1 min read

Sunk Costs Fallacy

Have you ever embarked on an endeavour; spent time, money and effort working towards something only to find out that it isn't quite what you were expecting?

It could be a course or project at work that you thought would help you achieve a desired outcome when you started, only to discover it wasn't as effective as you hoped.

But you continued anyways, because hey - you've already spent all this time, money and effort working towards it so you might as well continue and try to make it work.

You continue because the people around you tell you that you should always finish what you started, regardless if you will use it or not at the end.  "Just finish it, and try to see if it works" even if you know it is no longer what you want.

I'm referring to the Sunk Costs Bias or the Sunk Costs Fallacy.

Fallacy because the belief that you should always finish what you started, always finish something that you have committed resources to, and always continue on your path is based on unsound arguments that fail to consider whether the current drawbacks outweigh the benefits objectively.

A good example of this is:

"I went to law school, now I have to be a lawyer"

What rubbish!

The Law degree is a gift from your former self, now do something that brings you JOY.

The decision to continue an endeavour based solely on the fact that you have already consumed resources is irrational.

It's irrational because regardless of whether you continue or not those sunk costs can never be recovered.

It's irrational because irrecoverable costs incurred in the past are being used to make a present decision.

It's irrational because influences other than current alternatives are being factored in.

For us to act rationally, to progress towards our north star, only future costs and benefits should be considered when making present decisions.

The harder you worked to get something, the harder it will be to give it up.

Just because it is hard to give up, doesn't mean you can't give it up.

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