Medicating consumer vertigo

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The explosion of consumer choice represents one of the most dominant themes in the American economy over the past quarter of a century. And this growing army of options also manifests itself in a public-policy battle raging today in Washington -- one that conservatives can only win with a one-two punch of expanding both choice and consumer education simultaneously.

While the trend toward increased choice emerged gradually following World War II, it grew exponentially following innovations such as the microchip, the personal computer and the Internet. Today buyers enjoy a bouquet of options, indulging their preferences in everything from telecommunications to toothpaste, DVDs to detergent. And as is often the case, government has lagged behind these developments in the private market. But issues surrounding the desirability and implications of expanded consumer choice in public-policy programs have finally begun swirling faster around Capitol Hill as well.

Health care, retirement savings and education are just a few of the areas where the current debate rages about the prudence of volition -- should public policy expand citizen options or contract them by government fiat?

Some behavioral scientists warn about the downsides of too many decisions -- more is sometimes less, according to this view. Liberals sometimes seize on this research as justification for anti-choice ideology -- a subtle way to disguise advocating continuation of government monopoly. Fortunately, advocates of more choice are fighting back with some new evidence and creative solutions that fit with the realities of behavioral economics.

Virginia Postrel, writing last year in Reason magazine, argues that anti-choice advocates use the excuse of "consumer vertigo" to constrain options. Mrs. Postrel references Swarthmore psychologist Barry Swartz's recent book, "The Paradox of Choice," in which Mr. Swartz writes: "As the number of choices keeps growing, negative aspects of having a multitude of options begin to appear. As the number of choices grows further, the negatives escalate until we become overloaded. At this point, choice no longer liberates, but debilitates. It might even be said to tyrannize."

Mrs. Postrel's insights are particularly acute with respect to arguments against "choice" in government programs, criticisms now as common as a Capitol cocktail reception. Denigrating choice seeps into public-policy debates like spilled red wine on white slacks. Yet they are often only thinly veiled attempts to bolster bureaucratic monopoly and maintain a one-size-fits-all approach to the provision of certain services. Enemies of choice are usually allies of big government.

Here are the current rhetorical suspects. The new Medicare prescription drug legislation offers seniors too many options. Retirees can't handle personal Social Security accounts. And workers swoon contemplating the dizzying array of 401(k) options. But some policy-makers are combating the anti-choice advocates by promoting new informational tools to accompany expanded choice. They find it better to medicate potential consumer vertigo with education than to amputate expanded options.

The 2003 Medicare Modernization Act included millions of dollars to provide beneficiaries with counseling services and material about how to choose the best drug plan. Surveys show that those utilizing these additional resources are generally more satisfied. Moreover, the pension reform legislation signed into law last week enables companies to provide investment advice to their employees participating in 401(k) plans. Again, rather than limiting investment options in retirement plans, the legislation provides consumers with new tools to make responsible decisions.

Advocates of choice -- typically Republicans and conservatives -- recognize that a dosage of responsibility and education is the best antidote to one-size-fits-all programs. One Republican leadership aide summed it up this way: "We are giving Americans more freedom to prosper, and while it comes with more responsibility, we're also pairing up that additional responsibility with the tools needed to take advantage of the new freedoms and opportunities. This is what Republicans are all about."

The debate about choice in public-policy programs will continue. But it's really a proxy war -- pitting advocates of one-size-fits-all government against those willing to embrace reform through competition and variety. As Mrs. Postrel writes, "At the heart of the anti-choice argument is a false dichotomy: We can have a narrow range of standardized choices, or we can live with options that are infinite, dizzying, and always open."

But there is a third way. Recognizing the role of education and information in managing these choices provides an avenue bridging the flood of too many choices and an arid desert of no options. Advocates of more choices in government programs can win this battle, but they'll need a double-barrel flurry linking greater variety with solid educational resources.