Sunk Cost Fallacy
Let’s say you’ve been planning to go see a movie this Friday, and have already bought a ticket, but now that it’s time to go out you realize that you don’t want to go, and that you would rather enjoy spending your evening at home. Should you go or not?
Most of the people say yes, after all, the ticket has already been paid for, and it’s nonrefundable, so you wouldn’t want it to be wasted, right?
That is called a Sunk Cost Fallacy — the idea that people tend to stick with the courses of action they have invested money, time, or effort in, even when continuing is not the best thing to do.
If you think about it, it’s irrational to let the costs that we can’t recover to influence our decisions, only future costs and benefits should matter. But we don’t want to admit our mistakes, to “waste” our investment, so we often stick by our past choices that continue costing us more.
The movie example may not make it seem like a big deal, but this fallacy often leads to more significant consequences. Many people stick with professions they dislike because they have spent that all this money and time on getting their degree. They often don’t consider that starting over is better than being miserable for the rest of your career. Or people stay in unhappy relationships because of all the time they have invested in them.
To overcome this fallacy — be aware of it, ask yourself where do I fall victim to it. Learn to recognize it, and once you do —admit that it’s irrational.
People often commit this fallacy not because they think it’s logical, but because they are emotionally invested in the effort they put in, so you need to understand that sometimes it’s better to let go. Imagine that you’ve just been dropped into your current life situation with no warning, and do what is in your best interest.
- If you have realized half way through reading a book that it’s not useful or interesting — give it up.
- Are you trying to finish eating this sandwich because it’s already been paid for, even though you’re not hungry? Throw it away, it doesn’t benefit anybody.
- Do you keep going to a bad/useless class that you’ve paid a lot of money for? You probably don’t need to.
- Did you put so much sweat in writing this scene in your screenplay, only to realize that it doesn’t make the movie better? Cut it out.
By the way, I don’t mean to say that you should be wasteful, it’s always wise to try anticipating such things in advance and to avoid doing them in the first place. But once you did, don’t spend even more energy on it, realize that putting more time into it wont make it more worth it, cut your losses, and move on.
You can’t get your money, energy and time back, but you can still make yourself happier.