Posted on 01/22/2004 12:51:53 PM PST by Greg Luzinski
January 22, 2004 OP-ED CONTRIBUTOR Nation of Second Guesses By BARRY SCHWARTZ
PHILADELPHIA — In his State of the Union address on Tuesday, President Bush elaborated on a theme that is near to his heart: the virtues of personal choice.
"Younger workers should have the opportunity to build a nest egg by saving part of their Social Security taxes in a personal retirement account," the president said. "We should make the Social Security system a source of ownership for the American people." Mr. Bush also made clear that "any attempt to limit the choices of our seniors, or to take away their prescription drug coverage under Medicare, will meet my veto."
The value of choice has been a consistent theme for the president and his administration. Problems in education, health care and a host of other issues, Mr. Bush has repeatedly argued, can be addressed in large measure by expanding the options available to people.
The president's underlying logic is straightforward. If you believe that individuals are the best judges of their own welfare, giving them choices does more to enhance collective welfare than any universally imposed government program could. It is assumed that whatever else may be accomplished by the privatization of Social Security, the privatization of health insurance for the elderly and school choice for America's children, these policies have the benefit of allowing individuals to pursue their welfare as they see fit. After all, adding options can't make anyone worse off — and it will probably make some people better off.
Though this logic may seem compelling, there is growing evidence that the emotional logic (the psycho-logic) is deeply flawed. Indeed, for many people, increased choice can lead to a decrease in satisfaction. Too many options can result in paralysis, not liberation. Here is some of the evidence:
• Sheena Iyengar and Mark Lepper, psychologists at Columbia and Stanford respectively, have shown that as the number of flavors of jam or varieties of chocolate available to shoppers is increased, the likelihood that they will leave the store without buying either jam or chocolate goes up. According to their 2000 study, Ms. Iyengar and Mr. Lepper found that shoppers are 10 times more likely to buy jam when six varieties are on display as when 24 are on the shelf.
• In a study that Ms. Iyengar, Rachel Elwork of Columbia and I are working on, we found that as the number of job possibilities available to college graduates goes up, applicants' satisfaction with the job search process goes down. This is particularly true for job seekers whose aim is to get the "best possible" job — while people in this group receive more and better job offers than those who are aiming for "good enough" jobs, they also tend to be less satisfied with their career decisions than their less demanding counterparts. They are also more anxious, pessimistic, disappointed, frustrated and depressed.
• In another study under way, Ms. Iyengar found that as the number of mutual funds in a 401(k) plan offered to employees goes up, the likelihood that they will choose a fund — any fund — goes down. For every 10 funds added to the array of options, the rate of participation drops 2 percent. And for those who do invest, added fund options increase the chances that employees will invest in ultraconservative money-market funds.
• Carl Schneider, a law professor at the University of Michigan who specializes in medical ethics, has reported that patient satisfaction goes down when the choice of pharmaceutical and medical treatment goes up.
One illustration of the mismatch between how choice appears in theory and how it feels in daily life comes from a 1992 study by Lesley F. Degner and Jeffrey A. Sloan in The Journal of Clinical Epidemiology. People were asked if they would want to be in charge of their treatment plan if they had cancer. For those who had never had cancer, 65 percent answered "yes." For those who had already had cancer, only 12 percent said that they would want to oversee their own treatment.
In cases like these, increased choice often enables people to improve their lives by some objective measure — quality of jam, rate of return on investment, suitability of a job to one's ultimate career objectives, and so on. But it also makes people feel worse.
So the question we should be thinking about is this: do we care about objective results or subjective results when we're out to improve the general well-being? I think that once people's standard of living is above subsistence levels, it is usually the subjective quality of the experience that really matters. And increased choice does not seem to improve the subjective quality of experience. Perhaps the surfeit of choice in the United States, unprecedented in human existence, is related to something the Journal of the American Medical Association reported in 2003: that there has been a threefold increase in clinical depression among Americans over the last 25 years.
My colleagues and I have identified many different reasons increased choice can have these paradoxical effects. For starters, increased choice creates an enormous burden on people to seek the information needed to make a good decision. Who has the time to find the best digital camera, the best cellphone plan, the best 401(k), the best health insurance or the best school for his children?
What's more, plentiful choice increases the chances that people will regret the decisions they make, because of all the bypassed alternatives, many of which might have been better. Choice also increases the sense people have of missed opportunities with respect to all the options they have forgone.
Similarly, an abundance of options raises people's expectations about how good the option they have chosen will be. In this regard, the objective quality of the choice gets lost as it is compared with high expectations generated by the host of rejected alternatives.
Finally, increased choice forces people to take personal responsibility for all choices that turn out to be less than perfect. With so many options available, there is no excuse for anything less than perfection, and when less than perfection is what you end up getting, the fault must be yours.
While a life without any freedom of choice would not be worth living, it appears not to be true that more choice inevitably leads to more freedom and greater happiness. Indeed, there may be a point when choice tyrannizes people more than it liberates them. The implication of this news, both for individuals and for government officials, is that sound social policy simply cannot consist of throwing an ever-greater menu of options at the American people.
Barry Schwartz, professor of psychology at Swarthmore College, is author of "The Paradox of Choice: Why More Is Less."
Hard to believe this made it into print, even in the NY fishwrap. Ask the people of the (former) Soviet Republics if they appreciated the lack of choices in their lives. One political party, one name on the ballot, one choice of apartment, one type of bread.
Yeah, keep right on screwing us older guys. Everyone knows we're too naive to do the right thing with our retirement funds.
Tell you what, Dubya. You let me invest "my half" of the FICA taxes. You can keep the rest.
How was this measured, I wonder? Did the same people who couldn't choose among the varieties of jam in the supermarket also walk out of the doctor's office in indignation at the variety of treatment choices? Did they sue for mental anguish because their doctors gave them options?
This is funny stuff on one level, but it's also a revealing look at how the liberal elite view the unwashed masses.
In 1974, I was a passenger in an auto accident on a freeway...pre seat belt. Double fractured pelvis, healed unlevel...was not pined, ignored because of the serious head injury with vision loss, speech loss, dislocated knee, neck injury. I was allowed 10 wks. from work(without pay) or lose my job. So, on crutches, braces and pain meds, I returned to work. For the next 25 years, when I could physically no longer do one job, I would find other work. I did not want to use tax dollars to further my education...I was taught you do ANYTHING before going on the government dole. I raised my kids, alone, and paid for our home, never with government help. After 2 more back injuries, 2 more knee dislocations, I could only work part time and by 1996 I could no longer do that. I applied for SS disability. Turned down. Reapplied, turned down.. I have a autoimmune disease as well (diagnosed with biopsy, 1972), ulcers, recurring field of vision loss, migraines, etc.
The SSA says I am not disabled at 56 years and can get work, because I have so much “experience” and good references. I can’t even drive any longer. Yes, I know I need an attorney....they want paid up front, regardless of what the SSA says and they all want new MRI’s, xrays, etc...because all records over 7 to 10 years are destroyed. I was forced sell my home of 30 years last may and now live in another state. I quality for NOTHING. The last time I was in the SSA office, 4 hispanic’s were there, with our tax paid interpreter to change their address for their checks. 2 of them were obese. Unless one is illiterate, have never tried to work, obese, or “depressed” you just don’t fit into the “ qualified” category. Oh, yes, and you won’t believe this, no one else does...if you have not paid into SS for 5 years, it is gone....no disability, no matter how many years you worked and paid into it...check www.ssa.gov. But, SSI, the “welfare” portion needs never to be paid into and medicare is immediate for them. The SSDI program, we pay into, when “awarded” disability you must wait for 2 years for medicare. For instance: You are 45 years old. Your parents are ill and you have to quit your 20 year job to take care of them for the next five years (this also happened to me!) At age 50, you get hit by a truck and can’t move, much less work...guess what...you have no disability!! You waited TOO long! But, after you lose everything, you may qualify for SSI, along with the dredges of society.
The “system” needs an enema. Here’s the real rub. No one in the SSA, their contract employees, or our legislators will ever have to combat this system. They have another retirement/disability system. Judged by my peers. I think not. One SSA employee actually told me that my "mistake" was not filing for disabiity at age 25 in 1974!
I hope you all will consider signing the petition to reform Social Security Disability at: http://www.petitiononline.com/SSDC/petition.html
Typical liberal idiocy.
Consider that, as retirees live longer, old-fashioned pension plans threaten to kill big American businesses in the global economy. (Newer, foreign manufacturers don't have that problem.) I can't find the article but, Ford was specifically mentioned as facing deep trouble in the not-too-distant future, as their pension expenses keep rising.
So, maybe it's not all greed; maybe it's at least partly a matter of survival. If Ford (or whomever) keeps doing the old pension-for-life gig, and the company goes belly-up because it can't compete in the modern global economy, who's going to be mailing those pension checks? (No one.)
Not exactly how I remember it. I remember employees demanding – yes, *demanding* - some “portable” retirement/investment gimmick using pre-tax dollars so they wouldn’t have to worry about losing out over the course of their job-hopping careers.
And they were right, of course. You start out being the type that works at company A for three years, company B for four years, company C for two years – you end up retiring after 35 years with zero since you were never vested in a plan.
And that’s even though the company may have been making contributions on your behalf for those years, you’ll never see it.
A whole lot of people right now are finally beginning to understand that they’re going to be screwed in a spectacular way. Take the Teamsters Central States plan, for instance. They have what, ~15 billion in cash with something on the order of ~35 billion in liabilities? Ha. That’ll work out somehow. Their West Coast plan is in similar trouble.
Then you also have to face up to the fact that their membership is declining (as union trucking companies fold, among other things) and the number of retirees is increasing.
They’d have been a whole lot better off with a 401k, because the way it looks now they’re not going to get anything.
People in western New York have no problem collecting $6,000/mo – including a 13th monthly “bonus” payment they get in December from their Teamster Local administered plan. That plus full medical/dental/vision/prescription drugs (paid 100%) too. And full medical for the spouse as well. But it’s the exception rather than the rule.
If you live in Pennsylvania rather that western New York, you may find yourself in a position where you’re getting $800/month and paying $450 of that for supplemental health coverage for your spouse that has a pre-existing condition of some sort. You walk away with $350/mo and that’s after working the exact same job for the exact same company for the exact same number of years as that guy in New York getting $6,000+/mo.
But that just demonstrates how some funds are better managed than others.
Ask people of Enron how they like this 401K plan.
Ok. I’m not sure why people like to obsess over it. Enron didn’t administer the plan. Enron changed third party administrators at some point during which the plan was locked, but that is SOP for every plan every time the plan administrators change. Nothing particularly insidious, IOW.
That the employees were loading up on Enron stock in their 401k isn’t particularly surprising. They’d been increasing their holdings for years doing it. They thought it would last forever.
So if they were loaded up on Enron, I’d assume they aren’t happy. I’m not happy a lot of times and nobody seems too upset by it.
But that’s the way it goes. Despite what you hear you don’t “get rich” by diversifying. You get rich by hitching your wagon to something that’s doing well and leverage the hell out of it. You *retain* your riches by diversifying – but that’s after the fact. Oh, you got to remember to bail out before it digs in too.
Indeed, faced with an infinite number of choices the result is paralysis. But this does not imply that we have that number of choices. Nor is it true that Bush's proposal consists of "throwing an ever-greater menu of options at the American people."
In fact, this research may be perfectly sound as a psychology study, but as practical political guidance it is entirely a straw man. For it to be applicable to the present situation the researcher would have to demonstrate that the number of extra choices given to an individual by the new policy crosses the threshold from gratitude to discomfort. And recall, an individual is not obligated to make any of these choices under this policy - if he or she prefers to avoid the risk he or she can opt for a plan that is entirely government-directed. One would think a psychologist who really understood the implications of this research would identify that as a safety valve. Comforting, but recall Peart's lyric here - "if you choose not to decide, you still have made a choice."
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