A view by Sharon Darcy, Sustainability First Associate
When I was working in China in the 1980s I was lucky enough to be able to afford to buy a bicycle; the main way to get around at the time. At the small town’s only bike shop, I looked at the array of gleaming machines. All identical. Still enthused by the idea of my own transport, I thought this was a minor inconvenience and tried one for size. Just right. It was only then that I realised the nervousness of the on-looking staff. Neither that bike – nor any of the others in the shop – actually worked. The choice was in effect zero.
Since that time, I’ve realised just how important choice is. Most of us don’t like it when we have no choice. Being able to choose between different services and providers can help create thriving markets, drive innovation and ensure that what we buy meets our needs.
In recent years there has been an increasing shift in public policy to get people to take more personal responsibility and to make more choices for themselves. Just as we have long shopped around for groceries, so too can we choose between energy, insurance and communications providers. The boundaries of choice are now being pushed further to include services such as pensions. And to help reduce the impacts of an aging population on a stretched public purse, there may well be increasing pressure on us to make choices in areas such as social care.
All this choice sounds well in theory, but what does a world of ‘multiple-choice’ mean in practice? We all know that not all choices are the same. And we clearly all start from different points in terms of the choices we make. There are lots of areas where we don’t always have a choice. The table below provides a high-level categorisation of six different types of choice.
|Type of choice||When choice is made||Examples of areas in which choice is made|
|1||Consumer choices||At time of individual transaction||· Consumer goods|
|2||Essential or ‘foundational’ service choices||As services are normally used continuously, choices can be ‘rolling’||
|3||Life-stage choices||At key life stages||
|4||Distress choices||In response to problems||
|5||Personal choices||Over time and cumulatively||
|6||Ethical and moral choices||Over time, cumulatively. Can be instinctive||
Decision makers in government, regulators and companies spend much time looking at the costs and benefits of choice in their particular areas and at how some groups of people may find it more difficult to make choices. There is also a growing acceptance that the insights from behavioural economics can be used to maximise the effectiveness of choice. However, there has been less attention paid to understanding the cumulative impact of choice and how different types of choices interact.
Taking a holistic view of the choices we are increasingly being asked to make raises a fundamental question: are there any limits to the number and combination of choices that we are willing and able to make?
Are there limits to our capacity to make choices?
- Given that there is a limited number of hours in the day for people to exercise choice, are we likely to suffer from choice ‘over-load’?
- How do we ensure choice works as a society for the increasing numbers of people who are ‘time poor’, such as the one in five who usually work over 45 hours a week or those that have to juggle multiple jobs?
- If policy makers introduce ever-more measures that put pressure on people to make choices about essential services, will this have a knock-on impact on choices in other areas of their lives?
Are there any limits to our capability to make choices?
- Does ‘shopping around’ drive short-term thinking and make us less able to focus on, and judge, our total overall and long-term interests?
- What impact does the growing uncertainty and frequent lack of permanence of modern life – such as temporary work contracts and the rise in private rental accommodation – have on the ability of increasing numbers of people to make effective choices?
- Given the increasing availability of information, is it getting easier or more difficult to make the ‘right’ choices? If big data leads to services becoming increasingly tailored to meet our own individual interests, what impact will this have on our collective interests?
All this is not to undermine the value of choice but rather to recognise that it is not a silver bullet for society’s problems. Exploring what the collective and societal impact of choice is would seem to be important. Three ideas may be helpful in thinking about what weight to give to choice in future public policy thinking:
- Given the high degree of consumer inertia and reluctance to exercise choice or switch providers in many markets, rather than seeing this as an obstacle that consumers need to ‘wake up’ from, see if this can be turned into a positive. The automatic enrolment programme in DC pensions is a good example of this. Building long-term and trusted relationships where loyalty is rewarded should be good for business.
- Transparently and collaboratively explore the advantages of community and collective choices rather than individual choices. These can play to the collective strengths of the group and can spread and share downside risks.
- Platforms, brokers and automation may help us make choices in an increasingly complex world. However, these are often driven by similarly complex algorithms. Understanding how such services are checked for accuracy, and being transparent about who does the checking and how costs and benefits are shared, is likely to become increasingly important.
Multiple-choice questions in exams don’t always give students the chance to show the subtleties and nuances of their thinking. Introducing choice in complex areas of real life decision-making is likely to have the same challenge. It’s something we need to discuss openly and not be unduly ‘ideological’ about.