As important as I believe National Save for Retirement Week is, I have to confess that after four days (five, if you count Sunday), I’m bored of it. My short attention span has dwindled. (Imagine the difficulties I’m having as I try to concentrate on writing a book for three months solid!)

Instead, I want to shift gears for a moment and talk about a subject with immediate real-life implications: the dangers of perfection.

Good vs. perfect
While doing research for my book (Your Money: The Missing Manual), I re-read The Paradox of Choice by Barry Schwartz. The Paradox of Choice is about how we think that choice will make us happy — but it doesn’t. In fact, too much choice just might turn you into a basket case, especially if you’re a certain type of person.

Schwartz describes his research into two groups of people, Maximizers and Satisficers:

  • Maximizers are those who only accept the best. Every time they make a purchase (or do anything else, for that matter), they need to be sure they’ve made the best decision possible. When shopping for shoes, for example, a Maximizer wants to look at all of the options. She wants to compare of the prices. And even after she’s made her purchase, she worries that maybe she missed a better shoe or a better price at another store.
  • Satisficers, on the other hand, have learned that, contrary to conventional wisdom, good enough often is. Satisficers have learned to settle for something other than the best. A Satisficer still has expectations and standards, but once she’s found something that meets those standards, she buys it. When shopping for shoes, a Satisficer makes do with a pair that meets her needs at a price she can afford.

Many Maximizers believe that Satisficers are comfortable with mediocrity. That’s not necessarily true. Satisficers are just as interested in quality as Maximizers — but they’re not willing to spend the extra time moving from “excellent” to “best”.

The problem with perfect
As you might guess, Maximizers are not as happy as Satisficers. In his research, Schwartz has found that:

  • Maximizers are more likely to regret their purchases despite the fact that they have (in theory, at least) come closer than Satisficers to making the best decision.
  • On the flip side, Satisficers generally feel more positive about their purchases. They know they’ve made a choice that met their expectations.
  • Maximizers enjoy positive events less than Satisficers, and they don’t cope as well with negative events.

Maximizing and satisficing have important implications in the world of personal finance. Researchers have found, for example, that when an employer increases the number of options for retirement savings, the likelihood that employees will actually save for retirement goes down. Similarly, you could spend a lot of time searching for the bank with the best CD rates or the mutual fund with the best returns. Soon, though, something better would come along and you’d be unhappy. For most people, it makes more sense to make a good choice and stick with it.

Maximizing in real life
I like to think that I’m a Satisficer (and in many ways, I am), but the reality is I’m a Maximizer. Too much choice paralyzes me. Let me give you an example I’ve been saving for months.

Last spring, I got a haircut I really liked. As we were finishing, the stylist offered to sell me some “product”. But when I saw the prices, I balked. I could walk next door to the supermarket to buy “product” for much much less. So I did. But when I got to the hair care aisle, I was greeted by this intimidating sight:

The Paradox of Choice
I count at least 49 different options in this photo (and there were more!)

And that’s just a small portion of the hair gels, creams, and mousses available to me. I spent fifteen minutes looking at all of the options (no joke) while Kris did the grocery shopping. And you know what? I still wasn’t able to pick one. I went home without any “product”, and just combed my hair with water, as I always have.

Too much choice is no choice at all. Researchers have demonstrated repeatedly that if you give a consumer a handful of options, he’s happy. He feels in control of his life. But when there are dozens of choices available, he’s all at sea. (This is one reason I’m happier picking from six dinner options at our local Italian place than 120+ options at Claim Jumper.)

Less than perfect
The Paradox of Choice is a fascinating book. Schwartz offers plenty of data and real-world examples (some pulled from his own life) to illustrate how too much choice actually makes us unhappy. In the end, he offers almost a dozen tips for Maximizers that would like to be a little less stressed. Among them are these:

  • Don’t sweat unimportant decisions. Did it really matter which hair gel I selected? Of course not. I should have just picked one in the first ten seconds and called it good enough.
  • Limit your options. If you’re faced with overwhelming choices, arbitrarily reduce the field. When shopping for a new bicycle, for example, restrict yourself to a certain store or a certain brand.
  • Learn to accept “good enough”. If you’re a Maximizer like me, it can be tough to make the leap to the land of Satisficing. But remember: The perfect is the enemy of the good. You’ll be happier if you accept a good option and stop looking for perfection.
  • Stick with what you know. Schwartz argues that unless you’re dissatisfied with a product, you should stick with what you always buy. Don’t be tempted by “new and improved” options. Habits make people happy. (My research shows that this last fact is true in many ways.)
  • Don’t second guess yourself. Once you’ve made a decision, stick with it. Buyer’s remorse can nag at your heart. Ignore it. Be decisive.
  • Embrace restraints. Schwartz argues that it’s possible to learn to love limitations. Limits give us boundaries. They eliminate uncertainty. When we know our boundaries, we can focus on thriving within them.

While it’s true that some choice is a good thing, too much is not. It’s easy to pick the best option from a pool of three, but it’s difficult to find the perfect choice in a pool of thirty. The truth is “perfect” is a moving target. It’s nearly impossible to hit. It’s better to make a solid decision today than a perfect decision next week.