How can you tell if a jacket is too big without seeing the underlying body?
With RTW, I usually have to get my jackets a bit wide in the shoulders because otherwise they won't fit my hips; if that results in a too big chest it's not a problem because my tailor takes in the chest below the armpits. So I end up getting a jacket that fits rather well and with some shoulder extension, which I prefer.
Ernie, your jacket seems to have too wide shoulders but I doubt sizing down would be much of a difference in that respect. It seems to be rather unstructured so you would likely get that "droopy" shoulder look even if you size down. A size smaller could be too small in the chest/hips, which is worse than too big.
The biggest problem I see with your jacket is that it's too long, and not just in the sleeves. However, if a size smaller will fit well at the chest and hips, by all means size down. We can't tell from your pic!