Don’t Let the Sunk Cost Fallacy Rob You of Your Time
What is the sunk cost fallacy?
When you invest time, energy, or effort into something, you want your investments to pay off. There’s a danger in continuing if the matter is destined to fail, and you continue pumping your resources into it. The more you invest, the higher the wasted investment will be if you quit, thus increasing the urge to carry on.
If we realize we should quit or pivot while halfway through a project, we risk becoming the laughing stock.
“If we decide to cancel a project halfway through, we create a contradiction: we admit that we once thought differently. Carrying on with a meaningless project delays this painful realization and keeps up appearances.” — Rolf Dobelli
Sorry ego, but you’re going to have to take a hit.
To push through, or not
You want to stop arguing with your partner and finally reach that point of peaceful co-existence that you’ve been working so hard to get to. If you fail to see that you’re not a good match, no matter what happens or how hard you both work, love might not be enough to save the relationship. You keep investing and investing, hoping and crossing your fingers to try and make it work, but that doesn’t change that it might all be in vain.
As a younger, naive woman there were some relationships I stayed in longer than I should have, just because of the thought “but I already put so much effort into this”.
The sunk cost fallacy also showed up elsewhere in my life:
- Not wanting to move out of a student flat after experiencing continuous mobbing, just because of the money and effort I put into furnishing the room.
- Forcing myself to continue an audiobook, even though it bore me to the skull two hours in. The underlying thought was that I “already invested my credit into this book” and didn’t want it to go to waste.
- Not admitting immediately that I wanted to stop trying to chase a professional coding career. Again, because of how much effort, mental breakdowns, and hours on StackOverflow I already spent.
- Not changing studies, purely because of “time and effort previously invested”.
This brings up a conversation I had with a classmate during university. “I will finish this degree, and do something else after I’m done here”, she told me. I agreed that might be a good approach to take. The thing is, neither of us was on the right path. Instead of changing then and there, we both continued.
I think both of us fell for the sunk cost fallacy here. I had my doubts early on in the program. But I had committed, to myself, that I would for once finish something (the degree). The longer I stayed, the harder it became to switch my area of study, for which I’d also have to move across the country. Eventually, I felt like I had invested so much time, that it would be “a waste” to just quit.
I became aware of the sunk cost fallacy through this gem of a book “The Art of Thinking Clearly” by Rolf Dobelli. He goes through dozens of examples of cognitive biases; flaws in reasoning or rational thinking where our minds guide us in the wrong direction. I have lost track of the amount of “aha” and “damn…” moments that popped up in my mind when reading.
Being unaware of cognitive biases can rob you of your time, resources, and energy where these could better be spent elsewhere.
You may have your reasons for finishing a project. Just because you want to, or because working on the project itself gives you joy and satisfaction. Doing it for reasons such as hoping to retrieve “non-recoverable investments”? That’s not one of them.
“Rational decision-making requires you to forget about the costs incurred to date. No matter how much you have already invested, only your assessment of the future costs and benefits counts.” — Rolf Dobelli