I can be a terrible person to go grocery shopping with, and recently I have come to understand why.
If you ever go grocery shopping with me, you would see me standing in front of the fridge, wondering which milk would be the best, or standing in the vegetable section, wondering which vegetable I should get. I used to think I was just indecisive. Maybe I am, but it is more than that.
When I consider what to buy, factors I take into consideration are nutrition, price, taste, ingredients, etc. I look at the price, pick up the product, flip it to the back, look at how many "good" and "bad" nutrients it has and the ingredients. If I have had it before already, I recall what it tasted like. If not, I imagine how it would taste like and put it back. Then I pick up an alternative from the same brand or another brand, repeat the process. After that, I try to compare all or most of the options.
This is very rational, in one sense. Because I try to gather all the available information for my purchase and analyze all the options. It would be irrational to make a decision not based on all information or ignore alternatives, right? That would ignore opportunity cost and prevent my from choosing the one that would maximize my utility (pleasure/well-being).
The problem is, this does not necessarily lead to a good decision because of our cognitive limitation. If I want to buy 10 process foods in the supermarket, assuming each has 10 options and each option has 10 nutrients listed, I would have to look at 1000 nutrients! And this is just for nutrition (and only the listed nutrients). I would have to compare the price, the taste and ingredients of all options too. I have some scenarios here (already simplified) for us to imagine and let us think about whether we should choose A or B:
1) Nutrition vs Nutrition:
Option A and B have the same price and expected taste. A has 3 more grams of saturated fat per serving. B has 100 milligrams of sodium.
2) Nutrition vs Price:
Option A and B have the same expected taste. B has 3 less grams of saturated fat per serving and 100 less milligrams of sodium, but it is $1 (20%) more expensive. Is the avoidance of 3 grams of saturated fat and 100 milligrams of sodium worth $1?
3) Nutrition vs Taste:
Option A and B have the same price. B has 3 less grams of saturated fat per serving and 100 less milligrams of sodium, but it is expected to taste a little less good than A. (And how can you measure that?)
4) Taste vs Taste:
Option A and B have the same price and nutrition. Based on experience, A is a little less greasy but at the same time, the taste is a little lighter. B has a stronger flavor, which you think is good, but a little too greasy for you.
5) Taste vs Price:
Option A and B have the same nutrition. B is expected to taste a little less good than A but it is $3 (30%) cheaper.
6) Price vs Price:
Option A and B have the same nutrition and taste. A is $1 cheaper, but it contains 50 fewer grams. In this case you would have to calculate how much each gram of A and B costs.
I have already made these scenarios simple. In reality it is much more complex and we would have to compare A to B, B to C, C to D, etc. Also, I have omitted uncertainty here (e.g. the taste of a food you have never tried and have no information from anywhere else). If you really compare every factor of every option, you would want to cry. Analyzing and comparing different products is a highly challenging and mental effort demanding task.
I have finally come to realize why it takes me so much time to decide. I am very used to thinking "rationally" and trying to make a decision based on complete information. Ironically, after spending a long time weighing all the pros and cons of my options, sometimes I would still regret for the choice I had made. And I feel a little lost and tired of analyzing everything. This is known as "decision fatigue" (Vohs, et al, 2008).
This tells us two things. First, having more options can be a bad thing. In mainstream economics, it is assumed that having more options/varieties is just a good thing. I believe there is some truth in it because we would like to have a choice. But apparently, this can be really wrong based on what we have understood from above. When there are too many options, it is hard. This is called "choice overload" (or "overchoice") (Schwartz, 2004).
Mainstream economic theories also assume that we are rational and thus we can maximize our utility. This brings us to the second point: we have bounded rationality. If you try to be perfectly "rational", using logic and calculating all options based on available information and uncertainty, you would feel frustrated/tired because you are not a computer. At the end, the act of striving to choose the utility-maximizing option itself lowers the utility of your shopping experience (Schwartz, 2004). It turns into a paradox, which is why I call it "rational" not rational.
Generally, people are not "rational" like me and they just pick a choice that is good enough. "This looks good and it is not that expensive so I will just grab this." Or "it seems like it's cheaper than the other one so I will get this one". This is what is known as "satisficing" (satisfy+suffice), a term coined by Herbert Simon (Simon, 1956). This prevents them from "optimizing" (choosing the best option after evaluating all factors) but then they do not have to spend a lot of time and effort thinking about it.
Conclusion: don't go shopping with me.
It is free to subscribe to this blog. Support me by following me on Facebook or Twitter. Cancel any time you want.
Reference:
- Schwartz, B. (2004). The paradox of choice: Why more is less. New York: Ecco.
- Simon, H.A. (1956). Rational Choice and the Structure of the Environment. Psychological Review. 63 (2), 129–138. doi:10.1037/h0042769. PMID 13310708
- Vohs, K. D., Baumeister, R. F., Schmeichel, B. J., Twenge, J. M., Nelson, N. M., & Tice, D. M. (2008). Making choices impairs subsequent self‐control: A limited‐resource account of decision making, self‐regulation, and active initiative. Journal of Personality and Social Psychology, 94, 883‐898. doi: 10.1037/0022-3514.94.5.883
When I consider what to buy, factors I take into consideration are nutrition, price, taste, ingredients, etc. I look at the price, pick up the product, flip it to the back, look at how many "good" and "bad" nutrients it has and the ingredients. If I have had it before already, I recall what it tasted like. If not, I imagine how it would taste like and put it back. Then I pick up an alternative from the same brand or another brand, repeat the process. After that, I try to compare all or most of the options.
This is very rational, in one sense. Because I try to gather all the available information for my purchase and analyze all the options. It would be irrational to make a decision not based on all information or ignore alternatives, right? That would ignore opportunity cost and prevent my from choosing the one that would maximize my utility (pleasure/well-being).
The problem is, this does not necessarily lead to a good decision because of our cognitive limitation. If I want to buy 10 process foods in the supermarket, assuming each has 10 options and each option has 10 nutrients listed, I would have to look at 1000 nutrients! And this is just for nutrition (and only the listed nutrients). I would have to compare the price, the taste and ingredients of all options too. I have some scenarios here (already simplified) for us to imagine and let us think about whether we should choose A or B:
1) Nutrition vs Nutrition:
Option A and B have the same price and expected taste. A has 3 more grams of saturated fat per serving. B has 100 milligrams of sodium.
2) Nutrition vs Price:
Option A and B have the same expected taste. B has 3 less grams of saturated fat per serving and 100 less milligrams of sodium, but it is $1 (20%) more expensive. Is the avoidance of 3 grams of saturated fat and 100 milligrams of sodium worth $1?
3) Nutrition vs Taste:
Option A and B have the same price. B has 3 less grams of saturated fat per serving and 100 less milligrams of sodium, but it is expected to taste a little less good than A. (And how can you measure that?)
4) Taste vs Taste:
Option A and B have the same price and nutrition. Based on experience, A is a little less greasy but at the same time, the taste is a little lighter. B has a stronger flavor, which you think is good, but a little too greasy for you.
5) Taste vs Price:
Option A and B have the same nutrition. B is expected to taste a little less good than A but it is $3 (30%) cheaper.
6) Price vs Price:
Option A and B have the same nutrition and taste. A is $1 cheaper, but it contains 50 fewer grams. In this case you would have to calculate how much each gram of A and B costs.
I have already made these scenarios simple. In reality it is much more complex and we would have to compare A to B, B to C, C to D, etc. Also, I have omitted uncertainty here (e.g. the taste of a food you have never tried and have no information from anywhere else). If you really compare every factor of every option, you would want to cry. Analyzing and comparing different products is a highly challenging and mental effort demanding task.
I have finally come to realize why it takes me so much time to decide. I am very used to thinking "rationally" and trying to make a decision based on complete information. Ironically, after spending a long time weighing all the pros and cons of my options, sometimes I would still regret for the choice I had made. And I feel a little lost and tired of analyzing everything. This is known as "decision fatigue" (Vohs, et al, 2008).
Mainstream economic theories also assume that we are rational and thus we can maximize our utility. This brings us to the second point: we have bounded rationality. If you try to be perfectly "rational", using logic and calculating all options based on available information and uncertainty, you would feel frustrated/tired because you are not a computer. At the end, the act of striving to choose the utility-maximizing option itself lowers the utility of your shopping experience (Schwartz, 2004). It turns into a paradox, which is why I call it "rational" not rational.
Generally, people are not "rational" like me and they just pick a choice that is good enough. "This looks good and it is not that expensive so I will just grab this." Or "it seems like it's cheaper than the other one so I will get this one". This is what is known as "satisficing" (satisfy+suffice), a term coined by Herbert Simon (Simon, 1956). This prevents them from "optimizing" (choosing the best option after evaluating all factors) but then they do not have to spend a lot of time and effort thinking about it.
Conclusion: don't go shopping with me.
It is free to subscribe to this blog. Support me by following me on Facebook or Twitter. Cancel any time you want.
Reference:
- Schwartz, B. (2004). The paradox of choice: Why more is less. New York: Ecco.
- Simon, H.A. (1956). Rational Choice and the Structure of the Environment. Psychological Review. 63 (2), 129–138. doi:10.1037/h0042769. PMID 13310708
- Vohs, K. D., Baumeister, R. F., Schmeichel, B. J., Twenge, J. M., Nelson, N. M., & Tice, D. M. (2008). Making choices impairs subsequent self‐control: A limited‐resource account of decision making, self‐regulation, and active initiative. Journal of Personality and Social Psychology, 94, 883‐898. doi: 10.1037/0022-3514.94.5.883
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