i'm going to talk to you about some stuffthat's in this book of mine that i hope will resonate with otherthings you've already heard, and i'll try to makesome connections myself, in case you missed them. but i want to start withwhat i call the "official dogma." the official dogma of what? the official dogma of all westernindustrial societies. and the official dogma runs like this: if we are interested in maximizingthe welfare of our citizens,
the way to do thatis to maximize individual freedom. the reason for this is both that freedomis 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 thingsthat will maximize our welfare, and no one has to decide on our behalf. the way to maximize freedomis 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 embeddedin the water supply that it wouldn't occurto anyone to question it. and it's also deeplyembedded in our lives. i'll give you some examples of what modern progresshas made possible for us. this is my supermarket. not such a big one.
i want to say just a wordabout salad dressing. 175 salad dressings in my supermarket, if you don't count the 10extra-virgin olive oils and 12 balsamic vinegars you could buy to make a very large numberof your own salad dressings, in the off-chance that none of the 175the store has on offer suit you. so this is what the supermarket is like. and then you goto the consumer electronics store to set up a stereo system --
speakers, cd player,tape player, tuner, amplifier -- and in this one singleconsumer electronics store, there are that many stereo systems. we can construct six-and-a-half-milliondifferent stereo systems out of the componentsthat are on offer in one store. you've got to admitthat'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 kindof telephone service you wanted,
as long as it came from ma bell. you rented your phone. you didn'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 almostunlimited 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 crã¨me brã»lã©e torch.
(laughter) and if by some chance you haven'tseen that in your store yet, you can rest assuredthat one day soon, you will. and what this does is it leads people to walkinto their stores asking this question. and do you know what the answerto this question now is? the answer is "no." it is not possible to buy a cell phonethat doesn't do too much. so, in other aspects of life that are muchmore significant than buying things,
the same explosion of choice is true. health care. it is no longer the casein 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 hasthese benefits and risks, and b has these benefits and risks. 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 it really is a shiftingof the burden and the responsibility for decision-making from somebodywho knows something --
namely, the doctor -- to somebody who knows nothingand is almost certainly sick and thus not in the best shapeto be making decisions -- namely, the patient. there's enormous marketingof prescription drugs to people like you and me, which, if you think about it,makes no sense at all, since we can't buy them. why do they market to usif we can't buy them?
the answer is that they expect usto call our doctors the next morning and ask for our prescriptionsto be changed. something as dramatic as our identity has now become a matter of choice, as this slide is meant to indicate. we don't inherit an identity;we get to invent it. and we get to re-inventourselves as often as we like. and that means that every day,when you wake up in the morning, you have to decide what kindof person you want to be.
with respect to marriage and family, there was a time when the defaultassumption that almost everyone had is that you got marriedas soon as you could, and then you started having kidsas soon as you could. the only real choice was who, not when, and not what you did after. nowadays, everythingis very much up for grabs. i teach wonderfully intelligent students, and i assign 20 percentless work than i used to.
and it's not because they're less smart, and it's not becausethey'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 answerthese questions, whether or not it meansnot doing all the work i assign
and not getting a good gradein 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 dayfrom any place on the planet -- except the randolph hotel. (applause)
there is one corner, by the way, that i'm not going to tell anybody about,where the wifi actually works. i'm not telling you about itbecause i want to use it. so what this means, this incredible freedom of choicewe have with respect to work, is that we have to make a decision, again and again and again, about whether we shouldor shouldn'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 watchingour 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 answerto the question is "no,"
it's certainly going to makethe 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 usedto live in looked like this. [well, actually,they are written in stone.] that is to say, there were some choices, but not everything was a matter of choice.
and the world we now live inlooks like this. [the ten commandments dyi kit] and the question is,is this good news, or bad news? and the answer is, "yes." we all know what's good about it, so i'm going to talkabout 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 difficultto choose at all. i'll give you one verydramatic example of this: a study that was done of investmentsin voluntary retirement plans. a colleague of mine got accessto investment records from vanguard, the gigantic mutual-fund company of about a million employeesand about 2,000 different workplaces. and what she found
is that for every 10 mutual fundsthe employer offered, rate of participationwent down two percent. you offer 50 funds -- 10 percentfewer employees participate than if you only offer five. why? because with 50 funds to choose from, it's so damn hard to decidewhich fund to choose, that you'll just put it offuntil 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 haveto eat dog food when they retire because they don't haveenough money put away, it also means that makingthe decision is so hard that they pass up significantmatching money from the employer. by not participating, they are passing upas much as 5,000 dollars a year from the employer,
who would happilymatch their contribution. so paralysis is a consequenceof having too many choices. and i think it makesthe world look like this. [and lastly, for all eternity,french, bleu cheese, or ranch?] you really want to get the decisionright if it's for all eternity, right? you don't want to pick the wrongmutual fund, or the wrong salad dressing. so that's one effect. the second effect is that even if we manage to overcomethe paralysis and make a choice,
we end up less satisfiedwith the result of the choice than we would be if we hadfewer options to choose from. and there are several reasons for this. one of them is that with a lot of differentsalad dressings to choose from, if you buy one, and it's not perfect --and what salad dressing is? -- it's easy to imagineyou could have made a different choice that would have been better. and what happens
is this imagined alternative induces youto regret the decision you made, and this regret subtractsfrom 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 disappointingabout the option that you chose. second, what economistscall "opportunity costs." dan gilbert made a big point this morning of talking about how much the wayin which we value things
depends on what we compare them to. well, when there are lotsof alternatives to consider, it is easy to imaginethe attractive features of alternatives that you reject that make you less satisfiedwith the alternative that you've chosen. here's an example. [i can't stop thinking about those otheravailable parking spaces on w 85th street] sorry if you're not new yorkers. here's what you'resupposed 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. everybodyin my manhattan neighborhood is away. i could be parkingright in front of my building." and he spends two weeks nagged by the idea that he is missing the opportunity,
day after day, to havea great parking space. opportunity costs subtract from the satisfactionwe get out of what we choose, even when what we choose is terrific. and the more optionsthere are to consider, the more attractivefeatures of these options are going to be reflectedby us as opportunity costs. here's another example. now this cartoon makes a lot of points.
it makes points about livingin the moment as well, and probably about doing things slowly. but one point it makes is that wheneveryou're choosing one thing, you're choosing not to do other things that may have lots of attractive features, and it's going to makewhat you're doing less attractive. third: escalation of expectations. this hit me when i wentto replace my jeans.
i wear jeans almost all the time. there was a timewhen jeans came in one flavor, and you bought them,and they fit like crap, they were incredibly uncomfortable, if you wore themand washed them enough times, they started to feel ok. i went to replace my jeans after yearsof wearing these old ones, and i said, "i wanta 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, tapered, blah blah."on and on he went. my jaw dropped. and after i recovered, i said, "i want the kind that usedto be the only kind." he had no idea what that was, so i spent an hour trying onall these damn jeans,
and i walked out of the store -- truth! -- with the best-fitting jeansi had ever had. i did better. all this choice madeit possible for me to do better. but -- i felt worse. why? i wrote a whole bookto try to explain this to myself. the reason -- the reason i felt worse is that,
with all of these options available, my expectations about how gooda pair of jeans should be went up. i had very low, no particular expectationswhen 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 wasn't perfect. and so i compared what i gotto what i expected, and what i got was disappointingin comparison to what i expected. adding options to people's lives can't help but increasethe expectations people have
about how good those options will be. and what that's going to produceis less satisfaction with results, even when they're good results. nobody in the worldof marketing knows this. [it all looks so great.i can't wait to be disappointed.] because if they did, you wouldn't all knowwhat this was about. the truth is more like this. [everything was better backwhen everything was worse] the reason that everything was betterback when everything was worse
is that when everything was worse, it was actually possible for people to have experiencesthat 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 goodas 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. [you'll do] i want to say -- just a little autobiographical moment -- that i actually am married to a wife, and she's really quite wonderful.
i couldn't have done better. i didn't settle. but settling isn'talways such a bad thing. finally -- one consequence of buyinga 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 hundredsof 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 answerto the question is "you." you could have done better. with a hundred different kindsof jeans on display, there is no excuse for failure. and so when people make decisions,
and even though the resultsof the decisions are good, they feel disappointed about them; they blame themselves. clinical depression has exploded in the industrial worldin 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 experiencesthat are disappointing because their standards are so high,
and then when they have to explainthese experiences to themselves, they think they're at fault. and so the net result is that we dobetter 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 choiceis better than none,
but it doesn't follow from that that more choiceis better than some choice. there's some magical amount.i don't know what it is. i'm pretty confident that we havelong 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 societiesis material affluence.
there are lots of places in the world, and we have heard about several of them, where their problemis not that they have too much choice. their problemis that they have too little. so the stuff i'm talking aboutis the peculiar problem of modern, affluent, western societies. and what is so frustratingand infuriating is this: steve levitt talked to you yesterday about how these expensiveand difficult-to-install child seats
don'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 don't help. they actually hurt. they actually make us worse off. if some of what enablespeople in our societies to make all of the choices we make
were shifted to societiesin which people have too few options, not only would thosepeople's lives be improved, but ours would be improved also, which is what economists calla "pareto-improving move." income redistribution will makeeveryone better off -- not just poor people -- because of how all this excesschoice plagues us. so to conclude. [you can be anythingyou want to be -- no limits]
you're supposed to read this cartoon,and, being a sophisticated person, say, "ah! what does this fish know? you know, nothing is possiblein 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 viewthat this fish knows something. because the truth of the matter is that if you shatter the fishbowlso that everything is possible,
you don't have freedom. you have paralysis. if you shatter this fishbowlso that everything is possible, you decrease satisfaction. you increase paralysis,and you decrease satisfaction. everybody needs a fishbowl. this one is almostcertainly too limited -- perhaps even for the fish,certainly for us. but the absence of some metaphoricalfishbowl is a recipe for misery,
and, i suspect, disaster. thank you very much.