Analysis Paralysis
anailia recently started her new job (Congratulations!), and the inevitable tide of New Employee Benefits Forms have washed over and nearly drowned us. HMO or PPO? High Deductible with Low Premiums, or the other way around? Just how many deductions should we have? Should we get supplemental life insurance through the employer, or through USAA? Ad infinitum.
The board game playing community discusses a phenomenon called "Analysis Paralysis", which is common enough that it's more often known only by its acronym "AP". The gist of it is that a game offers so many decisions at a certain point in it that a player tends to get overwhelmed trying to maximize their chances to win and just sits there basically doing nothing as they calculate the odds, to the annoyance of everyone else at the table wanting to play the game. And this is in the confines of highly structured board game, which only takes up an hour or two of time total and the only consequence is winning or losing a silly game! This isn't a decision made under ambiguous, uncertain, or imprecise words with a very long term, very significant results on the rest of your life. It's no wonder that most people probably don't have the right asset allocation in their retirement account or right insurance coverage. The choices needing to be made to get to that point are nearly insurmountable!
Just the other day prototaph was helping me grocery shop for anailia's surprise birthday party. We were looking for a can of kidney beans. He found some, but I recognized that they were the expensive brand and wanted to keep looking. This made us take longer in the store. A moment later, he said "I wish there could be a kind of regulated monopoly. There's too many choices."
Now, I've studied enough Economics to understand in theory why such a thing wouldn't work. So I sarcastically quipped, "Yeah, choices suck, don't they?". But sometimes, they do!
This is nowhere near a new idea. Psychologist Barry Schwartz wrote a whole book on the topic. He also gave a TED talk a while back that I saw, before I knew anything really about his book. I highly encourage you to watch his talk (to watch all TED talks, really...), but one part that really stuck out to me was this part:
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? You want button fly or zipper fly? You want stonewashed or acid washed? Do you want them distressed? You want boot cut, you want tapered, blah blah blah ..." On and on he went.
...
so I spent an hour trying on all these damn jeans, and I walked out of the store -- truth be told -- with the best fitting jeans I had ever had. I did better. All this choice made it possible for me to do better. But I felt worse.
His thesis is that while choices may make us objectively better off, it certainly can make us feel subjectively much worse. As he points out, this goes contrary to orthodox thinking, that being objectively better off should make us feel better, too.
I know that as anailia and I are pouring over the New Employee Benefits Forms, I definitely feel like I wish that somebody else could just fill it out sufficiently well for us. That's sort of the point of the book Nudge that magus341 lent me a few weeks ago. Though an easy, interesting read I wouldn't actually recommend reading it yourself unless you really want to. It could have easily been condensed into a single magazine article. But it's own thesis is interesting to explore.
The authors invent a term they call "libertarian paternalism". They leave all the myriad, messy choices there (the "libertarian" part of it), but they also stress the role of the "choice architect" (another invented term) to choose a "good" default choice, or at least structure the possible choices such that human psychology is more likely to lead to a "good" choice (the "paternalism" part of it). There, now you don't have to read the book. This is a very seductive system, and one that definitely has a lot of good points that should probably be adopted (and some that already are being adopted). However, it relies on some of its own assumptions that don't always hold true in the "real world".
The "choice architect" is assumed to both a) have the person's best interests at heart and b) be able to determine what the person's best interests are. However, the choice architect themselves are just human, probably a government or corporate bureaucrat pretty far removed from the situation. How can they determine what makes the "best" choice? So they offload it to the individual, and we're back to Analysis Paralysis.
Even if we had Superman making all the right choices for us, I don't think we'd be fully satisfied. We Humans are just impossible to please, aren't we?
Now, back to studying Universal Life Insurance.
The board game playing community discusses a phenomenon called "Analysis Paralysis", which is common enough that it's more often known only by its acronym "AP". The gist of it is that a game offers so many decisions at a certain point in it that a player tends to get overwhelmed trying to maximize their chances to win and just sits there basically doing nothing as they calculate the odds, to the annoyance of everyone else at the table wanting to play the game. And this is in the confines of highly structured board game, which only takes up an hour or two of time total and the only consequence is winning or losing a silly game! This isn't a decision made under ambiguous, uncertain, or imprecise words with a very long term, very significant results on the rest of your life. It's no wonder that most people probably don't have the right asset allocation in their retirement account or right insurance coverage. The choices needing to be made to get to that point are nearly insurmountable!
Just the other day prototaph was helping me grocery shop for anailia's surprise birthday party. We were looking for a can of kidney beans. He found some, but I recognized that they were the expensive brand and wanted to keep looking. This made us take longer in the store. A moment later, he said "I wish there could be a kind of regulated monopoly. There's too many choices."
Now, I've studied enough Economics to understand in theory why such a thing wouldn't work. So I sarcastically quipped, "Yeah, choices suck, don't they?". But sometimes, they do!
This is nowhere near a new idea. Psychologist Barry Schwartz wrote a whole book on the topic. He also gave a TED talk a while back that I saw, before I knew anything really about his book. I highly encourage you to watch his talk (to watch all TED talks, really...), but one part that really stuck out to me was this part:
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? You want button fly or zipper fly? You want stonewashed or acid washed? Do you want them distressed? You want boot cut, you want tapered, blah blah blah ..." On and on he went.
...
so I spent an hour trying on all these damn jeans, and I walked out of the store -- truth be told -- with the best fitting jeans I had ever had. I did better. All this choice made it possible for me to do better. But I felt worse.
His thesis is that while choices may make us objectively better off, it certainly can make us feel subjectively much worse. As he points out, this goes contrary to orthodox thinking, that being objectively better off should make us feel better, too.
I know that as anailia and I are pouring over the New Employee Benefits Forms, I definitely feel like I wish that somebody else could just fill it out sufficiently well for us. That's sort of the point of the book Nudge that magus341 lent me a few weeks ago. Though an easy, interesting read I wouldn't actually recommend reading it yourself unless you really want to. It could have easily been condensed into a single magazine article. But it's own thesis is interesting to explore.
The authors invent a term they call "libertarian paternalism". They leave all the myriad, messy choices there (the "libertarian" part of it), but they also stress the role of the "choice architect" (another invented term) to choose a "good" default choice, or at least structure the possible choices such that human psychology is more likely to lead to a "good" choice (the "paternalism" part of it). There, now you don't have to read the book. This is a very seductive system, and one that definitely has a lot of good points that should probably be adopted (and some that already are being adopted). However, it relies on some of its own assumptions that don't always hold true in the "real world".
The "choice architect" is assumed to both a) have the person's best interests at heart and b) be able to determine what the person's best interests are. However, the choice architect themselves are just human, probably a government or corporate bureaucrat pretty far removed from the situation. How can they determine what makes the "best" choice? So they offload it to the individual, and we're back to Analysis Paralysis.
Even if we had Superman making all the right choices for us, I don't think we'd be fully satisfied. We Humans are just impossible to please, aren't we?
Now, back to studying Universal Life Insurance.