Monday, September 22, 2008

Choice and Change II: Opportunity Cost

Luckily, I was right about The Paradox of Choice having all sorts of quotable post inspirations. I'm halfway through and have irresponsibly dog-eared at least 20 of its pages. Unfortunately, both my lack of internet on the weekends and my habit of reading in bed and falling asleep with an open book have prevented me from rushing to Blogger in the first throes of knowledge-orgasm and have therefore forced a chasm between me and what I thought I was going to say. But I'll do my best.

What struck me as shocking is that the book happened to have all sorts of anecdotes that were basically reinterpretations of my farmers market story. For example, to paraphrase:

A parent gave one child a bunch of cash and let the child decide the clothes she wanted to buy for the next year, and she was fine. He tried it with his other child; the other child froze up. She deliberated endlessly over every little thing, wondering if she bought this one outfit, would there be a better one in the next store? If she bought two pairs of pants, would she still have enough for a sweater?

Someone decides to go on vacation, and is leaning towards Cape Cod. But the more alternatives they consider, the less attractive Cape Cod looks. One vacation spot has better weather than Cape Cod; another has a better nightlife, another is closer to family, etc. The more this person thinks about all the other possibilities, the less certain they are about choosing one. What if another one would have been better?

So I guess someone thought about this kind of freezing up, and the sinking feeling that accompanies a tenuous choice made after this kind of frenzied deliberation, and came up with a name for the costs involved: opportunity costs. My choosing to go to the farmers market carried with it the opportunity costs of not getting to go to the beach, and possibly not getting to launch a water balloon assault.

People's tendency to see the choices they didn't make as a 'loss' (because they had the opportunity to choose them, but didn't) makes choices even harder, because apparently, studies have shown that people feel equivalent gains and losses unequally. The joy at winning $100 is proportionately less than the anger at losing $100. So when a person has to make a choice between lots of appealing and perfectly achievable choices, they feel happiness at gaining the experience of their first choice, but compounding unhappiness from all the other choices that they rejected.

Entirely apart from the problem of habit (which I will get around to when I have something to back myself up) this explains why it's so tough to break a routine. Following a set routine, you feel no particular gain or loss; it's merely comfortable, merely satisfactory. Comfortable and satisfactory isn't great - a prolonged stint in that state breeds yearning for change and excitement and fulfillment - but at least it's not risky. You won't lose anything from staying put. Whereas if you decide to take the leap...

... a phalanx of choices and the associated headaching lays itself before you. What are you trying to achieve with this change? Whatever it is, what is the best way to go about achieving it? Could you be spending your time in a more productive way? What if you focus your efforts into making this change when you would be happier focusing your efforts into another?

And perhaps worst of all: what if you so carefully and delicately choose the change and the method, and despite your best efforts, fail?

In my opinion, that's the biggest obstacle to change that there is. Trying and failing is a blow to the ego (and time, and resources, and etc.) that staying with the status quo can never be. In terms of those studies about loss being a bigger blow than an equivalent gain is a bolster, the risk, in our minds, is mathematically not worth it. Whether we know that it's mathematical or not is, apparently, unimportant, because we calculate it unconsciously and decide accordingly.

I must be calculating away up there in my unconscious brain calculator, because the outcome of my decisions frequently follow this formula. That is to say, change is often harder for me when the risk of failing is greater.

The next post will be a continuation of this post, since I had no idea how seamlessly it would bleed into the end of this one So I'm just going to carry on later and all three of you will just have to deal with this topic being really, really longwinded (and if you read me normally then you shouldn't have a problem because you will be used to it). The only reason I'm not carrying on now is that I have run out of time. Look forward to more excessively wordy fleshing out of this fascinating topic tomorrow!

1 comment:

Dan R said...

If we gain something from spending resources on an opportunity, we're happy, but at the same time, we expected it.

If we lose something from spending resources on an opportunity, then the cost IS greater than the reward because the cost of losing everything involved is, well, everything.

I try to say to myself, well, if I'm going to risk something of mine to get something I want, I better make sure that I enjoy the process enough to ensure that my not achieving is okay.

As far as I know, my trip to San Francisco was fruitless, but I had a really great time while I was there, met some great people I still speak with, and had experiences I've never had before.

Maybe that's playing it safe... ?