If you take a look around and see the amount of choices you have in your everyday life, you might think they are limitless. There seems to be an endless supply of possibilities to choose from, whether it is ice cream, cars, movies or even schools and colleges. However, I do feel like this bouquet of choices is a misconception. If you take a deeper look at things, you won’t find an endless supply of choices, but rather an option from less than five.
Before I go deeper into things, I want to shed some light on the italian scientist, Vilfredo Pareto. He discovered and described an interesting distribution, which is now known as the pareto-distribution. While studying the real-estate ownership in Italy, he noticed that roughly 20% of the population own about 80% of the property. This distribution is found in other aspects of life, as well, for instance in health-insurance, where 20% of the people are causing 80% of the cost, wealth distribution, where 10% own more than 90% of the wealth, and the quality of work output among individuals, indicating that fewer people contribute considerable more than the rest. There is a law underlying human actions, rendering only a few responsible for the majority of something.
Within an economic context the above mentioned principle is referred to as an oligopoly. Contrary to the conception of having an unlimited reservoir of choices, I believe we only have an oligopoly of choices. Below is an uncomplete list illustrating the concept for a lot of subjects.
- Crops (wheat, oats, maize, rice)
- Farm Animals (cattle, pigs, chicken, sheep, goats)
- Pets (dogs, cats, hamster, guinea pig)
- Trees (pine, spruce, beech, oak)
- Cell Phones (Apple, Samsung, Huawei)
- Cruise Ships (Carnival, Royal Caribbean, Norwegian)
- Lemonade (Coke, Pepsi)
- Fast-Food (McDonald’s, Burger King)
- Beer (ABInBeV, Carlsberg, Heineken)
- and many more
A tendency of limiting the available choices to only a few exist. Maybe this has to do with the factor that humans can only process groups of objects of up to five easily. We are not designed to choose from endlessness, even if this is what we are being told everyday.
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