The Hidden Costs of Too Many Choices
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Welcome to Mind Over Money, a weekly newsletter where I share actionable ideas to help you transform your relationship with money to build financial confidence and independence.
Today's topic: The Paradox of Choice
We’ve been told that choice means freedom, but more choices don’t always make us freer.
In fact, more choices often mean entrapment—and often, that’s exactly where marketers want us to be. Here is an example:
Have you ever spent 15 minutes scrolling through Netflix, only to give up and turn the TV off? You’d think that kind of paralysis would hurt their business, but it actually helps them.
When you don’t watch anything, Netflix saves on bandwidth but still cashes your monthly check. You’re stuck in indecision, and they still profit.
The same thing happens in more subtle ways across industries. Sometimes companies appear to give you choices to empower you, but those options end up leaving you worse off.
Like that time you postponed signing up for your company’s retirement plan because the investment menu looked like alphabet soup. Or you ordered the first item (that's also usually the most expensive) on a restaurant menu because the sheer volume of dishes available overwhelmed you.
These patterns aren’t random at all; they've been studied for decades.
Psychologist Barry Schwartz called this the Paradox of Choice: the idea that having too many options doesn’t make us freer. It makes us miserable. The more options we have, the harder it becomes to choose, and the less satisfied we feel when we do.
In one now-famous study, shoppers offered 24 flavors of jam were 10x less likely to buy anything than those offered just six. The abundance that initially drew them in left them overwhelmed.
Fast forward to today, and the problem has scaled, from jam jars to online shopping comparison, company benefits, and investment portfolios. We’re drowning in options, and it’s quietly draining our mental energy, our confidence, and our joy.
What Causes the Paradox of Choice?
The human brain wasn’t built for infinite choice.
Every decision we make—from what to wear to which health plan to choose—draws on a limited pool of mental energy. When that pool is flooded with too many options, our brains short-circuit in fascinating (and frustrating) ways.
Let’s look at what your brain does in that moment. Here’s what actually happens:
As options pile up, your stress hormones increase, which redirect blood flow from your rational brain (the prefrontal cortex) to your threat center (the amygdala).
In other words, when you’re standing in front of a wall of 40 types of cereal or scrolling through 200 nearly identical investment funds, your brain literally interprets that moment as a threat. Decision-making stops feeling rational and starts feeling dangerous.
Psychologically, this reaction is fueled by anticipated regret, which is the fear of making the wrong decision when so many alternatives exist. The more options we have, the more we worry about choosing poorly. And that fear can be so paralyzing that we end up making no decision at all.
Choice overload shows up as decision paralysis, when opportunities pass by because we can’t commit to one path.
It can also appear as analysis paralysis, when overthinking feels like progress but really keeps us stuck.
And even when we finally do decide, satisfaction decreases because our mind can’t stop replaying all the "what ifs."
Over time, that constant second-guessing erodes confidence, leading to reduced self-esteem and increased stress every time another decision appears on your plate.
The good news is, you can outsmart the Paradox of Choice and take back your time, energy, and peace of mind.
How to Stop Drowning in Options
Here are three science-backed ways to do it:
1. Set Your Criteria Before You Shop.
Decide what matters before you dive in. If you’re buying a laptop, list your must-haves: screen size, budget, PC or Mac. Then stop comparing once you find one that fits. Clear criteria act as filters and protect you from endless “what if” spirals.
2. Embrace “Good Enough.”
The perfect choice doesn’t exist. Satisficers—people who settle once they find something that meets their standards—report higher happiness and less regret than perfectionists. “Good enough” isn’t settling; it’s sanity-saving.
3. Limit Your Menu.
When faced with too many options, narrow them down intentionally. Compare three to five options max, which is the human brain’s sweet spot for clear decision-making. Whether it’s restaurants, investment funds, or skincare products, fewer choices equal faster (and more satisfying) outcomes.
Final Thoughts
The Paradox of Choice reminds us that freedom isn’t about having endless options. It’s about making confident decisions that align with what truly matters.
When you simplify your options, you reclaim your mental energy. You start trusting your own judgment again. You stop chasing the illusion of the “perfect” choice, and you start making choices that move your life forward.
In the end, the real luxury isn’t abundance, it’s clarity.
This piece is the 4th in my Mind over Money series on consumer psychology. If you missed the first issue, read it using the link below:
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