I covered this and a similar lecture
here.
While what he is saying is very relevent on a psychological level, he completely ignores the economic ramifications of artificially restricted choice. In fact, he opens up the speech by openly ignoring the benefits. "We all know what's good about it, so let's focus on what's bad." This is like lecturing the pros and cons of Wal Mart without talking about the increased convenience and savings to consumers, and just talking about how moms and pops are going out of business. While there are some psychic detriments, the economic benefits provide for so much that we can make them up very easily, and that is how the civilized world progressed. Are we better off living in the dark ages when there were extremely few choices? Pretty hard to obsess over what "could have been" in that case. He is literally advocating shutting down civilization.
While I am very sympathetic to psychological findings, even as they often deviate from the very narrow-minded Austrian assumptions, I think that what Barry Schartz is saying is complete nonsense. If you're miserable because you're not sure whether you made the right purchase or not, you need a more positive outlook on life. I've never felt this way about the car I bought, the apartment I have or the computer I customized. Instead of lowering your expectations (come on, THAT'S the secret to happiness?!?!?!?!), just spend some time appreciating what you have rather than obsessing on what you don't have and this ceases to be a problem. Anyone can do this. We don't need to rewrite the economy because people don't know how to be happy.
Happiness is not an economic issue. It is a personal issue.