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How the Sunk Cost Fallacy Makes You Act Stupid

How the Sunk Cost Fallacy Makes You Act Stupid

Do you think you make smart, rational decisions most of the time?

Chances are good that even if you pride yourself on being rational most of the time, you still occasionally fall for the sunk cost fallacy.

What is this fallacy?

In economics, a sunk cost is any past cost that has already been paid and cannot be recovered. For example, a business may have invested a million dollars into new hardware. This money is now gone and cannot be recovered, so it shouldn’t figure into the business’s decision making process.

Or, let’s say you buy tickets to a concert. On the day of the event, you catch a cold. Even though you are sick, you decide to go to the concert because otherwise “you would have wasted your money”.

Boom! You just fell for the sunk cost fallacy.

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Sure, you spent the money already. But you can’t get it back. If you aren’t going to have a good time at the concert, you only make your life worse by going.

How Often Do You Fall Into The Sunk Cost Fallacy Trap?

Unfortunately, an awful lot.

If you take a moment, you can probably think of all sorts of situations where you make irrational decisions because of the sunk cost fallacy.

To help you see how common this is, here are a few examples.

1. “I might as well keep eating because I already bought the food.”

I do this one all the time. If I go to a restaurant and become full after eating most but not all of my food, I feel compelled to eat the rest so that it isn’t “wasted”.

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But in reality, nobody else will eat that food after me. It’s not getting recycled or given to poor people. It’s just thrown out.

So if I feel uncomfortable, I shouldn’t eat the food. It’s a sunk cost, and I only lose by gorging myself further.

2. “I might as well keep watching this terrible movie because I’ve watched an hour of it already.”

Or reading a terrible book that you are 100 pages into, or continuing a T.V. series on Netflix that has gone downhill, etc.

It doesn’t matter that you’ve already invested time into whatever media you are consuming. If you don’t like the movie, you can walk out of it.

I once made the mistake of staying in the theater during Dinner For Schmucks despite quickly realizing how terrible it was. It never got better, and I wasted even more of my time by staying.

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3. “I might as well keep going to a bad/useless class that I paid for.”

If you join a club or take a class to learn a new skill, you might feel compelled to continue even if you don’t enjoy it.

After all, you paid the $100 entry fee and you’ve gone to 3 of the 8 sessions, so you might as well finish, right?

Of course not. If you don’t feel you are getting anything out of it, bail. Write off the money and the time you spent, and save yourself from the other five classes. Don’t waste any more of your time.

4. “I might as well continue dating someone bad for me because I’ve already invested so much in them.”

This is unfortunately all too common.

If you put a lot of emotional investment into a relationship, it can be very challenging to break it off. This can be true of any relationship, not just romantic ones. Perhaps one of your good friends is no longer a positive influence on you. Years of emotional investment makes it very uncomfortable to cut your ties, but you might have to.

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Well, How Do I Free Myself?

We fall victim to the sunk cost fallacy because we are emotionally invested in whatever money, time, or any other resource we have committed in the past. The most important step to freeing yourself from making poor decisions based on sunk costs is to recognize the logical fallacy. Simply being aware of it will help you tremendously in making more rational decisions in the future.

By reading this article, you’ve already taken that huge first step.

But when that isn’t enough, I suggest you write out a pros and cons list. If the only pro of continuing to do something is to feel better about the emotional investment you’ve made, clearly you should go in the other direction.

Despite how common this fallacy is, you can see through it fairly easily most of the time. Don’t let it make you act stupidly.

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Michael Davidson

Michael teaches English in Israel while blogging about how to live a happier and healthier life.

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Last Updated on October 22, 2019

How to Get “I Can’t Do It” Out of Your Vocabulary

How to Get “I Can’t Do It” Out of Your Vocabulary

When someone says, “I can’t do it” . . . I say to myself, “What do you mean you can’t do it?” Maybe you don’t want to do it, but saying you “can’t” do it is a completely different story.

With the right mindset, positive attitude, and a clear vision of what you want to accomplish, the only thing that is holding you back is yourself.

Can’t is a terrible word and it has to be taken out of your vocabulary.

By saying you can’t do something, you’re already doubting yourself, submitting to defeat, and you’re making that barrier around your life tighter.

So today, right now, we are going to remove this word for good.

From now on there is nothing we can’t do.

“Attitude is Tattoo”

Your attitude is everything; it’s your reason, your why and how, your facial expression, emotions, body language, and potentially the end result. How you approach an opportunity, and the result of it, is solely based on you — not your boss or your co-worker or friend.

If you enter a business meeting with a sour attitude, that negative energy can spread like wildfire. People can also feel it — maybe even taste it. This is not an impression you want to leave.

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Now imagine you enter a business meeting with a positive attitude, that whatever happens in here is going to be your result, in your control, not someone else’s. Of course, we can’t always win, but even if the outcome is negative, your attitude and perception can turn it into a positive. The question is: can you do it?

Of course you can, because there is nothing in this world you can’t do.

It’s much better to be known for your positive attitude — your poise, your energy, the reason why things go so well because you are able to maintain such character. A negative attitude is easy. It’s easy to complain, it’s easy to be mad, and it’s even easier to do nothing to change it.

When I say your “attitude is tattoo”, it sounds permanent. Tattoos can be removed, but that’s not the point. Your attitude is like a tattoo because you wear it. People can see it and sometimes, they will judge you on it. If you maintain a negative attitude, then it is permanent until you change it.

Change your attitude and I guarantee the results change as well.

Believe You Can Do It

Do you know why most people say “can’t” and doubt themselves before trying anything?

It’s our lack of self-confidence and fear on many different levels. The one thing we have to purge from ourselves is fear — fear of bad results, fear of change, fear of denial, fear of loss, the fear that makes us worry and lose sleep. Worrying is the same as going outside with an umbrella, waiting for rain to hit it. Stop worrying and move on.

Confidence is fragile: It builds up slowly, but can shatter like glass. Project your confidence and energy into believing in yourself. This is a very important and groundbreaking step — one that is usually the hardest to take. Start telling yourself you can do something, anything, and you will do it the best to your ability. Remove doubt, remove fear, and stick with positive energy.

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Embrace Failure

Do not fear failure. Do not run away from it. Face it, learn from it, grow, and take action. Just remember: You will never know success if you have never failed.

Your confidence will bolster after embracing these facts. You will be immune to demoralizing results, and instead you will find ways to fix it, improve upon it, and make it better than before. You will learn to never say “can’t,” and will realize how many more opportunities you can create by removing that one word.

Don’t let one simple and ugly word plague your confidence. You’re better and stronger than that.

Start Making the Change

But to actually start the process of change is very challenging.

Why is that?

Fear? Time? Don’t know how — or where — to start?

It’s hard because what we’re doing is unlearning what we know. We are used to doing things a certain way, and chances are we’ve been doing them for years.

So here are some ways that I avoid using the word “can’t”, and actually take the steps to put forth the change that I wish to see. I hope you can incorporate these methods into your life.

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Write down What You Want to Change

Write it on post-its, notecards, whatever makes you comfortable — something you will always see. I usually write mine on post-its and put them all over the wall behind my monitor so I always see them.

Tell a Friend and Talk About It

Discussing your goals, what you want to change, is very effective when you say it out loud and tell another person other than yourself. It’s almost like saying, hey, I bet I can do it — watch me.

When you fulfill that goal and tell your friend, it feels rewarding and will motivate you to do it again in a different aspect. Who knows? Maybe your friend adopts the same mindset as you.

Stop Yourself from Saying the Forbidden Word

Sometimes,I can’t control myself in public when I’m with friends, so I have to be careful with the words I use so I don’t embarrass or insult anyone.

Treat the word “can’t” as the worst word you can possibly use. Stop yourself from saying it, mid-sentence if you must, and turn your whole perspective around — you can do it, you will do it, and nothing is impossible!

Repetition, Repetition, Repetition

You think this change will be overnight? No way. This is a practice. Something you’re going to be doing for the rest of your life from now until forever.

As I said earlier, you are unlearning what you know. You know how easy it is to say you can’t do something, so by unlearning this easy practice, you’re self-disciplining yourself to live without boundaries.

Practice this everyday, a little at a time, and before you know it, the word can’t will not be part of your language.

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Do Anything That Can Relieve Your Uncertainty

When I catch myself saying I can’t do something or I don’t know something, looking up information on that action or subject, doing research, educating yourself, relieves that uncertainty.

Sometimes, we think we can’t do something because the whole idea of it seems too large. We skip the small steps in our head and only focus on the end.

Before you say you can’t do something, rewind and slow down a little bit. Focus on what the first step is, then the next. Take it a step at a time, and before you know it you will have done something you previously thought you couldn’t do.

Final Thoughts

You know what you must do. The first step is right now. Once you begin this habit, and really start noticing some change, you’ll realize the door to opportunity is everywhere.

The funny thing is: Those doors have always been there. The evil word that we no longer use put a veil over our eyes because that’s how powerful that word is.

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Featured photo credit: Cata via unsplash.com

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