Christmas Time and the Tyranny of Choice

12 December 2013Behavioural Insights Team

Categorypop culture

Tagspop culture, sunstein

Have you ever received a useless Christmas present? One that you surreptitiously placed in a drawer and that never again saw the light of day?

Christmas Presents

Have you ever received a useless Christmas present? One that you surreptitiously placed in a drawer and that never again saw the light of day?

You are not alone.

As Cass Sunstein, co-author of Nudge, writes in Holiday Shopping Tips from Behavioural Economists (from last Christmas), people don’t always make the best choices for themselves, let alone for others.

In fact, there is a fairly high chance that whatever you buy for your friends and family this year, some will not think that the gift is worth what you paid for it. According to University of Minnesota economist Joel Woldfogel, typically the value of the gift is perceived by the recipient to be about 20% lower than its actual cost.

If you are anything like I am, this information, alongside the thought of shopping for Christmas presents, sends a cold shiver down your spine. That is because I am a maximizer, paralysed by the desire to maximise my gift buying.

In his article The Tyranny of Choice, Professor of Social Theory and Social Action, Barry Schwartz argues that there are ‘maximizers’ (those who aim to make the best possible choice) and ‘satisficers’ (those who aim for ‘good enough’). This theory highlights a trend in affluent societies where people who have more options and are freer to do what they want, tend to be less happy.

So, how can we improve our gift-giving to take some of our biases in to account? Recognising that Christmas tends to take a high financial toll on people’s wallets, Sunstein and Schwartz highlight some important cognitive biases to keep in mind, and tips to counter them:

  • Beware of thinking that other people will like what you like: most people over-exaggerate how much other people are like them. This is called the egocentric bias.
  • Buy gifts that people will put to daily, or at least weekly, use: when we focus on a product or a feature of a product, we tend to think it matters a lot more than it does. This is called the focusing bias.
  • Don’t focus on the gift: we often focus too much on how other people will react to what we get them, when really it is the act of gift-giving that is important and enjoyable.
  • Keep a tab of your costs on credit: cumulative cost neglect suggests that people tend to neglect the cost of cumulative purchases. So, if you are using your credit card, be aware! You may lose track of the total expense.
  • And for the maximizers…If you’re having trouble making a decision: restrict your options, for example, make a rule to visit no more than two stores when shopping for something, select a choice that meets your requirements rather than looking for the ‘best’, and focus on the positive parts of your selection.

Merry Christmas and best of luck!

Allison Wong is a member of DPC’s Behavioural Insights Unit