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  • I'm going to talk to you about some stuff that's in this book of mine

  • that I hope will resonate with other things you've already heard,

  • and I'll try to make some connections myself, in case you miss them.

  • I want to start with what I call the "official dogma."

  • The official dogma of what?

  • The official dogma of all western industrial societies.

  • And the official dogma runs like this:

  • if we are interested in maximizing the welfare of our citizens,

  • the way to do that is to maximize individual freedom.

  • The reason for this is both that freedom is 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 things that will maximize our welfare,

  • and no one has to decide on our behalf.

  • The way to maximize freedom is 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 embedded in the water supply

  • that it wouldn't occur to anyone to question it.

  • And it's also deeply embedded in our lives.

  • I'll give you some examples of what modern progress has made possible for us.

  • This is my supermarket. Not such a big one.

  • I want to say just a word about salad dressing.

  • 175 salad dressings in my supermarket,

  • if you don't count the 10 extra-virgin olive oils

  • and 12 balsamic vinegars you could buy

  • to make a very large number of your own salad dressings,

  • in the off-chance that none of the 175 the store has on offer suit you.

  • So this is what the supermarket is like.

  • And then you go to the consumer electronics store to set up a stereo system --

  • speakers, CD player, tape player, tuner, amplifier --

  • and in this one single consumer electronics store,

  • there are that many stereo systems.

  • We can construct six-and-a-half-million different stereo systems

  • out of the components that are on offer in one store.

  • You've got to admit that'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 kind of 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 almost unlimited 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 creme brulee torch.

  • And if by some chance you haven't seen that in your store yet,

  • you can rest assured that one day soon you will.

  • And what this does is

  • it leads people to walk into their stores asking this question.

  • And do you know what the answer to this question now is?

  • The answer is "No."

  • It is not possible to buy a cell phone that doesn't do too much.

  • So, in other aspects of life that are much more significant than buying things,

  • the same explosion of choice is true.

  • Health care -- it is no longer the case in 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 has these benefits and risks, and B has these benefits and risks.

  • What do you want to do?"

  • 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 what it really is is a shifting of the burden and the responsibility

  • for decision-making from somebody who knows something --

  • namely, the doctor --

  • to somebody who knows nothing and is almost certainly sick

  • and thus not in the best shape to be making decisions --

  • namely, the patient.

  • There's enormous marketing of 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 us if we can't buy them?

  • The answer is that they expect us to call our doctors the next morning

  • and ask for our prescriptions to 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-invent ourselves as often as we like.

  • And that means that everyday, when you wake up in the morning,

  • you have to decide what kind of person you want to be.

  • With respect to marriage and family,

  • there was a time when the default assumption that almost everyone had

  • is that you got married as soon as you could,

  • and then you started having kids as soon as you could.

  • The only real choice was who,

  • not when, and not what you did after.

  • Nowadays, everything is very much up for grabs.

  • I teach wonderfully intelligent students,

  • and I assign 20 percent less work than I used to.

  • And it's not because they're less smart,

  • and it's not because they'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 answer these questions,

  • whether or not it means not doing all the work I assign

  • and not getting a good grade in 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 day from any place on the planet --

  • except the Randolph Hotel.

  • (Laughter)

  • There is one corner, by the way,

  • that I'm not going to tell anybody about, where the WiFi works.

  • I'm not telling you about it because I want to use it.

  • So what this means, this incredible freedom of choice

  • we have with respect to work, is that we have to make a decision,

  • again and again and again,

  • about whether we should or 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 watching our 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 answer to the question is "no,"

  • it's certainly going to make the 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 used to live in looked like this.

  • That is to say, there were some choices,

  • but not everything was a matter of choice.

  • And the world we now live in looks like this.

  • And the question is, is this good news, or bad news?

  • And the answer is yes.

  • (Laughter)

  • We all know what's good about it,

  • so I'm going to talk about 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 difficult to choose at all.

  • I'll give you one very dramatic example of this:

  • a study that was done of investments in voluntary retirement plans.

  • A colleague of mine got access to investment records from Vanguard,

  • the gigantic mutual fund company

  • of about a million employees and about 2,000 different workplaces.

  • And what she found is that

  • for every 10 mutual funds the employer offered,

  • rate of participation went down two percent.

  • You offer 50 funds -- 10 percent fewer employees participate

  • than if you only offer five. Why?

  • Because with 50 funds to choose from,

  • it's so damn hard to decide which fund to choose

  • that you'll just put it off until tomorrow.

  • And then 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 have to eat dog food when they retire

  • because they don't have enough money put away,

  • it also means that making the decision is so hard

  • that they pass up significant matching money from the employer.

  • By not participating, they are passing up as much as 5,000 dollars a year

  • from the employer, who would happily match their contribution.

  • So paralysis is a consequence of having too many choices.

  • And I think it makes the world look like this.

  • (Laughter)

  • You really want to get the decision right if it's for all eternity, right?

  • You don't want to pick the wrong mutual fund, or even the wrong salad dressing.

  • So that's one effect. The second effect is that

  • even if we manage to overcome the paralysis and make a choice,

  • we end up less satisfied with the result of the choice

  • than we would be if we had fewer options to choose from.

  • And there are several reasons for this.

  • One of them is that with a lot of different salad dressings to choose from,

  • if you buy one, and it's not perfect -- and, you know, what salad dressing is? --

  • it's easy to imagine that you could have made a different choice

  • that would have been better. And what happens is

  • this imagined alternative induces you to regret the decision you made,

  • and this regret subtracts from 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 disappointing about the option that you chose.

  • Second, what economists call "opportunity costs."

  • Dan Gilbert made a big point this morning

  • of talking about how much the way in which we value things

  • depends on what we compare them to.

  • Well, when there are lots of alternatives to consider,

  • it is easy to imagine the attractive features

  • of alternatives that you reject,

  • that make you less satisfied with the alternative that you've chosen.

  • Here's an example. For those of you who aren't New Yorkers, I apologize.

  • (Laughter)

  • But here's what you're supposed 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.

  • Everybody in my Manhattan neighborhood is away.

  • I could be parking right in front of my building."

  • And he spends two weeks nagged by the idea

  • that he is missing the opportunity, day after day, to have a great parking space.

  • Opportunity costs subtract from the satisfaction we get out of what we choose,

  • even when what we choose is terrific.

  • And the more options there are to consider,

  • the more attractive features of these options

  • are going to be reflected by us as opportunity costs.

  • Here's another example.

  • Now this cartoon makes a lot of points.

  • It makes points about living in the moment as well,

  • and probably about doing things slowly.

  • But one point it makes is that whenever you're choosing one thing,

  • you're choosing not to do other things.

  • And those other things may have lots of attractive features,

  • and it's going to make what you're doing less attractive.

  • Third: escalation of expectations.

  • This hit me when I went to replace my jeans.

  • I wear jeans almost all the time.

  • And there was a time when jeans came in one flavor,

  • and you bought them, and they fit like crap,

  • and they were incredibly uncomfortable,

  • and if you wore them long enough and washed them enough times,

  • they started to feel OK.

  • So I went to replace my jeans after years and years of wearing these old ones,

  • and I said, you know, "I want a pair of jeans. Here's my size."

  • And the shopkeeper said,

  • "Do you want slim fit, easy fit, relaxed fit?