that good for us.
As someone who often has panic attacks whenever I enter a supermarket, I’ve got considerable sympathy with the idea that having choice creates stress. But I think we’re fooling ourselves if we think that having governments regulate and control our lives in various ways that we can relieve ourselves of this burden. If choosing for yourself induces stress, then choosing for other people must induce even more stress on behalf of the chooser, at least if they have our best interests at heart.
If we’re choosing for other people, we should be very, very concerned about whether we’re making the right decision. If we take seriously the idea that choice creates stress, then it will be to place an intolerable burden on regulators and bureaucrats to expect them to choose for us. So great will be this burden that there’ll be no reason to believe that they would actually make wise choices on our behalf.
Even if we assume, for the sake, of argument that bureaucrats and regulators aren’t actually too stressed out, there’s no reason to believe that they actually have the knowledge to make the best choices for us. They simply can’t know enough about our own personalities and characteristics to choose wisely for us.
So, there’s one choice that we simply can’t avoid. Either we face the reality of having to make our own choices and dealing with the burden of that stress, or we face the still greater burden of knowing that choices are being made for us by people who are either too stressed or who lack the knowledge to make the best choices for us.