Sunk Costs

A few days ago Andrew and I started watching a movie on Netflix. It had a decent trailer and we were excited about the divergence from our usual tv programming. A few minutes into the movie I could just tell this was not my cup of tea. So the question became - do we give up and watch something else or stick it out? We had already spent a chunk of time - previewing several movies, reading reviews, and watching the beginning of the movie. What would you do? Do you tend to stick to it or do you switch gears when you realize something is no longer a good decision?

In the end we decided it was not worth it and we gave up, going back to our regular tv show.

What is a sunk cost? The sunk cost fallacy “suggests that we overemphasize the resources we’ve already invested in something, whether that’s time, money, emotional involvement, etc., and we allow the perception of that ‘sunk cost’ to guide our future decisions,” says Dr. Amy White.

Sometimes, with bigger decisions than just what show to stream, it is hard to pivot when evaluating your sunk costs. Sometimes our emotional attachment to these sunk costs can cause us to continue down a path that we should have abandoned long ago. How do we handle the emotional entanglement associated with sunk costs that can keep us from making a better decision? Here are three tips that will help you, the next time you realize you need to change direction despite the sunk costs.

1. Acknowledge the value in what you have done.

   1. This is hard. It is hard to realize the time and energy you put into making a decision will feel wasted. No one likes wasting time. One thing that is helpful to me is to acknowledge that my time researching and making a decision that doesn’t plan out is valuable and even though I may never see any fruit from that labor it is okay.

2. Acknowledge the fear associated with change or unknowns.

   1. One thing that can make a pivot difficult is how scary change feels. For me, when I have spent time researching and planning a decision, and as I move down that path, the idea of going another route scares me. Often it is this fear that can make us stick with a decision that ultimately is not what is best. I find it helpful to acknowledge this - know that it is normal and okay to be afraid.

3. Acknowledge the benefits of a pivot.

   1. The thing about sunk costs is that you have spent time, energy, and resources in something that will not materialize. Wanting to make the most of what has already cost you something is hard if you don't keep the benefits of pivoting in clear view. It may help to have others take a look at the situation, as the sunk cost fallacy may be clouding your judgment. Then, focus on what good can come from change, even if it means losing what you have already invested. Ultimately the reason we make a change, despite the sunk costs, is because in the end we know we will see the most benefits from this decision. Focusing on the benefits of this change can help ease the feeling of loss from your sunk costs.

So ask yourself: Is there a situation in your life, where you are actually making things more difficult, by sticking with the current plan? Do you notice any unhealthy, inflexible thinking that you would be willing to make more flexible?