Yesterday, I was watching a Ted Talk by Barry Schwartz – The Paradox of Choice. In it, he bursts one of the most closely held beliefs of the Western Society – Welfare and happiness of people can come from giving them more choice. He points to evidence that runs counter to it.

He quotes a case study of the big mutual fund company Vanguard. It has about a million employees and about 2,000 different workplaces. It was found that for every 10 mutual funds the employer offered, rate of participation went down two percent. If 50 funds were offered, 10 percent fewer employees participated than if only five were offered. Why? Because with 50 funds to choose from, it’s so damn hard to decide which fund to choose, that the employees just put it off till tomorrow. Foregoing the matching contribution by the employer and all the benefits of the mutual fund, any mutual fund they might have chosen.

Counter-intuitively, more choice can also lead to less happy customer. Whereas with fewer choices, even in the odd chance that the choice proved wrong, he could always blame the company or quality or just plain luck. With a plethora of choices, if the choice proves wrong, he only has himself to blame. And if it proves good, he will still be left with a nagging feeling that perhaps there was an even better choice out there.

My take is that unless you’re in the fashion business and you NEED to stock a whole range of styles to suit personal tastes, take a leaf out of the book of iPhone – offer a handful of choices with clear distinction between them. iPhone not only offers few choices, they also have another trick up their sleeve – the price these choices in such a way that the customer chooses the option that the company wants them to… But that’s another blogpost.

(Do like, comment and share this post. It keeps me going.)