Previously, I discussed behavioral challenges to the cornerstone economic assumption that adding more choices can’t make people worse off, and posed the idea that the real driver behind the “paradox of choice” was the mathematical tendency for more choices to reduce consumer surplus. Today, I’d like to examine a related, but I think more empirically relevant concept that, surprisingly, I first heard about in this talk on role-playing game design of all things.
The basic idea behind what is termed “choice agony” is that, in certain situations, the calculus of choice-making can itself induce disutility.
Sophie’s Choice might be the best example of this phenomenon, where (spoilers for a 39 year old book), the titular character’s trauma stems from her experience in Auschwitz, where a guard forced her to choose one of her children to die in order to save the other. If the title isn’t evidence enough, it’s clear that Sophie’s misery isn’t primarily, or even mostly, about the loss of her child, it’s about the horror of the choice-making process itself.
Unlike the paradox of choice, however, surplus or opportunity costs don’t seem to be a driver here. Indeed, we would expect Sophie to have higher surplus after making her choice as opposed to if the guard were to pick one of her children randomly. After all, her choice, essentially, saved one of her children, while losing a child at random has no such negative opportunity cost (opportunity benefit?). But readers of the book are supposed to be more horrified at the guard’s behavior for inducing choice agony.
Healthcare might be one area where choice agony is relevant, as described in this article, or this quote from the great Robin Hanson:
Here’s one possibility: Maybe we are just terrified of thinking about death. Would imply that we just don’t want to think about not trusting our doctor. Want to push decision off on someone else. By buying health insurance, the vision is that someone else is responsible. This explains some of the puzzles, but not all. Explains apparent excess medical amount. If you were terrified of not getting enough food, you’d go only to all-you-can-eat restaurants. Wasteful-appearing care is not wasteful because it consoles you.
Hanson actually rejects this explanation in favor of a signalling-based approach,
If I were to attempt to steel man proposals for universal health care, I would probably begin from these foundations.