Watch: Psychologist Barry Schwartz
Talks Cost of Having Too Much Choice
by Alisa Giardinelli
Psychologist Barry Schwartz explores the social and psychological effects of free-market economic institutions on moral, social, and civic concerns. On PBS' Nightly Business Report, he recently discussed how having too many investment choices can lead to not making any choice at all.
"The way we know that people have too many options is that they end up choosing none," he says. "There's research that shows that the more [401(k) plan] options you give employees, the less likely they are to sign up. So you think you're doing them a favor by giving them 50, 100 funds to choose from. Every fund you add slightly decreases the chances that they'll do it."
Schwartz is the Dorwin P. Cartwright Professor of Social Theory and Social Action. His books include The Paradox of Choice: Why More is Less and The Costs of Living: How Market Freedom Erodes the Best Things in Life. Earlier this year on The Colbert Report, he further explored why people are paralyzed with indecision when offered too many choices.