My nephew Mark showed off his new Bluetooth wireless headphones, proudly telling me about how he got them on Amazon. He described how he searched through and compared dozens of options, reading product descriptions and user reviews for well over an hour, until he finally chose one. However, Mark still wasn’t sure he chose the best option; he was considering sending back the headphones and ordering another pair instead.
When he described his laborious online shopping process and its consequences, I could relate. His story made me recall my own time as a college student like Mark, when I lacked the knowledge of effective shopping techniques, whether in-person or online. He made many of the classic mistakes that cause shoppers to feel less happy and waste a great deal of time and money.
These errors result from how our brain is wired. Retailers take advantage of our psychology to manipulate our shopping experience, especially in digital contexts. Amazon & co want us to spend as much time on their sites as possible to tempt us with a wide variety of options and add-ons, and to cause us FOMO (fear of missing out) on the best possible purchase—all of which drains our happiness, time, and wallets. Fortunately, you can easily get familiar with the psychological dangers of online and in-person shopping through cutting-edge research in behavioral economics and cognitive neuroscience, helping protect yourself—and those you care about—from such threats.
Choose + Buy = Happiness?
Tom’s wife usually does the shopping in the family, but she had the flu and Tom had to go buy groceries instead. The fruits and veggies went fine, but then he got to the bread section. There were about 60 varieties available. He started reading the ingredients, comparing them to each other closely: he didn’t want to get it wrong, after all. After 10 minutes of close examination, he finally picked one that looked like a good choice.
The process repeated throughout the store. By the time he was at the checkout lane, an hour and a half later, he felt drained, overwhelmed, and, frankly, miserable. Tom made an impulse purchase of a chocolate bar, feeling better as he munched it on the way to his car.
Why did Tom have this experience? He had an abundance of options, after all. He could choose whatever he wanted! Shouldn’t he feel ecstatic about the consumerist abundance surrounding him in the supermarket? After all, the narrative presented by advertising and mass media equates abundance of choice with being happy.
The real story, according to behavioral economics and neuroscience research, is much more complex. Having some choices makes us feel good, yet once we get beyond that small number, we feel less and less happy the more choices we get. The trick is that we tend to buy into the (false) concept that more choices will make us feel better.
For instance, in one study, shoppers at a fancy food market—not a lab—saw a display table with free samples of 24 varieties of gourmet jam. On another day, in the same market, shoppers saw a display table with 6 jam varieties. You won’t be surprised that the larger display attracted substantially more interest. However, people who saw the smaller selection were 10 times more likely to buy the jam, and felt better about themselves doing so than those who had to select among 24 varieties.
Later studies confirmed these findings, and gave this phenomenon the name of “choice paralysis.” This term refers to the fact that after a certain minimal number of choices, additional options cause us to feel worse about the shopping decision and also less likely to make the decision in the first place. Scholars found that choice paralysis applies to both minor decisions—such as craft beer or ice cream flavors—and major ones, such as choosing a job or a retirement plan.
Loss Aversion & Post-Purchase Rationalization
Why do more choices causes us less happiness? Well, one typical judgment error we make due to the faulty wiring in our brains is called loss aversion. Our gut reactions prefer avoiding losses to making gains, likely due to our evolutionary background; our minds evolved for the savanna environment, not for our modern shopping context. In that ancestral savanna, we couldn’t save resources effectively: for example, when our ancestors brought down a mammoth, its meat would rot without refrigeration, making those extra resources useless. By contrast, our ancestors lived in a very risky environment, so giving up—losing—resources could mean death. Thus, our brain adapted to be more risk-averse than needed, as brain scans show.
As a result, when we have lots of options, we feel anxious about making the wrong choice and losing out on the best one. If we have 24 types of jam rather than 6, we spend excessive time comparing options, and feel less satisfied with whatever jam we choose. That’s why Tom got himself in a jam in the supermarket: he had too many to choose from! Beyond a certain limited amount, more options, scholarship finds, lead to wasting time and energy, more anxiety and regret, too-high expectations, and potential self-blame if anything about this choice doesn’t work out.
My nephew Mark, when choosing which headphones to buy, fell into the same trap with his wasted time and energy, high expectations, anxiety, and regret. He also had the additional problem of going back and forth on whether to send back the headphones and order another pair. You might wonder why I call that a problem: won’t you feel happier if you keep your options open about your purchase?
Turns out the benefit of having the opportunity to change your mind on a shopping decision by getting a refund or exchanging the product—just like the value of having many choices—is a myth. Another counterintuitive behavioral economics finding shows that we have a preference for being able to refund our purchases, but we feel more satisfied with a shopping decision if it’s nonreversible.
As an example, in one study, students got to choose between 2 art posters. Half the students were not allowed to change their mind, while the other half were told they could exchange the poster they chose for another one in the next 30 days. While 66% preferred to be in the half of the group that could change their minds, later evaluations showed that those who couldn’t exchange their posters actually were substantially happier with their decision.
What’s going on here is a phenomenon called post-purchase rationalization, also known as choice-supportive bias. Research finds that after we make a final choice, we try to justify it to ourselves, focusing on the positives and downplaying the negatives. After all, you’re a smart person, you wouldn’t make a dumb shopping decision, right? Yet if the choice is easily reversible, the post-purchase rationalization doesn’t turn on, and we keep ruminating about whether we made the right decision.
In-Person vs. Online Shopping
You might be surprised that online shopping in many ways facilitates a more unhappy shopping experience. Let’s start with choices.
Most consumers, according to research, follow the same method of online decision making: the same method I followed myself while younger. The shopping process divides into 2 stages, first, screening more lightly a large set of products to identify a smaller subset of more promising options, and then performing an in-depth screening of these options.
Due to the much wider selection of products online, compared to a brick-and-mortar store, online shoppers tend to examine a much wider number of potential options. We know we tend to like more options, believing (wrongly) that the more options we examine, the happier we will be with our final choice. Consequently, we make ourselves more miserable through examining a much bigger number of products online, without even realizing the damage we’re doing to our happiness.
Another counterintuitive problem: it’s much easier to return products you bought online than in a store. For a store, you have to drive back there, wait in line at the “Customer Service” desk, explain to the clerk what’s wrong with a product, and then go back home. By contrast, most large online retailers ask you to print a return label from their website, and then ship it back to them, often paying for your shipping fees: such returns take much less time. Due to the much lower barrier to making returns, many shoppers are much more willing to see their shopping choices online as tentative, and as a result make themselves unhappier.
An additional challenging element of online shopping concerns data privacy and security. People feel unhappy about the extensive monitoring and tracking of their data online. Savvy consumers know about and feel concerned about the risks involved in online shopping regarding how online retailers store and sell their information.