Choice is good. We Americans consider it a measure of our freedom and a source of our innovation and prosperity. Riches flow to the person who builds a better mousetrap--or computer mouse. Yet a grocery shopper blankly staring at hundreds of varieties of toothpaste might reasonably conclude that there can be too much of a good thing. Mark Lepper, a psychology professor at Stanford, and Sheena Iyengar, an associate professor of management at Columbia, illustrated this point with a simple study. In a grocery store, they set up tasting booths that offered either six or 24 types of jam. Shoppers found the wider selection more enticing: 60% who passed it stopped and tasted, while only 40% stopped at the booth with fewer flavors. Yet the wider selection was confounding; just 3% who sampled there bought anything, while 30% made a purchase at the other booth.
The tendency to feel overwhelmed and do nothing probably saves us money on jam. But it is becoming increasingly dangerous as society hands us more and more responsibility for vital and complex decisions about our savings for college and retirement, our family's health care and the providers of utilities ranging from electricity to cellular-phone service. Responsibility is always the price of freedom. But we are now responsible for so many decisions requiring so much homework that many of us feel helpless and paralyzed. The risks of inaction or unwise action are rising, even as many of the professionals on whom we would like to rely for guidance are proving untrustworthy and even corrupt.
Then came Enron. What makes this case so scary is that the shady ethics and the deception that suddenly bankrupted one of the world's most innovative companies have become pervasive--and much of it is legal. It's not unreasonable to fear that the next Enron could be lurking in your 401(k) account or paying your salary. If the corporate directors and auditors and stock analysts who were supposed to be looking out for the interests of shareholders at Enron could be bought off with consulting and underwriting fees, we know they are probably being bought off elsewhere too. From 1998 to 2000, 397 publicly traded companies had to restate their financial results, and big firms like Sunbeam and Cendant have paid to settle shareholder suits alleging fraud.
The social safety net for the unemployed is not the only thing that the government has loosened. It has also pulled back from the regulation of business. That's a direction we have chosen through our own elections, and in many ways it has served us well. But what we didn't anticipate was the degree to which lightly regulated companies would be able to corrupt the professionals on whom we have relied to guide us through complex financial and medical matters and to look out for our interests. We now know that we can't trust stock analysts and financial planners, who often get paid more for selling us shaky stocks and mutual funds than for selling us solid ones.
For several months after Sept. 11, Americans have felt ourselves pulling together. But the Enron scandal has shown us or perhaps reminded us that when money is involved, we are truly on our own.