HAPPINESS AND OPPORTUNITY COST.

HAPPINESS AND OPPORTUNITY COST. I said in yesterday’s post that I would explain why I think Barry Schwartz is right on an important issue. Annalisa in her comment on whether consumers can have too many choices pointed out that “The time that too much choice does stress me out is when I have activities or social engagements that overlap.” Imagine somebody who has one social event for the month, a wonderful party he is looking forward to. Then he gets an invitation to a second party that is almost but not quite as wonderful, and, as so often happens, it is for the same day as the first party. It appears from happiness research that the second invitation may diminish his pleasure because the opportunity cost of going to the first party is the loss of the second party. Apparently a lot of people think this way. This way of thinking underlies a number of the examples in Daniel Gilbert’s book, STUMBLING ON HAPPINESS, where the failure to anticipate our future desires leads us to the wrong choice and we suffer pain as a result. I think Barry Schwartz is right to identify the importance of this kind of thinking. His example is of his graduating Swarthmore students, undoubtedly talented in many directions, who are paralyzed by the thought that opening one door means closing other doors. I wonder whether our training in market decisions make us more prone to what I think is a mistaken way of thinking. We are used to using opportunity cost as a tool of analysis in making purchasing decisions, and are therefore prone to applying it where we shouldn’t. It might also be that this kind of thinking is somehow wired into our brains.