The beauty of more choices

In Virginia Postrel’s On Line Opinion article on consumer choices, she referred to the possibility that people respond to extra choices by adopting “satisficing” product selection strategies. In other words, when confronted with choices, people may choose the “default” option of buying brands they know and trust. For example, coffee drinkers may opt to select their favourite brand of coffee in the face of growing varieties. This strategy may also pay additional dividends in the event that market competition between coffee suppliers raises quality and lowers prices, including for the “default” coffee brand chosen by a given consumer.

The anti-choice critics also ignore that, often, consumers themselves may drive increasing product variety within the free market system. Consumers may use goods and services to solve their problems in ways that no producer had imagined previously. This in turn drives new entrepreneurial opportunities to meet the new market demands.

For example, the consumer practice of sharing files over the Internet has spawned the growth of the online music industry, as witnessed by the emergence of new groups such as The Arctic Monkeys and Gnarls Barkley.

The proposition that the growth in consumer choices makes individuals unhappy is also not borne out by a simple inspection of developments in various markets. If consumers are so debilitated and tyrannised by product variety growth, wouldn’t this be translated into mass bankruptcies of multi-product stores as miserable consumers boycott these outlets?

If people are so overwhelmed by choice, why does, for example, Bunnings hardware store continue to be successful stocking so many items? How does Safeway and Coles compete against small corner stores with less product varieties? Contrary to the themes outlined by the new critics of market capitalism, these and other real life examples show that individual consumers are coping effectively, if not thriving, in a dynamic environment of growing product choices.

At the broader level, it should be recognised that the ability of individuals to make choices has driven the astonishing improvements in living standards experienced by humanity over the past 200 years. Indeed, never before in human history have so many people had such affordable and convenient access to so many goods and services.

This is symptomatic of a free system that provides choice and expands product varieties, to make (life) better and easier for more people. As the Scandinavian economist, Johan Norberg, stated recently “[f]ast food or slow food, no logo or pro logo? In a liberal society, you decide”. The “variety revolution”, and the rising living standards it delivers, is also indicative of, to paraphrase Adam Smith, the unswerving human spirit “to truck, barter and exchange”.

Those that argue that economic choices need to be scaled back must make the accompanying case that their low growth, declining living standards strategy is a better way for ordinary people.