Introduction
The explosion of choice we have seen in consumer markets in recent decades is often feted as a good thing, a sign of the success, even, of modern day markets; that today’s consumers have unbridled choice at their fingertips is for many one of the best indications that consumers now find themselves in a veritable consumer ‘utopia’, where every possible need can be satisfied with the perfect product and almost every consumer itch becomes easily scratch-able.
Rational economic theory is of the opinion that through encountering inflated choice, consumers are more likely to find a product that best suits their needs and are therefore more likely to make a ‘perfect’ decision. Of course, several assumptions are made in the theory; namely that the consumer incurs no costs during the decision-making process, has all of possible information at their fingertips and has the ability to disseminate all of the available information. It is for these assumptions that the model comes under sustained attack from critics.
We turn our attention in this report specifically to the issue of choice in financial markets and explore whether the increased availability of financial products and services is understood by consumers as positively as the rational choice model would suggest. Using previous Future Foundation research on the topic of consumer choice and consumption behaviour as a base, we are aware of compelling counter-arguments that suggest inflated choice can in fact confuse and distress consumers in the consumption process, leading not to greater happiness but in fact a fall in the level of consumer utility. We will cover such counter-arguments and an introduction to the general issue of consumer choice in the desk research section of this report.