July 1, 2004

Eureka: Extraordinary Discoveries in Everyday Life

Professor Sheena Iyengar demonstrates how passing observations in ordinary moments can spark great ideas and groundbreaking research.

Greek mathematician Archimedes (287–212 B.C.) made revolutionary discoveries by observing small details of day-to-day life—water in a bathtub and sunlight on mirrors. Associate professor Sheena S. Iyengar follows in his scholarly tradition—finding extraordinary inspiration in the ordinary world of supermarkets, small talk and singles events.

Archimedes’ jubilant reaction—“Eureka!”—is a legend as enduring as his actual discovery, the principle of buoyancy. In retrospect, his discovery seems as ordinary as the source of his inspiration—water displaced in a bath. Of course an object will float if it displaces water with a mass greater than its own. His discovery, however, was the product of brainpower and observation, the marriage of keen perception and curiosity. For those who see it, inspiration springs unexpectedly in the world.

When I was a graduate student at Stanford University, I had a chance meeting with a well-known economics professor, Robert Wilson, who in casual conversation told me that, as a member of the retirement committee for Stanford University, he was very troubled by a recent trend: While the array of 403(b) investment choices offered to the Stanford faculty had increased from 2 to almost 100 plans, the percentage of the faculty participating had significantly decreased. Apparently, more choices compelled fewer people to save for their retirement.

At this same time, I was living in Palo Alto, which had an upscale grocery store, Draeger’s, which I loved to visit. The sheer variety of foods made it a tourist attraction. Often, I would visit and browse through the 12 types of apples, the 314 kinds of jam, the 248 varieties of mustard and the 75 olive oils; however, I never made a purchase. After returning from the store one day, again without making a purchase, I observed how paradoxical my actions seemed: I enjoyed the variety, but I never formed a preference. I had many choices but no decisions.

Then, the idea struck. Prior research in psychology and economics has assumed that people are better off with more choices, because variety allows consumers to better match products to their individual preferences. But this same research is limited to demonstrations in which choosers are given either a few choices or no choices at all.

In today’s world, however, people are confronted with literally thousands of options. Baskin-Robbins offers more than 31 flavors of ice cream. Godiva sells more than 100 types of chocolate. Amazon.com has nearly 400 toasters, all of which are claimed to revolutionize your kitchen. People embrace choice, but is there a point at which choice paralyzes?

Thus, one of my current research programs began. For my first study, I went back to Draeger’s, this time not as a customer but as a scientist, and set up a tasting booth where we offered, alternately, 6 or 24 flavors of jam. More shoppers stopped when there were 24 jams to taste as opposed to 6; however, only 3 percent of them actually bought jam from the larger display, while 30 percent bought from the smaller selection. Customers found more choices initially more appealing, but more choices ultimately resulted in inaction.

Subsequent studies with Godiva chocolates show that an espresso truffle selected from a set of 6 was regarded by customers as more satisfying than the exact same chocolate selected from a set of 30. Even in the classroom, college students write better essays when they’re given 6 essay topics to choose from instead of 30 topics.

And recently, my colleague Wei Jiang, assistant professor of finance and economics, and I followed up on Robert Wilson’s intuition. Working with Steve Utkus from the Vanguard Group, we examined how the number of 401(k) options affected the retirement savings decisions of approximately 800,000 employees at nearly 650 companies. Holding employee and employer demographics constant, our findings revealed that more options led to drops in participation rates. Moreover, even among those who did choose to participate, we found that the more options employees were given, the more likely they were to allocate their retirement savings to such conservative assets as money markets and bonds rather than to seemingly more risky equity funds.

What began, therefore, as a casual conversation and a passing observation resulted in large-scale studies and concrete data: Inspiration and work are inextricably linked.

What I love about being a professor at Columbia Business School is that I am part of an active network of ideas. I’m constantly inspired by conversations with colleagues both within and outside the Management Division. For example, a conversation with a colleague, Ray Fisman, the Meyer Feldberg Associate Professor of Business in the Finance and Economics Division, about the economics of the dating market resulted in an ongoing speed-dating study that tackles such questions as “Who matches up with whom? Can we predict that? Do people choose what they want or allow their choices to dictate what they want?” Carrie Bradshaw’s rhetorical questions, which gave Sex and the City a cult following for six seasons, are no longer rhetorical.

At Columbia Business School, I teach two courses, Leadership and Entrepreneurial Creativity, which are designed to create a reciprocal exchange of ideas. While I instruct students about the science of leadership and creativity, they build on the facts and develop their own skills, acquiring a store of knowledge to apply after graduation. By the end of the course, as we discuss effective leadership and idea generation, students are learning just as much from one another as they are from me. And I learn even more from them.

Indeed, my students pose questions that continue to refine my research and generate new ideas for study. “Do people really want to make a choice,” one student asked, “or do they simply want to think they made a choice?” That question led to research through which a student and I discovered that customers were satisfied not by the number of choices but rather by the feeling that they knew how to make a choice.

In the classroom, we’re building a network of ideas, a system of reciprocal exchange, a platform from which to face the world. With this intellectual structure, we create lasting knowledge, effect profound change and impact the future in ways that make us all jubilant assimilators.

Sheena S. Iyengar, the Sanford C. Bernstein Associate Professor of Leadership and Ethics, studies the implications of offering people choices. She has examined choice as it affects employee motivation and performance in a global organization, Citigroup, and in such contexts as chocolate displays at Godiva, magazine aisles of supermarkets and mutual fund options in retirement benefit plans. Professor Iyengar received the Presidential Early Career Award in 2002 for her ongoing work examining the cultural, individual and situational factors that influence choice-making preferences and behaviors.

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