The Problem with Optionality

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I’ve seen a lot of discussions this year around maximizing freedom and optionality. For example, consider this tweet:

If you ever get up $1M in cash

Buy a new modern apartment in the UAE for like $550k (you have zero property tax). Once you own it, it’s actually yours, and the only thing you pay is utilities and internet. No property tax, no municipality bs, no random fees like in other countries…

You won’t necessarily live a mega-luxury life, but you’ll be FREE. No capital gains tax, no property tax, no shady governments adding friction to your life.

I understand the need to escape from corrupt governments looking to enrich themselves. However, such messages tend to have an undertone of anti-commitment. It reminds me of this advice to young men:

If you are 23 – 28 and you feel you have not made it financially,

Do this.

leave your girlfriend and become single.

No football, sleep 5hrs max daily.

Grind for 1 year with no distractions.

When you’re back, the football and younger girls will be there.

Both of these messages hinge on the same idea—commit to yourself and preserve your optionality. Don’t tie yourself down. Don’t take risks. Always have a way out.

I saw this play out with regards to career selection among my peers at Stanford. Many of them (myself included) went into consulting after graduation because that was the choice of maximal optionality. And many of those who went into consulting later also got their MBAs (for much the same reason). The thinking was simple—why commit to one industry when you can do consulting and eventually work in any industry?

The same logic applies to the manosphere, the online community centered around male issues and masculinity. In the manosphere, being a perpetual bachelor is seen as the ultimate status symbol. It means you are independent and have no one holding you back.

I can see why such an ideology is appealing. It’s attractive to those who don’t want to take risks or are afraid of commitment. Technically, this is also the same ethos behind passive investing. Passive investors don’t commit to a single investment idea (or even a small set of ideas), they own everything.

But there’s a big difference between preserving optionality in your portfolio vs. other parts of your life. In investing, non-commitment leads to better than average outcomes for the typical investor. The data is clear on this.

But preserving optionality in other parts of your life typically doesn’t. Barry Schwartz, the author of The Paradox of Choice, has demonstrated this in his research. Schwartz has found that maximizers (those who always aim to make the best choice) are usually worse off than non-maximizers. As one of his articles in Scientific American states:

…individuals with high maximization scores experienced less satisfaction with life and were less happy, less optimistic and more depressed than people with low maximization scores. Indeed, those with extreme maximization ratings had depression scores that placed them in the borderline clinical range.

Those who always strive for the best in life end up feeling worse than those who commit to something and move on.

Of course, this doesn’t imply that you should commit to something for the sake of commitment. Picking the wrong partner or the wrong career is much worse than preserving your optionality.

But non-commitment as a basis for your life has its costs as well. As Daniel Levinson wrote in The Seasons of a Man’s Life:

One of the great paradoxes of human development is that we are required to make crucial choices before we have the knowledge, judgment, and self-understanding to choose wisely. Yet if we put off these choices until we truly feel ready, the delay may produce other, greater costs.

I know this all too well. I got married at 35 and I just had my first child at 36. Because I will have children slightly later than some of my peers, I wasn’t as committed in my 20s and early 30s.

While that was fun at the time, my non-commitment means that I’ll have less time with my grandchildren in the future. All else equal, I traded off a few years with my grandchildren for a few extra years of being single.

I’m not here to judge this decision, but it’s the kind of tradeoff that is overlooked by the "maximize optionality" crowd. These influencers are happy to tell you about the freedom you get from not committing, but they don’t tell you what you give up for that freedom. Because what you give up only becomes apparent at the end of your life.

Every year you spend with options is another year you don’t spend on the thing you eventually commit to.

This is true of your future career, your future spouse, and in every other part of your life. Of course, options are essential when you have no idea what you like. But once you know, the benefits of optionality begin to decline.

But the real reason why I think more people should commit to something is that studies show that the act of...