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Page last updated at 10:31 GMT, Friday, 17 July 2009 11:31 UK

Adam Shaw

"I want more choice, I want it now. Tomorrow I will want more of it in different colours, new styles and with more nobs on."

That is more or less the basis of our economy and society. Democracy is about freedom and freedom means choice.

In other words, we want the freedom to choose. Much of the study of economics is the analysis of how to make those choices amidst infinite demands and limited resources.

These were my thoughts when I read this week of a new computer operating system from Google.

We assume that choice is a good thing. The more of it the better - rather like air. But is choice necessarily good?

Customers choosing supermarket fruit
Lots of choice in what we can buy may not always be a good thing

Do people, for instance, want more TV channels or just better ones? Tesco offers me 55 types of sliced bread. Google offers 1,490,000 options for the search term Adam Shaw. Do we need over a million Adam Shaws I wonder?

I don't want, can't use and refuse to watch the Games, Media Album, Camera and Organiser on my phone. I want a phone that only calls other phones. Amidst all this choice, that is the one option I can't choose. No such phone seems to exist.

The interesting question here is not whether some choice is superfluous to needs, but whether choice actually makes us feel better or whether it could actually makes us worse off. Could the whole basis of our modern economy be wrong?

There is clearly a case for saying some choice makes you better off. But there may be a point at which more choice makes you less well off and we in the developed West may have already past that point.

What's more we don't have to look far beyond traditional economic theory to prove that point.

Costly opportunity

I have a rather round face and am desperately looking for shirts with long collars which make my look less dough-like.

Shirt and tie
Even buying a humble shirt could provoke doubt and dissatisfaction

In the past month I have popped across from the BBC to the new shopping centre, walked down Oxford Street, visited Bond Street, journeyed along Jermyn Street - I have in fact been to every street which might contain a shirt shop that I can imagine.

With so much choice, it is easy to imagine I could have chosen something which met my requirements.

The problem is that the more options there are, the easier it is to regret the decision you have made. In terms of economic theory, the opportunity cost is higher.

Opportunity cost is the value of the next best alternative forgone as the result of making a decision. The problem is that the opportunity costs subtract from the satisfaction we get even when we like what we have chosen. As a result choice can reduce satisfaction.

The problem with choice is that is raises expectations. Even when our choice is actually rather good, it has been devalued by the rise in expectations offered by the huge choice we face.

When interviewing Stelio Haji-Ioannou, who runs Easy Group, a long time ago, I brought him complaints about his car rental service. I told him that "it can't continue like this - your customers complain your service is appalling".

The problem, he said, is not that there was anything wrong with customer service levels. It wasn't his job to meet customer expectations, it was to reduce them. Then everybody would be happy.

Perhaps that is a lesson for us all.

Business round-up with Adam Shaw
Friday, 10 July 2009, 09:14 GMT |  Today
Business round-up with Adam Shaw
Friday, 3 July 2009, 09:30 GMT |  Today



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